In spite of global resilience in the hair & beauty sector, market trends are leading some companies to be more cautious in their forecasts. The American Company, Ulta Beauty, in predicting a levelling off in beauty sales, despite good performance in Q1.
Ulta Beauty’s Q1 fiscal 2024 net sales totalled $2.7 billion, a 3.5% increase year-over-year. E-commerce sales increased by 1.6%: results driven by a 1.3% increase in transactions and a 0.3% increase in average tickets.
Q1 2024 net income totalled $313.1 million, while gross profit increased 1.4% year-over-year to $1.07 billion.
These are good results, especially considering US retail market sensitivity to changes in consumer mood.
After years of growth in hair & beauty sales, most observers are now predicting some degree of global slowdown. That’s not to say the industry will stop growing, but retail companies are likely to see one-digit growth, while even higher results are expected in the professional arena.
“I remain confident in our differentiated model, the resilience of the beauty category, and our ability to execute against our plans, but we have adjusted our annual guidance as we anticipate the dynamics we faced in the first quarter to continue for the balance of the year,’ said Dave Kimbell, Ulta’s chief executive officer.
According to Ulta, sales in make-up product fell in the mid-single-digit range, while body care remained strong. Mass skin care grew, driven by dermatologist-backed brands. In addition, fragrance experienced double-digit growth, driven by new launches.
Finally, hair care sales rose in the low single-digit range, driven by hair tools and haircare sales associated with seasonal sales events.
Part of the reason of Ulta’s concerns is that the number of beauty sales outlets has grown significantly, especially prestige beauty, with more than 1,000 new ones opening in the last two years in the US alone. Additionally, prestige brands are expanding their online availability as digital reach grows.
Ulta is also concerned about competitors like Sephora x Kohl’s partnership, which has brought the LVMH-owned retailer closer in proximity to many Ulta locations.
Considering the situation, Ulta’s full-year fiscal 2024 forecast points now to year-over-year growth of 2-3%, totalling $11.5-11.6 billion, compared to a previously forecast rise of 4-5%.
