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Ulta Beauty, Inc. (ULTA) is a prominent specialty beauty retailer in the U.S., with a market cap of $19.2 billion. The Bolingbrook, Illinois-based company offers a diverse range of branded and private label products, alongside salon services, through its physical stores and online platforms.
Companies valued at $10 billion or more are generally considered "large-cap" stocks and Ulta Beauty fits this criterion perfectly. Ulta Beauty is renowned for its unique combination of offering both high-end and drugstore beauty products under one roof, combined with in-store beauty services that enhance customer engagement and loyalty.
However, the beauty products retailer has slipped 30.1% from its 52-week high of $574.76, achieved in March. Shares of Ulta Beauty have increased 6.2% over the past three months, lagging behind the broader Dow Jones Industrials Average's ($DOWI) 7.5% rise over the same time frame.
Longer term, ULTA is down nearly 18% on a YTD basis, underperforming DOWI's 11.6% gains. Moreover, shares of Ulta Beauty have dipped 2.3% over the past 52 weeks, compared to Dow Jones' 22.1% returns over the same time frame.
ULTA has shown a bearish trend, trading below its 50-day and 200-day moving averages since April. However, it has recently climbed above its 50-day moving average.
Ulta Beauty has underperformed primarily due to a decline in comparable sales driven by reduced transactions, alongside a shift in consumer behavior. Rising living costs prompted shoppers to cut back on discretionary spending like cosmetics. Moreover, the stock dipped over 4% following its lower-than-expected Q2 earnings release on Aug. 29, with net income of $5.30 per share and revenue of $2.6 billion. The company also cut its annual sales and profit forecasts, citing reduced demand for higher-priced cosmetics and declining customer traffic.
In contrast, its rival, The Estée Lauder Companies Inc. (EL), has also seen a significant drop, with a 41.9% YTD decline and a 43.6% decrease over the past year, underperforming ULTA.
Despite ULTA's underperformance over the past year, analysts are moderately optimistic about its prospects. The stock has a consensus “Moderate Buy” rating overall from the 27 analysts covering the stock. Also, as of writing, it is trading above the mean price target of $401.39.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
