Why Ulta Beauty Stock Fell Friday

What happened

Shares of beauty retailer Ulta Beauty (NASDAQ: ULTA) took a hit Friday, falling as much as 12.4%. As of 3:35 p.m. EDT, the stock was down 11.6%.

The stock's decline comes after Ulta's third quarter of fiscal 2018. Shares are likely down because management's sales guidance for its fourth quarter was below the consensus analyst estimate for key metrics.

So what

Ulta reported fiscal third-quarter sales of $1.56 billion, up 16% from $1.34 billion in the year-ago quarter. This was in line with the average analyst estimate for the metric. The company's earnings per share of $2.18 was slightly ahead of a consensus analyst estimate for EPS of $2.16.

Importantly, e-commerce sales during the period increased 42.5% year over year to $170.7 million, accounting for about 11% of the company's total sales. Comparable sales were up 7.8% year over year.

"Ulta Beauty's strong performance in the third quarter reflects continued market-share gains across all major categories, acceleration in our overall comp driven by healthy traffic, excellent new store productivity, and robust e-commerce growth," said Ulta CEO Mary Dillon about the quarter.

Now what

The company's guidance for fourth-quarter sales, however, may have disappointed some investors. The company said it expected fourth-quarter sales to be between $2.09 billion and $2.10 billion. Analysts were expecting fourth-quarter sales of about $2.11 billion.

In addition, some investors may have some concerns about Ulta's plans to open fewer stores in 2019 and 2020, as management opts to be more deliberate about its expansion.

10 stocks we like better than Ulta BeautyWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Ulta Beauty wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of November 14, 2018

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool recommends Ulta Beauty. The Motley Fool has a disclosure policy.