Ulta Beauty (ULTA) is down 6% despite posting yet another strong quarterly report.
Second quarter EPS came in at $1.83 vs. $1.72-1.77 guidance. Same-store sales grew 11.7% vs. 10-12% guidance. That's a very impressive number on top of a +14% comp last year, but it also narrowly missed the Street's expectation. EPS guidance for the third quarter was also a bit light.
One other blemish: the company spent $126.5 million buying back its stock at an average of $273.56/share during the quarter. Still, Ulta raised guidance for the full year.
The company plans to achieve comparable sales growth of ~10% to 11%, including the impact of the e-commerce business, compared to previous guidance of 9% to 11%; grow e-commerce sales in the 50% to 60% range, compared to previous guidance of 50%, and deliver EPS growth in the high twenties percentage range, compared to previous guidance of mid-twenties percentage range.
One could easily make the case that a less-than perfect report was priced in given ULTA is already down 25% from the highs.
The stock was never really able to break above the 300 level despite continued strong results because of its "full" valuation.
Retail stocks have languished this summer and concerns around increased competition in the cosmetics space have weighed on the stock as of late.
The outlook for the company remains strong, especially relative to pretty much every other retailer. Still, investors are questioning the ~26x PE ratio for the $13.5 billion retailer in the face of slowing growth.