Ulta Beauty Stock Falls on Weak Margin Forecast

Ulta Beauty’s (ULTA) stock fell over 5% in early trading Friday, a day after the beauty retailer reported fourth-quarter earnings that beat expectations but issued a weak margin forecast for 2024.

Ulta reported $394.4 million in net income, or diluted earnings per share (EPS) of $8.08, both above analyst estimates compiled by Visible Alpha.

For the 2024 fiscal year, Ulta projected net sales of $11.7 billion to $11.8 billion and diluted EPS of $26.20 to $27, above 2023 figures and analyst estimates. However, Ulta said it anticipates a lower profit margin of 14% to 14.3%, compared to 15% in 2023, with margins pressured by higher costs and increased promotions.

Ulta bought back about $159.5 million of its own stock in the quarter, and a total of $1 billion in the full 2023 fiscal year. Just under $100 million remains in the buyback program Ulta announced in March 2022, and the company said its board approved a new $2 billion program to replace the old one.

Executives also said they see opportunity for international expansion into markets like Mexico and announced a joint venture with Axo to do so next year.

Ulta shares were down 5.7% at $533.41 as of 10:45 a.m. ET Friday, though they were up more than 9% year to date.