If you ask Dave Kimbell what's going on in the cosmetics space, the Ulta Beauty ( ULTA -0.59% ) CEO would say there's a general slowdown. And he's been saying it for months now.
Back at J.P. Morgan 's 10th Annual Retail Round Up Investor Conference in April, Kimbell spooked investors when he said: "What we've seen so far is a slowdown in the total category across price points and segments.
That's a bit earlier and a bit bigger than we thought." Ulta Beauty stock is down 26% since Kimbell said this. Then, on May 30, Kimbell discussed Ulta Beauty's plan "To navigate near-term pressures" in the industry and the economy.
In short, the company believes consumer spending is cooling off. However, I'm not sure that all cosmetics companies would agree that there's a general slowdown in the space. Co-founder and CEO of digital-first cosmetics retailer Oddity Tech ( ODD 20.
54% ) Oran Holtzman asserted: "Over the last couple of months, we have heard some of our competitors talk about their businesses slowing. I want to be clear; we don't see any signs of slowing down in our platform." For Holtzman, spending is shifting from stores to online platforms like Oddity Tech.
Oddity's evidence is its 39% net year-over-year revenue growth in the first quarter of 2024. There are reasons to support Holtzman's analysis of the cosmetics space over Kimbell's. Another bit of evidence might be that e.
l.f Beauty ( ELF -3.20% ) has a strong e-commerce business, accounting for 16% of its sales in fiscal 20.