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Ulta Beauty Stock Plunges 15% as CEO Flags Sharper Demand Slowdown

Ulta Beauty (ULTA) - ★★★ - Ranked #62 in our Q2 2024 Large Cap Equity Rankings

Shares of Ulta Beauty (ULTA) plummeted over 15% on Wednesday after the cosmetics retailer's CEO warned of a significant deceleration in growth across the beauty category over the past two months.

Speaking at the JPMorgan conference, CEO Dave Kimbell said Ulta has seen its growth rate come down much faster than anticipated. Just a few weeks ago, the company said it expected a moderation after three strong years, but the slowdown has proven to be more severe.

Kimbell's comments raised concerns about weaker consumer demand for beauty products amid an uncertain economic environment.

The CEO's remarks strike a more pessimistic tone than Ulta's recent fourth quarter report in early March. While Q4 sales rose 10% year-over-year, transactions declined with the average ticket down 1.9%.

Ulta provided disappointing guidance for the current first quarter, likely pricing in the recent swift pullback in demand. The company is still working to expand internationally through a joint venture to open stores in Mexico.

However, investors are now bracing for a potentially harsh slowdown domestically in the months ahead. Ulta's dire outlook underscores the strain on consumer spending for discretionary items like cosmetics amid persistent inflation and economic uncertainty.

After a three-year post-pandemic boom, the U.S. beauty sector may be headed for a reckoning.


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