"Kim is one of the strongest forces in pop culture and we are very excited to expand our partnership with her," Dylan said.
Because of Ulta, Kardashian's entire Instagram after a better show in the store the first week since the makeup line debut.
Shares of Ulta Beauty – a longtime favorite on the market due to impressive growth rates – gained 25% on Friday, while Dillon warned about the state of cosmetics in the US market. With recent product launches failing to excite customers, Dillon has noticed a slowdown in cosmetics purchases, and is beginning to develop.
It is not clear when the tide will turn. But cosmetics make up about 50% of Ulta's business, so any slump is unwanted news.
The cosmetics business is shrinking
"It's clear that cosmetics and the overall US market are challenging. After several years of very strong performance, growth in the makeup category has been slowing down over the last two years, but has recently turned into a negative, ”Dylan explained. Ulta estimates that cosmetics sales declined by an average of one-digit percentages in the first half of 2019 – volatility widened in the third quarter.
"We believe that the major problem leading to this softer cycle in cosmetics is that news and innovation, which have been the focus of most brands this year, simply have not driven the kind of gradual growth, which we have been looking forward to for a while, "says Dylan.
"Over the past few years, we have seen a strong growth in cosmetics driven by new rituals and application techniques such as contouring and eyebrow shaping and innovative new products such as liquid lips, palettes and mines," she added. "This innovation has led to new makeup routines that require new products that have generated strong growth. The latest cycle of innovation simply did not drive those behaviors that lead to a soft cycle for the cosmetics category in the US, since innovations and novelties in market prices did not trigger the expected growth. "
Results Shock Wall Street
Same-store sales grew 6.2%, cooling from 8.1% profit delivered in the previous quarter. Now Ulta is seeing year-over-year sales increase from 4% to 6%, compared to 6% to 7% before.
Year-over-year earnings are expected to be $ 11.86 to $ 12.06 per share. Ulta had forecast $ 12.83 to $ 13.03 per share.
Ulta generally shocked Wall Street, which stumbles on Friday, to issue a downgrade of what was a growth stock.
"For a company that is one o Best successive models in our universe over the past five plus years, today's results were so shocking as one might imagine, "wrote analyst Wells Fargo Ike Boruhov. The analyst lowered his Market Performance rating from Outperform and the price tag to $ 235 from $ 350.
"With their highest order of pressure from a challenging landscape, we fear that Ulta's margin structure may not be equipped handle more moderate trade-offs, and we might see a meaningful diversion if the top line doesn't improve (which we think will be a challenge when industry pressures), "added Boruchow.