Ulta Beauty Unveils Ambitious Growth Strategy Amidst Challenging Market Conditions
The beauty retailer’s shares took a hit after unveiling its long-term business strategy, which focuses on four key areas: assortment, experience, access, and loyalty. Ulta Beauty aims to drive profitable growth by expanding its store count to over 1,800 locations and growing its loyalty program to 50 million members by 2028.
A Shift in Focus for FY24 Guidance
Despite reaffirming its fiscal year 2024 guidance, the company reduced its net sales projection from $11.5 billion – $11.6 billion to $11.0 billion – $11.2 billion, citing challenging market conditions. Comparable sales are expected to be down 2% to flat, with an operating margin of 12.7% to 13%.
CEO Dave Kimbell’s Vision for Growth
“This plan will enable us to drive strong growth and capture greater market share in beauty and wellness,” said Dave Kimbell, CEO of Ulta Beauty. The company’s board of directors has approved a new $3.0 billion share repurchase authorization, replacing the prior $2.0 billion program.
Long-Term Targets: A Path to Sustainable Growth
Ulta Beauty’s long-term targets for 2026 and beyond include 4% – 6% net sales growth, mid-single-digit operating profit growth, and low double-digit EPS growth. The company will prioritize disciplined capital allocation, focusing on funding operations, reinvesting in the business, and returning excess cash to shareholders.
CFO Paula Oyibo’s Outlook
“While we expect 2024 and 2025 will be transitional years as we manage through near-term category dynamics, over the long-term, we see additional opportunity to expand our leadership position, delivering both profitable growth and compelling shareholder value,” said Paula Oyibo, CFO.
Investor Insights
Ulta Beauty’s stock has lost 6% in the past year, according to Benzinga Pro. Investors can gain exposure to the stock via the Neuberger Berman Next Generation Connected Consumer ETF (NYSE:NBCC) and the Advisor Managed Portfolios Trenchless Fund ETF (NYSE:RVER).
Current Market Performance
ULTA shares are trading lower by 3.6% to $356.20 as of Wednesday. Stay ahead of the curve with Benzinga Edge’s unique market trade ideas and tools.
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