Ulta Beauty on Thursday laid out plans to spice up sales and gain market share after sales fell in the primary quarter.
Comparable sales, a metric that tracks Ulta stores open no less than 14 months in addition to online sales, rose 1.6% yr over yr, a pointy slowdown from the identical period last yr when Ulta reported comparable sales growth of 9.3%.
“We expect growth to accelerate in the second half of the year to be between 2 and 4 percent, reflecting the impact of our revenue-generating initiatives,” Chief Financial Officer Paula Oyibo said throughout the company’s quarterly earnings conference call.
In April, Ulta CEO Dave Kimbell warned at an investor conference that demand in the wonder segment was slowing. And while the slowdown was largely expected, Kimbell said it hit the corporate “a little earlier and a little harder” than expected.
Kimbell acknowledged on Thursday that there have been market share challenges in recent quarters, particularly within the prestige beauty category.
“We are not satisfied with our market share performance and are taking actions to strengthen our leadership position and accelerate growth,” Kimbell said throughout the conference call, adding that the corporate will announce additional long-term plans at its analyst day in October.
Kimbell outlined five key areas where the corporate plans to take concrete motion: strengthening its assortment with 25 latest brands, including Ulta exclusives with celebrities akin to Serena Williams and Bella Hadid; accelerating social relevance by scaling its creator network; improving the patron digital experience; leveraging its loyalty program and evolving promotional creatives.
The company may even expand its partnership with the delivery service DoorDashwhere it offers same-day delivery from its stores, and is banking on using its app. Ulta’s app accounted for 57% of e-commerce sales within the quarter, Kimbell said.
Kimbell also announced that the corporate is testing latest gamification platforms and can activate latest marketing technologies later this yr to assist guests personalize their shopping experience.
Ulta shares rose about 11% in prolonged trading Thursday.
How the wonder company works carried out throughout the period in comparison with Wall Street expectations, based on an analyst survey conducted by LSEG:
- Earnings per share: USD 6.47 versus expected USD 6.24
- Revenue: $2.73 billion in comparison with expected $2.72 billion
Ulta reported net income of $313.1 million, or $6.47 per share, for the quarter ended May 4, in comparison with $347.1 million, or $6.88 per share, a yr earlier.
Net sales increased barely to $2.73 billion from $2.63 billion within the previous yr.
The company lowered its forecast for the fiscal yr. Ulta said it now expects net sales within the range of $11.5 billion to $11.6 billion and comparable sales within the range of two percent to three percent. It had previously forecast full-year net sales of $11.7 billion to $11.8 billion and comparable sales of 4 percent to five percent.
Ulta also revised its full-year earnings per share forecast downward, raising it to $25.20 to $26 (previously $26.20 to $27).
Ulta Beauty has proven to be a robust performer for retailers as they face a decline in consumers amid persistently higher costs. The beauty brand Eleven recently reported its first billion-dollar fiscal yr, beating Wall Street estimates and driving up share prices.
Cosmetics company with artificial intelligence Curious technology recently told CNBC that the industry just isn’t a lot a few slowdown because it is a few shift in business.
“We’re seeing an industry in transition. Consumers are going online and looking for high-impact products that really solve their problems,” Lindsay Drucker Mann, Oddity’s chief financial officer, told CNBC.
Wall Street sentiment toward Ulta has cooled ahead of the corporate’s earnings report, with analysts at Baird and Canaccord Genuity cutting their price targets in recent days.
“We believe the beauty category is resilient. Despite reduced spending on non-essential items, consumers continue to place value on beauty products, leading to significant growth in the category,” analysts at Jane Hali & Associates said in a recent note on Ulta, adding that while they view the wellness category as considered one of their key strengths, they’re cautious in regards to the makeup category.
The company’s stock price closed at $385.58 per share on Thursday, giving the corporate’s market value around $18.5 billion.
