Ulta Beauty's Annual Profit Outlook Falls Short of Expectations, Stock Price Declines

Investing.com - Ulta Beauty shares fell about 8% after hours on Thursday, despite the cosmetics retailer reporting Q4 earnings that beat expectations, though its guidance for profit was slightly below Wall Street estimates.

Ulta expects FY2027 earnings per share to be between $28.05 and $28.55, compared to analyst expectations of $28.57. The company also forecast net sales growth of 6% to 7%, with profit growth of approximately 9.4% to 11.4%.

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The company reported Q4 earnings of $8.01 per share, surpassing analyst expectations of $7.93. Revenue reached $3.9 billion, above the expected $3.81 billion.

Comparable sales increased by 5.8%, driven by a 4.2% rise in average order value and a 1.6% increase in transaction volume. Net sales rose 11.8% year-over-year, mainly supported by comparable sales growth, the acquisition of Space NK, and new store openings.

Gross profit grew 11.2% to $1.5 billion, though gross margin slightly declined from 38.2% last year to 38.1%. The company stated that margin pressure reflected unfavorable sales mix and higher store-related costs, partially offset by lower inventory shrinkage and improved supply chain efficiency.

Selling, general, and administrative expenses increased 23% to $1 billion, mainly driven by higher corporate management costs related to strategic investments, increased advertising spending, and higher incentive compensation.

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