Shares of Ulta Beauty tumbled as much as 14.5% on Wednesday after executives flagged a slowdown in demand across categories in the first quarter and stiff competition, weighing on peers elf Beauty, Coty and Estee Lauder.
The beauty retailer now anticipates its total category to increase at a moderate mid single-digit range after years of strong growth.
"What we've seen so far is a slowdown in the total category across price points and segments. That's a bit earlier and a bit bigger than we thought," Ulta Beauty CEO David Kimbell told J.P. Morgan analysts during a fireside chat.
Shares of the company were headed for their worst day since May 26, 2023. Elf Beauty (ELF.N) shares fell as much as 12.2%, tracking their worst day since May 2020. Coty (COTY.N) and Estee Lauder both dropped about 5%.
"The competitive environment is intense, and we're feeling it particularly in a couple of areas. We lost share in prestige makeup. We've been challenged in haircare," Kimbell said.
Resilient demand for luxury makeup brands such as MAC Cosmetics, Clinique and Anastasia Beverly Hills as well as premium fragrances had lifted sales at Ulta in the last three years.
"We believe the decline in shares reflects uncertainty rather than a more tangible understanding of earnings downside," William Blair analyst Dylan Carden wrote in a note.
Ulta last month forecast annual profit below Wall Street estimates as supply chain costs and increased promotions squeezed its margins. In February, Estee Lauder (EL.N) announced it would cut jobs due to challenges in the Chinese market.
Ulta reiterated on Wednesday its comparable sales target of 4% to 5% growth for the year.
