Shares of Ulta Beauty (ULTA -10.83%) were pulling back today as investors reacted to the surprise departure of CEO Mary Dillon and disappointing guidance for 2021 as the cosmetics and salon chain turned in its fourth-quarter earnings report.
The stock was down 6.9% as of 12:02 p.m. EST on the news.
In a difficult environment, the company delivered a solid fourth-quarter report, reporting a decline of 4.8% in comparable sales, while revenue fell 4.6% to $2.2 billion, though that was still better than the analyst consensus at $2.08 billion.
Expenses rose slightly as a percentage of revenue, and operating income fell from an adjusted total of $254.7 million in the quarter a year ago to $224.3 million. On the bottom line, adjusted earnings per share slipped from $3.83 to $3.41, but that easily beat expectations at $2.35.
"The Ulta Beauty team delivered better-than-expected results for the fourth quarter," Dillon said. "Strong, enterprisewide execution of our plans, combined with improving trends in consumer demand, resulted in solid results across multiple metrics, including sales, transactions and profitability."
However, the real news wasn't the quarterly earnings report, but Dillon's decision to step down in June after eight years at the helm, though she will remain on as executive chair of the board of directors. Dave Kimbell, who has served as Ulta's chief merchandising and marketing officer and as president, will take over as CEO.
Ulta's guidance for 2021 also left investors wanting more. As it rebounds from the pandemic, the company expects comparable sales growth of 15% to 17%, and called for revenue of $7.2 billion to $7.3 billion, up from $6.15 billion in 2020, but slightly below estimates at $7.32 billion.
On the bottom line, management sees EPS of $8.85 to $9.30, which was below estimates at $10.61. However, given the uncertainty ahead over the coming year, CFO Scott Settersten acknowledged on the earnings call, "visibility into the timing of a demand recovery remains limited," and its forecast is based on Americans wearing masks for an extended time.
That could make Ulta a winner on an accelerated recovery. Even if its guidance proves to be accurate, the stock has been a consistent winner over the years. There's little reason to fret about today's sell-off.