“Beauty Throne” replaced with a new person: Ulta Beauty CEO changed, and holiday results exceeded expectations

Ulta Beauty (ULTA. O) CEO Dave Kimbell will step down immediately, the company announced Monday. He will be an advisor until June 28.

As growth in the beauty products market slows, the cosmetics retailer wants to reinvigorate sales momentum by changing leadership. Kecia Steelman, current president and chief operating officer, will succeed Kimbell, effective immediately. Ulta board member Lorna Nagler said the change was part of the company's succession plan.

“Steelman served as president and chief operating officer, and it was no surprise that he took over as CEO,” D.A. Davidson analyst Michael Baker wrote in Monday's report. “She's been with Ulta for 10 years, and we think this transition has been relatively orderly. ”

Kimbell has joined Ulta since 2014 and has been CEO since 2021, while Steelman He has also served since 2014 and was appointed Chief Operating Officer in 2023.

Ulta stock rose 1.9% to $439.50 per share in after-hours trading. However, in the past 12 months, its share price has dropped by about 11%.

As the peak demand for beauty products during the pandemic came to an end, the market competition became more intense. Companies such as Amazon (AMZN.O) and Sephora continue to seize shares in the high-end beauty market. Furthermore, Warren Buffett's Berkshire Hathaway A (BRK.A.N) sold off after only one quarter of holding Ulta's shares, which also dampened market sentiment.

However, Baker believes the worst phase of losing market share may be over.

The company updated its fourth-quarter earnings forecast on Monday, saying the holiday season's strong performance exceeded expectations. Ulta expects same-store sales to increase slightly and operating margin to be higher than the previous upper limit of the 11.6% to 12.4% guidance range.

Baker said the update supports his view that competitive pressure is at its peak.

“This is the second consecutive quarter where the company's same-store sales are better than expected, which indicates that as Sephora and Kohls' store-to-store plans are fully implemented, the share pressure on Ulta sales will ease. ” he added.