Ulta Beauty Stock Is Plunging After Earnings. Investors Are Worried About Its Outlook and a New CEO.
Ulta stock fell after the company reported earnings Friday.
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Ulta Beauty stock tumbled more than 9% on Friday, despite a robust fiscal fourth-quarter earnings report, as the cosmetics retailer’s forecast and a leadership change spooked investors.
Ulta Beauty (ticker: ULTA) said it earned $171.5 million, or $3.03 a share, in its quarter ended Jan. 30, compared with $3.89 in the year-ago period. Adjusted earnings, which strips out items including depreciation and amortization, noncash lease expenses, and asset impairment charges, were $3.41 a share. Revenue fell 4.6% year over year to $2.2 billion. Analysts were looking for EPS of $2.34 on revenue of $2.08 billion.
Same-store sales rose declined 4.8%, notably better than the 11.2% decline analysts were expecting.
However, for the full year, Ulta said it expects to earn $8.85 to $9.30 a share on revenue between $7.2 billion and $7.3 billion. Consensus calls for EPS of $9.42 and $7.32 billion in revenue.
Separately, Ulta announced that President Dave Kimbell will replace long-term CEO Mary Dillon in June; Dillon will become executive chair of the board of directors.
Ulta stock was down 9.5% to $314.34 in recent trading.
The shares have soared nearly 68% in the past year, and have risen 21% year to date, reflecting investors’ optimism that—with an economic reopening at some point later this year—demand for makeup and related products will bounce back. While many analysts view the company’s full-year guidance as conservative, the market may have been looking for more assurance from Ulta that it, too, is expecting a swift recovery from the pandemic.
In addition, Dillon’s decision to step down is likely a surprise to many, and a potential source of worry for investors, given how successful her tenure has been. Ulta stores and loyalty members more than doubled under her watch in the past eight years. Still, her presence on the board may ease some concerns about the transition.
Those factors were overshadowing what was a stronger-than-expected fourth quarter, especially at a time when investors are keenly focused on the success of reopening plays.
Write to Teresa Rivas at [email protected]
