06:23 AM EDT, 03/15/2024 (MT Newswires) -- Ulta Beauty's ( ULTA ) shares dropped early Friday after the beauty retailer issued a downbeat fiscal 2024 profit outlook at the midpoint, while it expects its operating margin to be lower than the previous year.

Per-share earnings are anticipated to be in a range of $26.20 to $27 for the current fiscal year, the company said late Thursday, while the consensus on Capital IQ is for GAAP EPS of $26.73. In fiscal 2023, net income increased 8.4% to $26.03. The stock fell 6.4% in recent premarket trading.

"We are planning EPS to decline in the first half and then accelerate to high single-digit growth in the second half of the year," Senior Vice President of Finance Paula Oyibo said during an earnings call, according to a Capital IQ transcript. Oyibo is set to become the company's chief financial officer at the beginning of next month, succeeding Scott Settersten.

The beauty retailer forecasts its operating margin to be 14% and 14.3% for fiscal 2024, compared with the 15% it reported last year. "For modeling purposes, we expect operating margin to be the most challenged in the first quarter with meaningful deleverage across (selling, general and administrative) and gross margins," according to Oyibo.

Full-year sales are pegged at $11.7 billion to $11.8 billion while comparable sales growth is seen at 4% to 5%. The Street is looking for revenue of $11.75 billion and a same-store sales rise of 4.2%. In the just ended fiscal year, sales advanced 9.8% to $11.21 billion while comparable sales inclined 5.7%.

For the quarter ended Feb. 3, earnings surged 21% to $8.08 a share, topping the Capital IQ-polled consensus of $7.54. Sales climbed to $3.55 billion from $3.23 billion in the prior-year quarter, just ahead of the Street's view for $3.53 billion.

Comparable sales moved 2.5% higher, above the 2.1% growth modeled by analysts. This was driven by a 4.5% increase in transactions, offset by a 1.9% decline in average ticket. "Reflecting a more normalized pricing environment, we estimate that product price increases contributed about 100 basis points to the overall comp increase," Settersten told analysts on the call.

Gross margin ticked up to 37.7% from 37.6% year-on-year, mainly due to robust growth in other revenue, lower shipping rates and leverage of supply chain costs, largely offset by lower merchandise margin, according to the company. Selling, general and administrative expenses widened to $820.4 million from $762.7 million on an annual basis.

Price: 529.50, Change: -35.94, Percent Change: -6.36