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Ahead of the Bell: Ulta shares continue tumble

The Associated Press

Shares of Ulta Salon, Cosmetics & Fragrances Inc. plunged in premarket trading Friday a day after the beauty products retailer reported a fiscal fourth quarter forecast that fell well below analysts' expectations.

The Bolingbrook, Ill., company said Thursday it expects to earn $1.07 to $1.10 per share in its fourth quarter on revenue between $853 million and $867 million. It said softer retail trends may continue into the holiday shopping season.

Analysts were anticipating earnings of $1.24 per share on revenue of $893.6 million, according to FactSet.

Ulta also reported fiscal third quarter earnings of $45.4 million, or 70 cents per share, on $618.8 million in revenue. Adjusted earnings came in at 72 cents per share, and that also fell short of Wall Street expectations.

Analysts were anticipating earnings of 74 cents per share on revenue of $622.1 million.

The company expects heightened promotions to weigh on sales and profitability, like many other retailers, Jefferies analyst Randal J. Konik said in a research note. He lowered his price target on the shares to $105 from $120 but kept a "hold" rating on the stock.

"Over the long term we continue to like the company's unique positioning in the beauty space and believe the business model remains sound as the company invests for future growth," the analyst wrote in the Friday morning note.

Ulta shares fell more than 4 percent on Thursday to $118. The stock sank another 18.7 percent, or $22.10, to $95.90 in premarket trading Friday about 45 minutes before the market opening. Its shares had risen 20 percent so far this year.