Why Ulta Cosmetics Stocks Sank Wednesday

existJP Morgan Chase (bank) ( J.P. Morgan )At the 10th Annual Retail Roundup Investor Conference.Ulta Beauty (NASDAQ: ULTA)Shares of the company fell on Wednesday following comments from Koon's management. As of 1:20 p.m. EST, Ulta Beauty shares were down 14%.

Gwen's lowering of expectations

Ulta Beauty chief executive officer Dave Kimbell and future chief financial officer Paula Oyibo had a fireside chat at 9 a.m. ET today at the aforementioned conference. According to The Fly, the two warned investors that the company's "year-to-date growth has been slower than expected".

On March 14, Ulta Beauty released its financial guidance for FY2024, saying it expects same-store sales to grow 4% to 5% for the year. however, just 20 days later, Koon said the modest growth in the first half of the year will result in full-year FY2024 business closer to the low end of its guidance.

Today, this negative review spooked investors, which is why Ulta Beauty shares plummeted on an otherwise quiet day.

Is this a typical overreaction?

Judging by the stock's performance, you'd think Ulta Beauty's management would have thrown out guidance. But it didn't do that. It just said that based on current trends, it expects the business to be at the low end of its guidance. To me, this suggests that the market is overreacting today.

That said, given the changes that seem to have taken place over the past three weeks, perhaps some caution should still be taken with Ulta Beauty stock. The current trend could be an early indication of a bigger slide.

From a broader perspective, the cosmetics industry is a resilient one, and Ulta Beauty is one of the stronger players. I think today's decline could be an opportunity for investors with a long-term view.

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JPMorgan Chase is the advertising name partner of The Ascent, a Motley Fool company. jon Quast does not hold any of the above shares. the Motley Fool holds recommended JPMorgan Chase and Ulta Beauty. the Motley Fool has a disclosure policy.

Why did Ulta Beauty shares dip on Wednesday?