Ulta Beauty Extends Store Closures Amid Rising Coronavirus Fears
The coronavirus outbreak is spreading at an alarming rate. The pandemic has infected more than 600,000 people worldwide and the death toll has crossed 32,000. The cosmetic sector is under major pressure with companies shutting stores, limiting store hours and withdrawing their guidance. In fact, companies are bound to keep stores shut for extended durations withthe situation getting worse with each day. Moreover, companies are bearing the brunt of supply-chain bottlenecks due to travel restrictions imposed to contain further spread of the deadly virus. Certainly, this is a blow to the travel retail network, which plays a vital role in the sales of cosmetic and beauty players.
In connection with this, beauty retailer —Ulta Beauty, Inc. ULTA — recently provided an update related to its store closures. The company informed investors that all stores will remain temporarily shut until it is safe to reopen them again. Prior to this, Ulta Beauty had announced temporary store closure plans from Mar 19 till at least Mar 31. Nonetheless, shoppers can keep purchasing online via Ulta Beauty app or ulta.com.
Well other companies like Nordstrom, Inc. JWN, Guess?, Inc. GES and L Brands, Inc. LB have also taken similar steps to extend their store closure plans and contain the further spread of the deadly coronavirus.
Coming back to Ulta Beauty, management will continue to make payments to its store and salon associates through mid-April alongside offering benefits to workers who have currently enrolled. Apart from these, the company is offering a $2-per-hour wage premium to associates who continue to work in distribution centers to support the company’s e-commerce business amid coronavirus. Meanwhile, Ulta Beauty has also enhanced the sanitization process and is undertaking various practices like social distancing as precautionary measures in its distribution centers.
In an earlier press release, Ulta Beauty had announced thewithdrawal of its recently provided guidance for fiscal 2020, given the current situation and its unpredictable impact on revenues and costs. This was followed by drawing down of $800 million under its revolving credit facility to enhance its financial flexibility amid the crisis. Including the revolver drawdown, the company’s cash on hand was nearly $1.3 billion as of Mar 18. Moreover, management highlighted that they have been reassessing the pace and timing of its stock repurchase program.
We note that shares of this Zacks Rank #4 (Sell) company have plunged 49% in the past year compared with the industry’s decline of 47.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ulta Beauty Inc. (ULTA) : Free Stock Analysis Report
Guess?, Inc. (GES) : Free Stock Analysis Report
Nordstrom, Inc. (JWN) : Free Stock Analysis Report
L Brands, Inc. (LB) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
