Earnings: Ulta Beauty stock falls as Q2 results miss view; cuts FY19 guidance

Ulta Beauty (NASDAQ: ULTA) reported a double-digit increase in second-quarter sales and profit, continuing the recent trend. However, the results missed the market’s expectations, triggering a stock selloff during Thursday’s extended trading session. The management revised down its full-year guidance.

Net earnings of the cosmetics store operator moved up to $161.3 million or $2.76 per share in the second quarter from $148.3 million or $2.46 per share in the comparable period of last year. The bottom line missed Wall Street’s forecast.

Sales up 12%

The profit growth was driven by a 12% annual increase in net sales to $1.67 billion during the three-month period. Analysts had predicted a slightly faster growth. Comparable store sales were up 6.2% year-over-year.

“Looking forward, we have updated our fiscal 2019 outlook to reflect the headwinds we are currently seeing in the US cosmetics market. We remain confident that our guest-centric, differentiated business model will drive continued market share gains and strong returns for our shareholders over the long term,” said Mary Dillon, chief executive officer of Ulta Beauty.

Outlook

For fiscal 2019, Ulta Beauty expects earnings to be in the range of $11.86 per share to $12.06 per share, down from the previous outlook of $12.83-$13.03 per share. The forecast for comparable-store sales growth has been lowered to 4-6% from the earlier estimate of 6-7%. Currently, capital expenditure is expected to be between $340 million and $350 million.

Share Buyback

During the quarter, Ulta Beauty repurchased 791,603 shares for about $271 million. It also opened 20 new stores and ended the quarter with 1,213 stores and square footage of more than 12.75 million.

Also see: Ulta Beauty Q1 2019 Earnings Conference Call Transcript

Shares of Ulta Beauty moved up steadily after losing momentum towards the end of last year and reached a new peak last month. The stock has gained 32% since the beginning of the year, outperforming the S&P 500 index. It closed Thursday’s regular trading session higher but fell sharply during the after-hours session.

Listen to publicly listed companies’ earnings conference calls along with the edited closed caption text