“Ulta’s stock prices have declined following warnings from its CEO about a slowdown in the demand for beauty products, reflecting concerns within the beauty industry about changing consumer trends and preferences.”
“During an investor conference hosted by JPMorgan Chase, Ulta’s CEO, Kimbell, acknowledged a slowdown in the overall beauty category. Contrary to previous expectations, the company anticipated a moderation in growth after several years of strong performance but did not foresee the extent of the deceleration observed.”
“Ulta’s CEO, Kimbell, stated that the company anticipated sales growth in the mid single-digits for the year. However, Kimbell noted that the slowdown in demand has occurred earlier and to a greater extent than expected. This trend has affected various price points and beauty categories but has been particularly pronounced in prestige makeup and haircare.”
“In the retail landscape, beauty has consistently emerged as a standout category, even amidst cautious consumer spending on discretionary items like clothing. Despite economic uncertainties, U.S. consumers have maintained their enthusiasm for makeup, skincare, and other beauty products. This sustained demand has prompted numerous retailers to increase their investments in the beauty sector, recognizing its resilience and potential for growth.
Target has opened a growing number of Ulta Beauty shops in its stores. Kohl’s plans to open Sephora shops in all of its locations. Macy’s is expanding its beauty chain Bluemercury.
In his recent remarks, Kimbell acknowledged that beauty shoppers are not immune to economic pressures, despite the category’s previous resilience. He highlighted various factors, such as escalating credit card debt, geopolitical tensions, and the upcoming presidential election, which may prompt consumers to exercise caution in their spending habits. Kimbell described these dynamics as contributing to a complex landscape for consumers, requiring them to navigate through uncertain economic conditions.The retailer said it anticipates comparable sales, a metric that takes out the impact of opening and closing stores, to increase by 4% to 5% this fiscal year. That would be a slowdown from a growth of 5.7% in the previous fiscal year and 15.6% in fiscal 2022.
