RETAIL | Friday, March 15

Ulta Falls on Blemished Outlook

The rising beauty retailer just can’t project confidence about spending in 2024.


After a solid run in the last 6 months, Ulta Beauty finally ran out of gas after management just couldn’t put up numbers confident enough for the Street. Let’s break down why the stock is falling. 


Utla absolutely obliterated their Q4 growth expectations by generating $394 million in net income from $8.08 billion in revenue. Ulta just casually boosted revenues by $1.4 billion in a single year. While consumers showed up big for Ulta in 2023—the worry is if they have enough strength to make it through 2024. 


The issue here is that net income isn’t growing quite as well as revenue—signaling that Ulta isn’t generating these revenue gains as efficiently as they could. That’s a trend that can get out of hand very quickly—and Ulta management added fuel to those fears with their 2024 guidance. While revenue growth is still projected to be strong, Ulta predicts they’ll be able to generate—at worst—a $26.20 EPS from their revenues this year. That’s well below the market’s median expectations of $27.03. More importantly, that’s a signal to investors that Ulta has to burn a lot of cash just to keep customers coming back. 


Ulta also cited slower growth in the U.S. being offset by international sales. With the USD staying overpowered for the foreseeable future, that’s not a revenue mix the market is super excited about. Instead, investors are concerned that Ulta might be spiraling downward in order to stay competitive in a much more complex beauty space. Worries about weaker U.S. consumer spending compounded this—sp Ulta stock dropped over 6% in early trading. 


Read this report for free

There's a reason why over 5 million investors love Moby, try for free today