Ulta Beauty Lowers Sales and Profit Forecasts

(Reuters) – Ulta Beauty has cut its annual sales and profit forecasts due to declining demand for higher-priced cosmetics and fragrances.

The company’s shares fell 7% in extended trading after a 22% decrease this year.

In the wake of pandemic restrictions lifting, consumers initially splurged on affordable luxury beauty products. However, with high living costs, customers are now reducing their spending on cosmetics and skincare.

In the second quarter, Ulta’s comparable sales decreased by 1.2%, resulting from a 1.8% drop in transactions. Customer traffic has moderated in recent months, as noted by Placer.ai.

CEO Dave Kimbell stated, “Our second quarter performance did not meet our expectations,” leading to updated annual expectations based on a cautious outlook.

Similarly, MAC lipstick maker Estee Lauder has also lowered its annual profit and sales forecasts, citing reduced demand, particularly in the Chinese market.

Ulta’s quarterly net sales rose about 1% to $2.55 billion, falling short of LSEG expectations of $2.62 billion. The retailer earned $5.30 per share, compared to expectations of $5.46.

For the upcoming year, Ulta projects net sales between $11 billion and $11.20 billion, down from previous expectations of $11.5 billion to $11.6 billion. They forecast annual earnings per share between $22.60 and $23.50, compared to earlier expectations of $25.20 to $26.00.