Ulta Beauty lost market share for the first time in 2024 and delivered worse than expected earnings guidance for 2025. However, shares rose in after-hours trading on the back of an earnings uptick in its fourth quarter, which beat Wall Street’s expectations.
In her first earnings since being named chief executive officer, Kecia Steelman addressed the increasingly competitive landscape and unveiled her new strategy, Ulta Beauty Unleashed.
“The beauty landscape has fundamentally changed,” she said during an analyst’s call. “Guest expectations continue to rise and the pace of change is accelerating. The competitive environment in beauty has never been more intense. For the first time, we lost market share in the beauty category in 2024.
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“I am aware of the challenges that we face. Some of them are external, while others we own,” she continued, citing execution challenges, particularly in product transitions and launches as the retailer implemented new tools and processes.
Steelman, who rose through the ranks on the operational side of the business, was optimistic about her strategy to right the ship. “We’ve identified specific gaps and we’re working quickly to address them,” she said. “It’s clear to me that how we’ve operated must change to ensure that we capture the opportunities in front of us. We are focusing to ensure the guest is at the center of everything we do, and we intend to move faster, invest strategically, and optimize our business.”
Steelman’s plan is called Ulta Beauty Unleashed, and involves securing more exclusives, optimizing digital capabilities and streamlining costs.
“First, driving core business growth through brand building, personalization and digital acceleration; second, scaling new, high-growth businesses, including wellness, Ulta Beauty Marketplace, international expansion, and UB Media, and third, realigning our foundation for the future by optimizing our ways of working and strategically aligning our leadership team around our key priorities,” outlined Steelman.
She has already made several changes to her C-suite since taking the reins as CEO, including tapping Kelly Mahoney as Ulta Beauty’s new chief marketing officer.
Ulta is still searching for a chief merchandising officer, with Monica Arnaudo planning to retire.
For 2025, the beauty retailer’s comparable sales are expected to come in flat or increase 1 percent. Wall Street had forecast growth of 1.2 percent. Earnings are now expected to be between $22.50 and $22.90, below analysts’ estimates of $23.47.
Net sales decreased 1.9 percent to $3.5 billion compared to $3.6 billion in the fourth quarter ended Feb. 3, primarily due to the benefit of an extra week of sales in fiscal 2023, partially offset by new store contribution and increased comparable sales. Analysts had predicted $3.46 billion.
Net income was $393.3 million compared to $394.4 million. Diluted earnings per share were $8.46 compared to $8.08, above Wall Street estimates of $7.13.
Its share price rose 7.7 percent in after-hours trading to $337.01, having closed down 4.48 percent to $314.47.
