How Ultra beauty says it expects a slowdown in retail’s most resilient category, and an upstart says it’s bucking the trend.
Strange technologya newly public Israeli beauty platform that uses artificial intelligence to develop products posted first-quarter results that beat expectations and raised its full-year guidance.
Here’s how the beauty retailer behind the Il Makiage and Spoiled Child brands performed compared to Wall Street expectations, based on a survey of analysts conducted by LSEG:
- Earnings per share: Adjusted 61 cents vs. expected 49 cents
- Income: USD 211.63 million against the expected USD 205 million
The company reported net income of $32.98 million, or 53 cents per share, for the three months ended March 31, compared with $19.59 million, or 35 cents per share, a year earlier. Excluding one-time items, Oddity saw earnings of 61 cents per share.
Sales rose to $212 million, up about 28% from $166 million a year earlier.
The company now expects full-year revenue to be between $626 million and $635 million, compared to earlier guidance of $620 million to $630 million. According to LSEG, analysts expected $627 million. It expects adjusted earnings per share to be between $1.57 and $1.62, compared with earlier guidance of $1.49 to $1.54. Analysts expected $1.51, according to LSEG.
For the current quarter, Oddity expects sales of $185 million to $189 million and adjusted earnings per share in the range of 61 cents to 64 cents. Analysts expected revenue of $186.5 million and earnings per share of 56 cents, according to LSEG.
Shares rose nearly 10% in extended trading Tuesday.
Oddity, which began trading on the Nasdaq stock exchange in July, aims to revolutionize the existing beauty and wellness industry by using artificial intelligence to develop recent products and tailor recommendations.
Oddity believes that beauty and wellness products sell best online and that consumers will no longer need to visit beauty stores like Ulta and Sephora if product selection can be improved.
Last month, Ulta Beauty CEO Dave Kimbell warned that demand for beauty products was degenerating, causing the company’s stock to tumble 15% that day and hit Elven beauty, Estée Lauder AND What are you.
“We have seen a slowdown in the overall category,” Kimbell said at an investor conference hosted by JPMorgan Chase. “We came into this year and talked about it at ours [earnings] call a few weeks ago – expecting the category to be moderated. It has [had], as I said, several years of mighty growth. We didn’t expect it to continue at the rate it is growing.”
He added that the slowdown occurred “a little earlier and was a little greater than we thought.” Kimbell said the downturn eased across all price and beauty categories, but was more significant in prestige makeup and hair care.
Lindsay Drucker Mann, Oddity’s chief financial officer, disagreed that the category was slowing down.
“We have not seen any slowdown, either in our recent users or in the way our existing users behave. In any case, this quarter shows that there is a huge demand for online services,” Drucker Mann told CNBC in an interview.
“We see that the industry is changing,” she said. “So consumers are moving online and choosing high-performing products that really solve their problems. These are two truly unstoppable trends that we believe are driving the industry we lead.”
Read the full results announcement Here.
