During its March 2024 earnings call, Ulta Beauty CEO Dave Kimbell noted a shift in the beauty market: "Over the last three years, the beauty category has experienced unprecedented growth. In 2024, we expect the category will remain healthy, but the growth will moderate to the mid single-digit range, barring a major economic event."
A month earlier, during a CEW briefing, Circana's Larissa Jensen confirmed a slowdown was predicted. As of that presentation, Circana was forecasting 10% growth for the U.S. prestige beauty market, with expansion slowing in 2025 and 2026 to 8% and 7%, respectively.
Overall unit performance is expected to remain steady through 2026, per Circana, with some consumers shifting their spending to mass.
Then, yesterday, during a J.P. Morgan conference, Kimbell reportedly gave an update on the Ulta business, explaining, "We have seen a slowdown in the total category ... We came into the year—and we talked about this on our [earnings] call a few weeks ago—expecting the category to moderate. It has [had], as I said, several years of strong growth. We did not anticipate it would continue at the rate that it's been growing."
A Reuters report quoted Kimbell as saying, "What we've seen so far is a slowdown in the total category across price points and segments. That's a bit earlier and a bit bigger than we thought."
He added, "The competitive environment is intense, and we're feeling it particularly in a couple of areas. We lost share in prestige makeup. We've been challenged in hair care."
That said, the retailer remains strong in luxury makeup and premium fragrance.
The retailer is now anticipating "comparable sales for the first quarter of the year to come in at the lower end of the first-half guidance for low single-digit growth," per Reuters.
Some of Ulta's challenges have less to do with the market than with healthy competition, Quartz points out, with Sephora's Kohl's partnership placing stores in close proximity with Ulta shops.
