Shares of Ulta Beauty, Inc. (NASDAQ: ULTA) were down 1% on Friday. The stock has dropped 15% over the past three months. The retailer is steering through a dynamic consumer environment and a rapidly changing and highly competitive beauty landscape, which present a fair share of challenges. The company has laid out a number of strategies to tackle these issues and drive growth in its business.
Ulta Beauty Unleashed
As mentioned on its most recent earnings call, Ulta Beauty is seeing a radical change in the beauty landscape. As this segment continues to evolve, customer expectations are increasing and competition is heating up. Against this backdrop, the company lost market share in the beauty category and faced execution challenges in its stores. It has identified the areas that need change and is working on improving them.
ULTA’s business plan, which it has named Ulta Beauty Unleashed, is centered around three main priorities which are to drive core business growth, scale new accretive businesses, and realign its foundation for the future.
The first priority of driving core business growth is focused mainly on brand-building, personalization, and digital acceleration. The company plans to improve its assortment by focusing on exclusive, emerging and established brands. It is also working on driving better engagement with guests using a more personalized approach, and building its digital capabilities with new and enhanced features on its app and website.
The second priority is to scale new and accretive businesses to take advantage of growth opportunities and stay resilient in a fast-changing environment. In 2025, Ulta’s main initiatives will be to focus more on the wellness category, launch a new marketplace that will expand its e-commerce presence and help it offer a broader range of products to customers, expand its international presence, and enhance its Ulta Beauty Media offering.
The third priority is to realign the foundation for the future by streamlining the cost structure, focusing resources on higher growth areas, and making changes within the organization to ensure smooth operations.
ULTA remains optimistic about the strength and resilience of the beauty category and it anticipates healthy consumer engagement in this segment. It believes its business plan will help it build on its strengths and help drive growth over the long term. The company’s long-term targets include revenue growth of 4-6% and low double-digit EPS growth.
Q4 performance
In Q4 2024, Ulta Beauty’s net sales decreased nearly 2% year-over-year to $3.5 billion. Comparable sales increased 1.5%. Gross margin rose to 38.2% from 37.7% last year and earnings per share grew 5% to $8.46.
Outlook
For fiscal year 2025, ULTA expects net sales of $11.5-11.6 billion and comparable sales growth of 0-1%. EPS is expected to be $22.50-22.90.
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