Ulta Beauty said Thursday that fourth quarter sales and earnings were down year-over-year, hurt by weaker cosmetics sales during the pandemic.
Although the decline was less than expected, stocks fell as the beauty retailer issued a disappointing outlook for the coming year. Ulta shares fell more than 8% after the bell.
The company also announced that its CEO, Mary Dillon, is stepping down in June and will be replaced by President Dave Kimbell.
Dillon will also move to the company’s board of directors, where she plans to stay for a year.
Kecia Steelman, Ulta’s chief store operations officer, has been promoted to chief operating officer.
The company reported for the fourth quarter, versus Wall Street analysts’ expectations based on a survey by Refinitiv:
- Earnings per share: $ 3.41, adjusted versus $ 2.35 expected
- Revenue: $ 2.2 billion versus $ 2.08 billion expected
“The Ulta Beauty team delivered better than expected results in the fourth quarter. The strong company-wide execution of our plans coupled with improving trends in consumer demand resulted in solid results across multiple metrics including sales, transactions and profitability.” Dillon in a press release.
Ulta reported net income of $ 171.5 million, or $ 3.03 per share, for the fourth quarter, compared to $ 222.7 million or $ 3.89 per share last year.
Excluding items, Ulta earned $ 3.41 per share, beating analysts polled by Refinitiv, which was expected to $ 2.35 per share.
Net sales fell to $ 2.2 billion from $ 2.31 billion last year, beating expectations of $ 2.08 billion.
Sales in stores that have been open for at least 14 months decreased 4.8% over the last period, negatively impacted by fewer transactions. The company said transactions were down 12.2%, but the average purchase per ticket increased 8.3%.
For fiscal 2021, Ulta expects earnings between $ 8.85 and $ 9.30 per share on revenue of $ 7.2 to $ 7.3 billion. The earnings forecast includes the impact of share buybacks of approximately $ 850 million.
According to Refinitiv, analysts had expected Ulta to make $ 10.61 per share on sales of $ 7.32 billion.
Revenue in the same store is expected to be between 15% and 17%, the company said.
Ulta plans to open 40 new Netto stores and remodel around 21 stores in the coming year.
With the ongoing pandemic and slow adoption of vaccines, Ulta executives do not expect a strong rebound this year.
“While we are encouraged by the recent sales momentum, the visibility of when demand will recover remains limited. We anticipate that masking requirements and social distancing will continue to negatively impact much of 2021,” said Scott Settersten, chief financial officer from Ulta, on a conference call.
Although the beauty retailer saw makeup sales decline as more people stayed home, the company remains optimistic about the category’s long-term prospects.
“We’re seeing a renewal [and] How our guests engage with makeup behaviors, fashion, looks and style will continue to evolve, “said Kimbell.
In November, Ulta announced plans to open small cosmetics stores in hundreds of Target stores across the country to increase sales and expand reach.
The cosmetics retailer was injured due to temporary store closings during the pandemic. After reopening stores in July, the company saw a return in demand with a strong comeback for its mobile app and e-commerce website.
Read the full results publication here.
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