Here’s Why Ulta Beauty (ULTA) Stock is Down in Pre-market Friday

Ulta Beauty Inc (NASDAQ:ULTA) was established in 1990 with the concept of providing all beauty products under one roof.  The broad range of brands gradually helped the company to become one of America’s biggest beauty retailers. Ulta has a wide product line comprising cosmetics, fragrance, skin, and hair products, and many more.

Like many non-essential retailers, Ulta Beauty also struggled over the last year due to the Covid-19 pandemic. The company sales were mainly hurt by the store closures. ULTA stock could not gain much value in 2020.

The negative effects of the pandemic also hurt Ulta’s financial performance. The company on Thursday reported its financial results for the fourth quarter below expectations. It reported earnings of $3.03 per share for the three months ended January 30, down from $3.89 per share in the comparable period of 2019. Excluding items, its adjusted earnings of $3.41 per share came in below analysts’ average estimate of $3.73 per share.

Revenue slipped 4.6 percent on a year-over-year basis to $2.2 billion, slightly below the consensus forecast of $2.29 billion. Same-store sales decreased 4.8 percent, as compared to a surge of 4 percent in the fourth quarter of 2019.

CEO Mary Dillon said in a statement, “Fiscal 2020 was a difficult year, and I am proud of how our teams navigated the unprecedented challenges with agility and purpose.”

Separately, the company announced that Dillon will step down from her position in June, and its president David Kimbell will become the new CEO. Moreover, Dillon will take the role of executive chair of Ulta’s board of directors.

Looking forward, Ulta projected earnings in the range of $8.85 per share to $9.30 per share and sales between $7.2 billion and $7.3 billion for fiscal 2020. Analysts on average were looking for earnings of $10.61 per share on revenue of $7.32 billion.

Ulta shares are down nearly 10 percent in the pre-market trading Friday apparently on the disappointing outlook for the current fiscal year.

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