Ulta falls short of Wall Street expectations, adjusts sales forecast after quarterly decline.

• Ulta Beauty fell short of second-quarter expectations and trimmed its full-year guidance.
• In contrast to the 8% rise in sales during the second quarter of the previous year, there was a 1.2% decrease in comparable sales this quarter.
• Since CEO Dave Kimbell warned of decreasing beauty demand, Ulta's stock has been declining.

The company's shares dropped 7% in extended trading on Thursday due to missing second-quarter expectations and reducing full-year guidance after a decline in same-store sales during the latest period.

Since May 2020, the company had not missed its earnings per share target, but it did so in the latest quarter. Additionally, it was the first time the company missed its revenue target since December 2020.

According to StreetAccount, sales for the second quarter fell 1.2% compared to an 8% increase the previous year, which was significantly lower than the 1.2% growth that analysts had predicted.

Despite positive indicators in our business, our second quarter performance did not meet expectations due to a decline in comparable store sales. CEO Dave Kimbell stated in a press release that we are aware of the factors that negatively impacted our store performance and have actions in place to address the trends.

The company has revised its forecast for full-year same-store sales, predicting a range of flat to 2% decline instead of the previously predicted 2% to 3% growth.

Ulta has revised its full-year revenue and earnings per share expectations. The company now anticipates revenue of $11 billion to $11.2 billion, down from its previous guidance of $11.5 billion to $11.6 billion, and expects full-year earnings per share of $25.20 to $26, down from a previous forecast of $22.60 to $23.50.

Based on a survey of analysts by LSEG, the beauty retailer's performance in the period ended August 3 exceeded Wall Street's expectations.

• Earnings per share: $5.30 vs. $5.46 expected
• Revenue: $2.55 billion vs. $2.61 billion expected

During the same quarter a year ago, the company's net income was $300.1 million, or $6.02 per share, compared to $252.6 million, or $5.30 per share, in the most recent quarter.

The company's revenue increased to $2.55 billion, compared to $2.53 billion in the previous year.

In recent weeks, Warren Buffet's Berkshire Hathaway revealed a $266 million investment in the beauty retailer, causing Ulta shares to skyrocket. This news served as confirmation for some analysts that the stock had been undervalued after experiencing a 32% decline in 2024, followed by a 26% drop in the second quarter alone.

Since April, Ulta's shares have been declining due to CEO Dave Kimbell's warning about the slowing beauty market at an investor conference. Kimbell stated that the company had experienced a more significant pullback than anticipated.

In May, during the company's first-quarter earnings call, Kimbell presented a plan to increase sales in five key areas: product assortment, brand social relevance, improving the consumer digital experience, enhancing the loyalty program, and evolving promotional strategies.

Kimbell stated that the beauty retailer would be expanding its partnership with delivery service, testing new gamification platforms, and activating new marketing technology to personalize the customer shopping experience in the same call.