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Why Ulta Beauty Stock Rose 12% in May

By Demitri Kalogeropoulos – Jun 5, 2020 at 10:09AM

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Sales dived during the social-distancing efforts in March and April, but the retailer is ready to reopen for business.

What happened

Ulta Beauty (ULTA 0.89%) outperformed a rallying stock market last month. Shares rose 12% in May versus a 4.5% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The boost put shares back near positive territory so far in 2020, compared with an over 40% drop through mid-March.

A woman having her hair cut at a salon.

Image source: Getty Images.

So what

Investors first reacted to encouraging news that the spa and beauty products giant would be reopening its stores in early May after shutting most locations as part of COVID-19 containment measures. The consumer staples chain followed up that positive report by announcing mixed first-quarter results that showed robust demand in the days leading up to the closures, but sharp declines in the weeks that followed.

Now what

Ulta Beauty's growth trends have already started to recover at its stores, and its booming digital platform should feature prominently in management's rebound initiatives. The bigger question is how the chain can protect its interactive and experimental shopping experience while the coronavirus threat remains, as is likely at least through early 2021.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Ulta Beauty. The Motley Fool has a disclosure policy.

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Ulta Beauty, Inc. Stock Quote
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