Ulta Beauty (ULTA) earnings Q1 2024

Ulta Beauty on Thursday laid out plans to boost sales and gain market share after a first-quarter sales slowdown.

Comparable sales, a metric that tracks Ulta stores open at least 14 months along with online sales, increased 1.6% year over year, a stark slowdown from the same period a year earlier when Ulta reported comparable sales growth of 9.3%

“We expect growth to accelerate in the second half of the year, to be between 2% and 4% reflecting the impact of our sales-driving initiatives,” the company’s Chief Financial Officer, Paula Oyibo, said during the company’s earnings call,

Ulta CEO Dave Kimbell in April warned of cooling demand in the beauty category at an investor conference. And while the slowdown was largely anticipated, Kimbell said that it hit the beauty company “a bit earlier and bit bigger” than it had expected.

Kimbell on Thursday acknowledged the company’s market share has been challenged in the past quarters, particularly within the prestige beauty category.

“We are not satisfied with our market share trends and we’re taking actions to reinforce our leadership position and accelerate growth,” Kimbell said during the company’s earnings call, adding that the company will share further long-term plans at its analyst day in October.

Kimbell outlined five key areas in which the company is planning on taking concrete action: strengthening assortment through 25 new brands including Ulta-exclusives with celebrities like Serena Williams and Bella Hadid; accelerating social relevance through scaling its creator network; enhancing the consumer digital experience; leveraging the loyalty program and evolving promotional levers.

The company will also expand its partnership with delivery service DoorDash, where it offers same-day delivery from its stores, and lean in on their app adoption. The Ulta app accounted for 57% of e-commerce sales in the quarter, Kimbell said.

Kimbell also announced the company is testing new gamification platforms and later this year will activate new marketing technology that will help guests personalize their shopping experience.

Shares of Ulta gained about 11% in extended trading Thursday.

Here’s how the beauty company performed during the period compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

• Earnings per share: $6.47 cents vs. $6.24 expected
• Revenue: $2.73 billion vs. $2.72 billion expected

Ulta reported net income for the quarter ended April 24 of $313.1 million, or $6.47 cents per share, compared with $347.1 million, or $6.88 per share, a year earlier. 

Net sales rose slightly to $2.73 billion, up slightly from $2.63 billion a year earlier.

The company lowered its guidance for the fiscal year. Ulta reported that it is now expecting net sales in the range of $11.5 billion to $11.6 billion and comparable sales in the range of 2% to 3%. The company previously guided to full-year net sales of $11.7 billion to $11.8 billion and comparable sales of 4% to 5%.

Ulta also revised its…