Ulta Shares Collapse After Missing on Both the Top and Bottom Line

Shares of beauty product retailer Ulta were crashing on Thursday after the company reported earnings that missed analysts’ expectations for revenue, profit and same-store sales.

Wall Street was also less than enthused to learn that the company had cut its earnings and revenue outlook for the fiscal year.

Ulta shares fell over 20% in extended hours.

For the second quarter, the cosmetics company reported adjusted earnings of $2.76 a share. This is compared to $2.80 expected according to a survey of analysts from Refinitiv. Revenue at $1.67 billion was also below the $1.68 billion that was expected. Same-store sales saw a growth of 6.2%, also coming in below the 6.6% that was anticipated.

According to Ulta, the cosmetics industry has struggled as a whole this cycle. CEO Mary Dillon said she believes industry wide challenges will continue in the near term, leading the company to lower its earnings and revenue growth guidance.

“Ulta Beauty continues to drive meaningful market share growth in makeup across mass and prestige but it’s clear that cosmetics in the overall U.S. market is challenged,” said Dillon on the earnings call.

“The most recent cycle of innovation has just not driven those behaviors, resulting in a soft cycle for the cosmetics category in the U.S. as innovation and newness brought to the market has not driven the expected growth.”

Looking ahead, Ulta has slashed its earnings forecast to a range of $11.86 to $12.06 a share. Previously the company had expected a range of $12.82 to $13.03 a share. Revenue growth expectations have also been slashed to a range of 9% to 12%.

“The Ulta Beauty team delivered another quarter of solid top-line performance, gross margin expansion, and double-digit earnings growth,” Dillon also said. “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.”

Disclaimer: We have no position in Ulta Beauty Inc. (NASDAQ: ULTA) and have not been compensated for this article.