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Coronavirus Hits Ulta Beauty, 19 Stores to Shut Permanently

Zacks Equity Research

The novel coronavirus has been wreaking havoc worldwide by killing thousands of people and disrupting the global economy. The beauty space is under major pressure as companies had to temporarily shut stores and delay product launches.

In connection with this, Beauty retailer —Ulta Beauty, Inc. ULTA — recently provided an update related to its store closures. The company informed investors that it will permanently shut 19 stores. These closures are expected to be carried out during the second and third quarter of fiscal 2020. Moreover, management now anticipates opening nearly 30 new stores in fiscal 2020. Notably, Ulta Beauty will restart new-store openings in August. Earlier, the company had envisioned opening 30-40 stores in fiscal 2020. Additionally, Ulta Beauty expects to open more stores in the United States and Canada sometime in fiscal 2021.


 

Further, Ulta Beauty informed that its phased reopening of stores is now complete, as coronavirus induced lockdowns are being lifted. The company called back nearly 50% of its staff who were temporarily furloughed in April amid coronavirus-led store closures. Apart from shopping in stores, customers can opt for Buy Online Pickup in Store or Curbside Pickup. Also, shoppers can keep purchasing online via Ulta Beauty app or ulta.com.

Ulta Beauty, which shares space with Sally Beauty Holdings SBH, had temporarily closed all stores effective Mar 19 to ensure the safety of its customers and employees amid the pandemic. This primarily affected its first-quarter fiscal 2020 performance, with the top and the bottom line deteriorating year over year as well as missing the Zacks Consensus Estimate. Notably, net sales in the first quarter slumped 32.7% year over year due to coronavirus-led store closures. Also, comparable sales (including stores temporarily closed due to the pandemic and e-commerce sales) plummeted 35.3% in the quarter.

We note that shares of this Zacks Rank #4 (Sell) company have lost 20.9% so far this year compared with the industry’s decline of 6.2%.

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Tractor Supply Company TSCO, with a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 12.3%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Office Depot ODP, which carries a Zacks Rank #2, has a long-term earnings growth rate of 6.8 %.

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Ulta Beauty Inc. (ULTA) : Free Stock Analysis Report
 
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