Ulta Salon Slumps on Q4 Guidance
Shares of Ulta Salon Cosmetics & Fragrance (NASDAQ:ULTA) plunged on Friday morning despite strong economic data and broad market gains. Since the company went public back in 2007, investors have poured into the name with exuberance. Year to date, shares of the company were higher by more than 20 percent but unfortunately it now looks like the majority of these gains will be lost for the year. A number of retailers have reported guidance for the fourth quarter in recent weeks. Many traders and investors use these statements as barometers for company strength and sales. Ulta Salon report lower than anticipated guidance following the market close on Thursday.
The company stated that it expects fourth-quarter earnings to come in between $1.07 to $1.10 a share, compared to consensus estimates of $1.24 a share. Net sales during the fourth quarter are expected between $853 million and $867 million. On a year over year comparison, sales in last year’s fourth quarter totaled $758.8 million, including $40 million of sales in the 53rd week of the year, the company said. Again , these predictions came in lower than analysts had anticipated. On the top line analysts, on average, had expected sales of $895 million for the January-ending quarter.
At the time of this writing, shares of the company were lower by a whopping 19 percentage points to $95.45 in the pre-market session. Some analysts and commentators had predicted the lower than anticipated guidance as a result of the company’s reporting conflicts with the SEC. Going into the weekend, many investors and traders will be looking to position themselves for future volatility. Look for the options market to be rather active even on this Friday announcement. Implied volatility should soar as fear and demand for put contracts rises.
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