Alta Beauty On Thursday it laid out plans to boost sales and gain market share after sales slowed in the first quarter.
Comparable sales, a metric that tracks Ulta stores open at least 14 months along with online sales, rose 1.6% year over year, a stark slowdown from the same period a year earlier when Ulta reported comparable sales growth of 9.3%.
“We expect growth to accelerate in the second half of the year, to between 2% and 4%, reflecting the impact of our initiatives to stimulate sales,” Paula Oyebo, the company’s chief financial officer, said during the company’s earnings call.
Ulta CEO Dave Kimbell warned in April of declining demand in the beauty category at an investor conference. While the slowdown was largely expected, Kimble said it hit the beauty company “a little earlier and a little bigger” than it expected.
Kimble acknowledged Thursday that the company's market share has been challenged in recent quarters, particularly in the prestige beauty category.
“We are dissatisfied with our market share trends and are taking actions to strengthen our leadership position and accelerate growth,” Kimble said during the company's earnings call, adding that the company will share more long-term plans at its analysis day in October.
Kimball identified five key areas where the company plans to take concrete action: enhancing the assortment with 25 new brands including exclusive Ulta products with celebrities like Serena Williams and Bella Hadid; accelerating social relevance by expanding the creator network; enhancing the digital consumer experience; Benefit from the loyalty program and advanced promotional tools.
The company will also expand its partnership with the delivery service DoorDashIt offers same-day delivery service from its stores, and relies on the approval of its applications. Kimball said Ulta's app represented 57% of e-commerce sales in the quarter.
Kimbell also announced that the company is testing new gaming platforms and later this year will activate new marketing technology that will help guests personalize their shopping experience.
Ulta shares rose about 11% in extended trading Thursday.
Here's how the beauty company performed during this period compared to what Wall Street expected, based on a survey of analysts conducted by LSEG:
EPS: $6.47 vs. $6.24 expected Revenue: $2.73 billion vs. $2.72 billion expected
Ulta reported net income for the quarter ended April 24 of $313.1 million, or 6.47 cents per share, compared with $347.1 million, or $6.88 per share, a year earlier.
Net sales increased slightly to $2.73 billion, up slightly from $2.63 billion the previous year.
The company lowered its guidance for the fiscal year. Ulta said it now expects net sales of $11.5 billion to $11.6 billion and comparable sales of 2% to 3%. The company previously guided for full-year net sales of $11.7 billion to $11.8 billion and comparable sales of 4% to 5%.
Ulta also revised its full-year earnings per share guidance to a range of $25.20 to $26, down from its previous guidance of $26.20 to $27.
Beauty has been a strength for retailers as they face consumer decline in light of persistently high costs. Beauty brand dwarf It recently reported its first fiscal year at $1 billion, beating Wall Street estimates and sending shares soaring.
AI-powered beauty company Strange technology She recently told CNBC that the industry is seeing not so much a slowdown, but a transformation.
“What we're seeing is an industry that's transforming. So the consumer is moving online and the consumer is moving to highly efficient products that actually solve their problems,” Lindsay Drucker Mann, the company's chief financial officer, told CNBC.
Wall Street's view on Ulta was cool ahead of the company's earnings report, with analysts at Baird and Canaccord Genuity lowering their price targets in recent days.
“We believe the beauty category is resilient. Despite a decline in spending on discretionary items, consumers continue to prioritize beauty products, driving significant growth in the category,” analysts at Jane Hali & Associates said in a recent note on Ulta. Viewing the wellness category as a key strength, they are cautious about the makeup category.
The company's shares closed at $385.58 per share on Thursday, bringing the company's market value to about $18.5 billion.
