Buffett-backed Ulta Beauty's stock tumbles as Q2 results, guidance disappoint

Ulta Beauty (NASDAQ:ULTA) reported second-quarter earnings that fell short of analyst expectations, while also cutting its full-year outlook, sending shares down about 8% in after-hours trading.

The beauty retailer posted adjusted earnings per share of $5.30, missing the analyst consensus of $5.51. Revenue grew 0.9% YoY to $2.55 billion, but fell short of estimates of $2.62 billion.

Comparable sales decreased 1.2%, compared to an 8.0% increase in the same quarter last year.

Ulta Beauty significantly lowered its fiscal 2024 guidance, now expecting EPS of $22.60-$23.50, well below the previous analyst consensus of $25.26.

The company also reduced its full-year revenue forecast to $11-11.2 billion, down from the $11.495 billion analysts were expecting.

CEO Dave Kimbell acknowledged the disappointing results, stating, "While we are encouraged by many positive indicators across our business, our second quarter performance did not meet our expectations, driven primarily by a decline in comparable store sales."

The company's gross profit margin contracted to 38.3% from 39.3% a year ago, primarily due to lower merchandise margins and deleverage of store fixed costs.

Operating income fell to $329.2 million, or 12.9% of net sales, compared to $391.6 million, or 15.5% of net sales in the prior-year period.

Despite the challenges, Ulta Beauty continued its share repurchase program, buying back 549,852 shares at a cost of $212.3 million during the quarter.

The company also expanded its store network, operating 1,411 stores at the end of the quarter, a net increase of 49 stores from the same period last year.