Ulta Beauty plunges 9% on mixed results, guidance; analysts see more downside

Ulta Beauty (NASDAQ:) shares plummeted 9% in pre-market Friday after the company reported Q1 results and offered full-year guidance.

came in at $2.63 billion versus the consensus estimate of $2.62B. EPS was $6.88, slightly ahead of the analyst estimate of $6.82.

Comparable sales (sales for stores open at least 14 months and e-commerce sales) grew 9.3%, compared to an 18.0% growth in Q1/22. The growth was driven by an 11.0% increase in transactions and a 1.5% decrease in average ticket.

“While we expect the operating environment to continue evolving, we remain confident in the resilience of the beauty category and in our ability to drive share and profitable growth with our proven business model, a diverse, best-in-class assortment, an industry-leading loyalty program, and our world-class team,” Dave Kimbell, chief executive officer, said.

The company provided its outlook for the full 2023 year, expecting revenue in the range of $11-11.1B, compared to the consensus of $11.12B. Comparable sales are expected to increase 4-5% year-over-year.

Wells Fargo analysts lowered the price target on Underweight-rated ULTA stock to $350 per share.

“ULTA’s 1Q print was indeed surprising – with a comp/EBIT miss and inherent guide-down for the FY (margins lowered, though EPS reiterated due to int/tax). Following a significant 24 months, mean reversion has begun, and we see tough sledding ahead,” the analysts commented.

BMO analysts also cut the price target, going to $485 per share. They believe that the in-line quarter will raise questions as investors were looking for a beat-and-raise quarter.

“Ulta remains a compelling company, but we understand investors will be sensitive to any signs of slowing (revenue or margins),” analysts said.

Additional reporting by Senad Karaahmetovic