ULTA - Ulta Beauty's flags theft issue in retail pushes peers lower
2023-05-26 10:20:17 ET
Ulta Beauty ( NASDAQ: ULTA ) stock slid more than 10% after posting a disappointing earnings result on Thursday, with its slump rippling across its peer group on Friday.
Ulta ( ULTA ) missed on the top line for Q1 and trimmed its guidance on margins for the full year. While the company also updated its net sales outlook for the year, hiking its forecast for net sales to between $11B and $11.1B from a prior guide of $10.95B to $11.05B, the updated guide still suggested disappointment against the lofty analyst expectation of $11.09B in revenue.
During the earnings presentation, Ulta spoke to macro pressures as well as retail theft issues impacting not only its stores, but the broader beauty retail industry. Management noted that organized thefts are an “increasingly concerning challenge” for retailers in the space.
“When I think about the financial results in totality, really shrink was the thing that surprised us in the quarter, and that's really the driver when we think about the operating margin adjustment for the year,” CFO Scott Settersten told analysts on Thursday evening. “We knew the promotional environment was going to ramp up some and maybe it's slightly richer than we were expecting, but that's not the driver. The driver is shrink by far. And so that's what put a pretty meaningful drag on our first quarter, and we're expecting those trends to continue the rest of the year.”
Ulta Beauty ( ULTA ) slid 12.13% shortly after the market open with its slide spreading to Sally Beauty Holdings ( SBH ) -1.4% and Target -1.6% , which earlier flagged concerns on the retail theft issue regarding beauty products specifically. Skin care retailer Bath & Body Works ( BBWI ) also edged lower on Friday.
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Ulta Beauty’s flags theft issue in retail, pushes peers lower