Shares of Ulta Beatty (ULTA) fell 15% on Wednesday after the company warned that demand appears to be cooling. Anthony Chukumba, managing director of Loop Capital Markets, told Yahoo Finance that the announcement was “a little surprising, given that the beauty retailer announced its results just three weeks ago. ” he said.
Mr. Chukumba recently downgraded Ulta’s stock to Hold based on the stock’s valuation. But there are some things that give beauty retailers an edge over their competitors. Chukumba points out that Ulta has a diversified product mix, carrying both prestige and drugstore brands. He also notes that some stores have spas, and in general, those stores tend to be less intimidating than other stores. Chukumba said Ulta’s most important benefit is its loyalty program, claiming the company has the “most attractive” program.
Watch the video above to hear Chukumba explain why cosmetics are not an optional purchase for some customers.
Check out the full interview with Anthony Chukumba. For expert insights and the latest market trends, click here to watch the full episode of Market Domination.
Editor’s note: This article was written by Stephanie Mikulich.
