Ulta Beauty compeitoin from Kohl’s may be easing, says DA Davidson

DA Davidson thinks Ulta Beauty’s (ULTA) comps are being impacted by slowing industry trends as well as competitive pressures. Losing share in a slowing environment “is a tough position” and as a result, Ulta has seen decelerating comps six quarters in a row and the stock has been an underperformer in 2024, the analyst tells investors in a research note. Kohl’s (KSS) yesterday reported Sephora store within a store sales growth continues to slow, liklely because the program was 95% built out as of Q3, DA says. With only 5% more square footage from the program and no more openings planned, the firm thinks Ulta’s competitive pressure will slow. In addition, Nielsen data show that while Amazon (AMZN) is taking significant share in beauty, the trend seems to have flattened out over the last two months, contends DA. It reiterates a Buy rating on Ulta with a $435 price target ahead of the earnings report on December 5.