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Ulta Beauty Cuts Guidance; Investors Do the Same to the Stock as it Falls ~30%


Ulta Beauty, Inc. (NASDAQ:ULTA) has had a dreadful Friday as the stock not only failed to meet expectations, it warned investors of future sales being weaker, and it got downgraded by analysts as a result. By the afternoon, the stock had shed nearly one-third of its value.

While net sales were up 12%, the company’s earnings per share of $2.76 fell short of expectations of $2.79. If that were the worst of it, the stock probably wouldn’t have gone over a cliff. Unfortunately, the bigger problem was the company’s guidance, which was slashed.

Same-store sales growth was previously expected to be between 6% to 9% for 2019, and that has been adjusted down to a range of 4% to 6%. In prior years, double-digit same-store growth numbers were common and so it may not be a surprise that it ran out of room to grow, with 2018 falling into single digits and 2019 poised to be down from those numbers as well.

The company received multiple downgrades as analysts were worried that things could get a lot worse for Ulta. The company’s CEO, Mary Dillon, tried to soften the landing as much as possible for investors:

Looking forward, we have updated our fiscal 2019 outlook to reflect the headwinds we are currently seeing in the US cosmetics market. We remain confident that our guest-centric, differentiated business model will drive continued market share gains and strong returns for our shareholders over the long term.

The fall in price on Friday wiped out the stock’s entire gains during 2019.

Disclosure: The author of this article does not hold any shares of the stock(s) mentioned in this article. This article is not a substitute for financial advice and this is not intended to persuade investors to buy or sell the stock(s) mentioned. Investors are recommended to seek professional investment advice or do their own analysis before making a stock purchase.