Ulta Beauty (ULTA) shares continued to take an ugly turn on Friday after reporting a weak first-quarter outlook late Thursday.
Ulta shares crashed more than 15% in the stock market today after shares fell 11% in after-hours trading Thursday. Sally Beauty (SBH) shares are down more than 15%.
The beauty and cosmetics chain said Q4 EPS rose 37% to $1, beating analyst estimates by 2 cents. But EPS has been decelerating the past five quarters. Sales climbed 30% to $758.8 million, above views of $752.3 million.
But Ulta only forecasted a Q1 EPS of 60-63 cents, well below analyst estimates of 72 cents. Ulta sees Q1 sales of $568 million to $577 million, below forecasts for $579.7 million.
The former highflying IBD 50 stock had been stalling in recent months, with several failed breaks outs trying to form a late stage base.
On Feb. 14, Ulta Beauty's CEO Chuck Rubin resigned to take up the reins of the craft shop operator Michaels Stores. CFO Bruce Hartman resigned in October.
The news sent shares tumbling 11%.
Credit Suisse downgraded Ulta to neutral from outperform on the gaping holes in Ulta's executive positions.
Ulta appointed nonexecutive Chairman Dennis Eck as interim CEO.
Ulta's Retail-Specialty group has been slipping in recent months. The group is now ranked No. 184 out of the 197 industry groups IBD covers. It was ranked No. 80 six months ago as the eclectic batch of retailers offered unique products that customers were willing to splurge on, like health and beauty beauty and pet supplies.
Eeesh. Fast-growing cosmetics chain Ulta (ULTA) has taken to shooting itself in the foot of late, first losing a CEO a month ago and this week projecting slower-than-expected near-term sales growth, sending its shares into repeated nosedives, as seen in a chart
As Amy Merrick reported on YCharts earlier this month, the the real threat, once Ulta finds a permanent CEO and gets its operations and expectations in sync, could be Amazon (AMZN), the Suicide Bomber of Retail. The online retailer cuts prices in many markets, ruining the results of competitors, like Best Buy (BBY), and its own, as well.
As the prior YCharts piece noted: “William Blair analyst Mark Miller notes that Amazon’s prices are, on average, 15.7% lower than Ulta’s for the same products. In a randomly selected basket of Ulta items, Amazon carried 74% of them, up from 69% in a previous survey.”
You can't go to Amazon and try out lipstick colors, but once you have a favorite you can certainly buy it cheap online.
Jeff Bailey, The Editor of YCharts
How do you know they are done buying I saw all the shares were sold on ask price in last 5 min. I will be worried all weekend if I was short like you. I say we might see $80 on Monday after short squeez.
here is some good news
Ulta Salon (ULTA), a retailer of beauty products, is sinking after the company reported stronger than expected fourth quarter results but provided weaker than expected guidance for the current quarter. Ulta said that its business had experienced "choppiness" last quarter and in the early part of this quarter, and that consumers were utilizing its coupons and promotions at a greater rate during both periods. The company expects its earnings per share growth for its current fiscal year to be at the low end of its long-term guidance of 25%-30%. Meanwhile, Ulta stated that it would make significant investments in its business during fiscal 2013 and that these investments would reduce its earnings per share by 13c in that period. Despite those elements of its forecast, several research firms recommended buying Ulta's stock on today's weakness. Ulta's margins are expected to drop in the first quarter, but downward pressure on margins should lessen later in the year, Sterne Agee analyst Ike Boruchow wrote. Moreover, the company still has many growth opportunities over the long-term, as it plans to build many more stores and can gain market share in its large, fragmented market, according to the analyst. Credit Suisse upgraded the stock to Outperform from Neutral, as the firm believes that the company's problems are temporary and that it can grow at a 25%-30% rate going forward. In late morning trading, Ulta Salon sank $12.42, or 14%, to $75.95.
Ulta Salon ULTA was downgraded from Outperform to Perform, Oppenheimer said. Company is seeing choppy customer demand.
Ulta Salon was upgraded to Outperform from Neutral, Credit Suisse said. $110 price target. Company is attractively valued, following a 25% pullback.
Ulta slumped 14% on Friday after the company gave a disappointing first-quarter outlook and said this year's per-share profit growth will be at the low end of its long-term target range. Many analysts said they still like the stock. Credit Suiss
More on Ulta Salon (ULTA): Q4 handily beats across the board on a 30% rise in total revenue. Net profit rose 39% on strong sales gains from its new and existing stores. Its Q1 forecast falls short of Street expectations however, now expecting its EPS in a range of $0.60 to $0.63 on revenue of $568M to $577M. Consensus EPS estimates are for $0.72 on revenue of $580M. Shares are -14% AH.
Ulta Salon, Cosmetics & Fragrance (NASDAQ:ULTA): The company provided weaker Q1 guidance than predicted, which causes Sterne Agee to believe that the gross margin pressure on the company will weaken, and the firm continues to view the company as one of the most attractive long-term growth stories in retail. The firm keeps its Buy rating and a $90 price target on the stock. Also, after the company announced its guidance, JPMorgan recommended buying the Ulta shares into the sell-off after the company’s disappointing guidance. The firm keeps its Overweight rating but reduces the price target to $92 from $115.
According to Baird, the back-weighted guidance for the company has caused some confusion, but the firm continues to see the potential for better than expected results due to effective execution,rapid unit growth, comp momentum, and strong pipeline of new products. The firm predicts that the valuation will continue to be under pressure until investors gain greater visibility but would use the weakness as a buying opportunity. The firm reiterates its Outperform rating but reduces its price target to $102 from $114 on the stock
At least Credit Suisse is holding fast on ULTA as investors continue to flee a stock that's slumped 1/4 in 30 days, with the beauty-products retailer's 2013 forecasts adding to uncertainty amid executive changes. The investment bank sticks with its $110 target on the stock and upgrades ULTA to outperform, saying it still believes "in the growth potential of the concept." It adds, "Yes, there are issues raised primarily from the Q1 guidance on gross margin and Q4 inventory levels, but we believe these are temporary issues and that the underlying story is intact." The company expects to increase its square footage by a big 22% this FY. ULTA is down 15% at $75.29, hitting a 14-month low.
Amid ULTA's downbeat 1Q and 2013 forecast, per-store inventories jumped a sharp 20% last quarter, more than double the company's still-robust same-store-sales increases. But that top-line growth is seen moderating this year, not a good sign if the back room is filled to the gills. That as William Blair notes traffic increases last quarter were the least in more than 3 years. While shares slump 13% premarket to $77.07 after being at $100 a month ago, Oppenheimer downgrades the beauty-products retailer to perform, saying, "Investors are better served moving to the sidelines rather than catching a falling knife.
Ulta Cut to Perform From Outperform by Oppenheimer ULTA
Ulta Raised to Outperform From Neutral by Credit Suisse ULTA
Sterne Agee -- posted already
We are buying shares of Ulta on weakness. Following a below Street outlook — with elevated inventory and investment spend weighing on margins — we believe the long-term thesis (footage growth, category killer, comp consistency) remains intact despite the near-term headwinds. Impressively, management still believes they can grow earnings-per-share 25% in 2013 (on a 52-week basis) which illustrates the strength of the model. Given the weaker than expected outlook, we are lowering our price target to $90 from $102.