The beauty of Ulta On Thursday, it issued weak guidance for the next year to navigate a series of internal missteps, increased competition and what is called “consumer uncertainty.”
According to StreetAccount, the retailer who appointed Kecia Steelman as new CEO in January said he expects comparable sales to increase flat or 1% in 2025.
According to LSEG, full-year revenues are between $22.50 and $22.90, which is lower than expected at $23.47.
Ulta is the latest company to predict rocky years. It took into account uncertain consumer spending into guidance, but retailers are also navigating a set of company-specific challenges and views 2025 as a transition year. Fixing these issues costs money. This is part of the reason why profits are expected to be lower than Wall Street, which is expected over the next year.
“We shared a plan to make investments headed towards the key guests needed to improve our competitiveness and reaffirm our long-term stock growth,” Steelman told a call with analysts. “Though these investments will put pressure on profitability in 2025, we believe they are important to drive long-term sustainable growth in a competitive, innovative category.”
Stocks rose 6% in expansion trading.
Based on an analyst survey by LSEG, here is how beauty retailers did in the fourth quarter compared to what Wall Street had expected:
Earnings per share: $8.46 vs. $7.12 forecast: $3.49 billion vs. $3.466 billion
The company reported net profit for the three months ended February 1st. That was $8.46 per share compared to the previous year’s $394 million, or $8.08 per share.
Revenue fell to $3.49 billion, down approximately 2% from $3.55 billion the previous year. Like other retailers, Ulta benefited from an additional week of sales week in the same period last year.
Beauty has been one of the brightest spots in retail in recent years, but Ulta has fallen behind due to a series of self-harm challenges. The company’s business became more complicated as it grew, and Ulta stumbled when launching new fulfillment options, such as online purchases, in-store pickups, same-day delivery, and ships from stores.
“As a result, today’s in-store presentations and guest experiences are not as strong as we would like,” Steelman said. “These are opportunities within our control.”
In January, Ulta announced that longtime CEO Dave Kimbell would replace it with Steelman, then-executive officer who has been with the retailer for over a decade. Her experience as a leading operational figure makes her a good fit to tackle some of the execution problems that have plagued Urta.
During his first income call as CEO, Steelman was openly speaking about Ulta doing the right thing and what it was wrong. She said the company would work to reset its business the following year and regain the market share it had lost.
“The competitive environment for beauty is more intense than ever,” Steelman said. “For the first time, I lost market share in the beauty category in 2024.”
According to StreetAccount, comparable sales rose 1.5% in the Ulta holiday quarter, surpassing the 0.8% growth rate. Customers spent more in the quarter, with average tickets rising by 3%, but fewer shoppers came to Ulta stores to buy beauty products. Trading fell 1.4% during the quarter.
Part of this is because more companies are expanding into beauty. Not only does he compete with his rival Sephora, he also likes popular retailers. Macy’s, Walmart and Amazon Beauty has been the cornerstone of their strategy, and has expanded its selection of makeup and skincare products.
Last year, Ulta warned about the cooling beauty market, The beauty of the elf and Strangeness No similar dynamics were seen, and beauty sales remained strong at retailers like Macy’s and Target.
In the meantime, Ulta has focused on improving profitability. Even if it wasn’t a week, I was able to increase my revenue during the quarter.
