If Ultimate beauty says it expects a slowdown in retail's most resilient category, while one newcomer says it's bucking the trend.
Peculiar technology – the newly public Israeli cosmetics platform that uses AI to develop products – posted first-quarter results that beat expectations and raised full-year expectations.
Here's how the beauty retailer behind the Il Makiage and Spoiled Child brands performed compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Profit per share: 61 cents adjusted versus 49 cents expected
- Gain: $211.63 million versus $205 million expected
The company reported net income of $32.98 million, or 53 cents per share, for the three-month period ended March 31, compared with $19.59 million, or 35 cents per share, a year earlier. Excluding one-time items, Oddity reported earnings of 61 cents per share.
Revenue rose to $212 million, up about 28% from $166 million a year earlier.
The company now expects full-year revenue to be between $626 million and $635 million, compared to previous expectations of $620 million to $630 million. Analysts expected $627 million, according to LSEG. It expects adjusted earnings per share to come in between $1.57 and $1.62, compared with prior expectations of $1.49 to $1.54. Analysts expected $1.51, according to LSEG.
For the current quarter, Oddity expects revenue to be between $185 million and $189 million and adjusted earnings per share to be between 61 cents and 64 cents. Analysts had expected revenue of $186.5 million and earnings per share of 56 cents, according to LSEG.
Shares rose nearly 10% in extended trading on Tuesday.
Oddity, which began trading on the Nasdaq in July, aims to disrupt the legacy beauty and wellness industry by using AI to develop new products and tailor recommendations.
Oddity believes that beauty and wellness products are best sold online, and that consumers don't need to visit beauty stores like Ulta and Sephora if product selection can be improved.
Last month, Ulta Beauty CEO Dave Kimbell warned that demand for beauty products was cooling, sending shares down 15% that day and sending shares of Elven beauty, Estee Lauder And Coty.
“We have seen a slowdown in the overall category,” Kimbell said at an investor conference hosted by JPMorgan Chase. “We came into the year – and we talked about this on our [earnings] called a few weeks ago – expecting the category to moderate. It has [had]As I said: a number of years of strong growth. We didn't expect growth to continue at the pace it has.”
He added that the delay was “a little earlier and a little bigger than we thought.” Kimbell said the downturn has hit awards and beauty categories, but has been more important in prestige makeup and hair care.
Lindsay Drucker Mann, Oddity's CFO, disagreed that the category is slowing down.
“There is no slowdown for us, not with our new users, and not in the way our existing users behave. If anything, this quarter shows that there is a huge demand for online,” Drucker Mann told in an interview CNBC.
“What we do see is an industry that is transforming,” she said. “So consumers are moving online and consumers are turning to high-efficacy products that really solve their problems. These are two really unstoppable trends that we see as driving the industry that we lead.”
Read the full earnings release here.