Ulta Stock Is the Worst Performer in the S&P 500 on Wednesday. Here’s Why.


Ulta Beauty

stock was falling Wednesday after the cosmetics retailer said at conference that it expects first-quarter comparable-store sales to increase at the lower end of its previous guidance.

Ulta

management said during a

J.P. Morgan

Retail Round Up Conference on Wednesday that overall category growth was slowing more than expected. If the category slowdown continues, “we would expect our Q1 comp to be on the lower end of that first-half guide that we provided of the low single digit.”

Shares of Ulta were falling 12% to $454.84, marking their largest percentage decrease since May 26, 2023, according to Dow Jones Market Data. The stock was the worst performer in the


S&P 500

on Wednesday.

The announcement from Ulta was hitting cosmetic stocks since these companies sell their products at Ulta locations. Shares of

e.l.f. Beauty

were dropping 11% and were on pace for their largest percentage decrease since March 16, 2020.

Coty

stock was off 4.4%,

Estée Lauder

fell 3.7%, and American depositary receipts of

L’Oreal

were down 1.8%.

Ulta stock fell 5.2% on March 15, after the beauty supplies retailer said it expected fiscal 2024 earnings of between $26.20 and $27 a share, which was below analysts’ estimates of $27.01 a share. Ulta also said that in 2024 it expects the category will ”remain healthy, but the growth will moderate to the mid-single-digit range, barring a major economic event.”

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Management added Wednesday that while consumers were still showing a lot of interest in buying makeup, the company was coming off multi years of growth and going through some “economic environment dynamics.”

It wouldn’t be shocking if the cosmetics category saw a slowdown. Beauty is a historically resilient space, specifically during times of economic uncertainty when people choose to still spend money on their favorite foundations and lipsticks despite broader macro risks. With this in midn, beauty companies like Ulta and e.l.f. have seen strong growth. Ulta, for example, has seen revenue jump each year since 2021, with 2024 revenue of $11.2 billion 67% above the $6.7 billion revenue recorded in 2019.

That doesn’t mean the risk of a slowdown isn’t making investors nervous. Shares of Ulta have dropped 6.8% this year.

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Write to Angela Palumbo at angela.palumbo@dowjones.com



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