Ulta Beauty Shares Drop After Berkshire Hathaway Reduces Stake

Ulta Beauty (NASDAQ:ULTA) shares saw a decline of over 5% in premarket trading on Friday after Warren Buffett's Berkshire Hathaway (NYSE:BRKa) significantly cut its stake in the cosmetics retailer.

The reduction was revealed in a regulatory filing on Thursday, which indicated that Berkshire had decreased its holdings in Ulta by over 96%, selling the majority of its position acquired only a quarter earlier.

Berkshire initially bought 690,106 shares of Ulta in the second quarter for approximately $266.3 million, as disclosed in August filings. However, by the end of the third quarter, its stake had plummeted to just 24,000 shares, indicating a swift exit from the investment.

This sell-off comes on the heels of a tough year for Ulta, with its shares down more than 21% year-to-date, reflecting broader issues within the cosmetics retail sector.

Although the reasons behind Berkshire's drastic reduction of its Ulta stake are unclear, investors are reacting with caution, viewing Buffett's withdrawal as a potential signal of underlying concerns.

In premarket trading, Ulta's shares were at $361.71, representing a 5.5% drop from Thursday's close. This sell-off adds pressure on Ulta, which has been facing continued challenges in consumer spending.