Ulta Beauty, the popular beauty retailer, experienced a setback as its second-quarter sales fell short of expectations and the company was forced to revise its full-year guidance. The disappointing performance comes amidst a decline in same-store sales and a warning from CEO Dave Kimbell regarding cooling beauty demand.

On Thursday, Ulta Beauty shares declined by 7% in extended trading as the company reported lower-than-expected second-quarter results and adjusted its full-year forecast accordingly. Comparable sales for the quarter dropped by 1.2%, a significant contrast to the 8% increase reported during the same period last year. This underperformance came as a surprise to Wall Street analysts, who had anticipated a 1.2% growth.

In a press release, CEO Dave Kimbell acknowledged the company's disappointment in their second-quarter performance, primarily driven by a decline in comparable store sales. Despite positive indicators in other areas of the business, Kimbell outlined the steps being taken to address the trends that negatively impacted store performance.

As a result of these challenges, Ulta Beauty has revised its full-year same-store sales forecast, now projecting a range of flat to 2% down, compared to the previous guidance of 2% to 3% growth. Further adjustments were made to the full-year revenue and earnings per share forecasts, with estimates now ranging from $11 billion to $11.2 billion and $25.20 to $26, respectively, down from the previous guidance.

The second quarter earnings report revealed that Ulta Beauty's net income amounted to $252.6 million, or $5.30 per share, compared to $300.1 million, or $6.02 per share, during the same period last year. Despite the decline in net income, the company's revenue rose slightly to $2.55 billion from $2.53 billion in the previous year.

Ulta Beauty's recent struggles have been evident in its stock performance, which has suffered since CEO Dave Kimbell first warned about cooling beauty demand back in April during an investor conference. Prior to that, Ulta shares had dropped 32% in 2024 and plummeted 26% in the second quarter alone. However, early this month, the beauty retailer received a boost as Warren Buffet's Berkshire Hathaway disclosed a $266 million stake in the company, causing Ulta shares to surge.

In response to the challenges faced, Ulta Beauty outlined plans to boost sales across several key areas, including product assortment, brand social relevance, enhancing the consumer digital experience, strengthening the loyalty program, and evolving promotional strategies. Additionally, the company revealed its intention to expand its partnership with delivery service DoorDash, test new gamification platforms, and employ new marketing technology to personalize the customer shopping experience later this year.

The coming months will prove critical for Ulta Beauty's efforts to regain momentum and recapture the attention of beauty consumers. As the company addresses the decline in same-store sales and implements strategies to adapt to changing industry dynamics, industry observers and investors will be keenly watching its progress in the highly competitive beauty market.