Ulta Beauty tumbles 11% as profit outlook disappoints and CEO Dillon plans to step down

  • Ulta Beauty dropped 11% on Friday following quarterly earnings the prior evening.
  • Ulta’s earnings-per-share view of $8.85 to $9.30 fell short of Wall Street’s target of $10.61.
  • CEO Mary Dillion will transition to the role of the board’s executive chair.
  • See more stories on Insider’s business page.

Ulta Beauty shares were knocked sharply lower on Friday after the cosmetics retailer’s yearly earnings guidance missed Wall Street’s target. The company also said CEO Mary Dillon will step down from the top role.

The company late Thursday forecast fiscal 2021 per-share earnings of $8.85 to $9.30, which includes the impact of about $850 million in share buybacks. Analysts were looking for earnings of $10.61 per share, according to data compiled by Refinitiv. Ulta’s revenue forecast was $7.2 billion to $7.3 billion, below the average analyst forecast of $7.32 billion.

The company in a separate announcement said Dillon will transition to the role of executive chair of its board of directors, with President Dave Kimbell to succeed her as CEO.

Shares dropped 11% to a low of $308.32 as trading in the regular session got underway. The stock had gained 21% so far in 2021 and has climbed by nearly 68% over the past 12 months.

“Throughout my time with the company, I have worked closely with our board on strategic succession plans, and I believe now is the right time to begin a CEO transition,” said Dillion in the statement, noting that she had led the company for eight years. Kimbell joined Ulta Beauty as chief marketing officer in 2014.

For the fourth quarter ended January 30, Ulta posted adjusted earnings were $3.41 per share, down from $3.83 per share a year ago but higher than expectations of $2.35 per share. Revenue of $2.2 billion was ahead of Wall Street’s projection of $2.08 billion but down from $2.31 billion a year earlier.

Dillon will be nominated to stand for election to the company’s board of directors at its 2021 annual stockholders meeting to be held on June 2.

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