3 Beauty Stocks Off to an Ugly Start—Can 1 Stage a Comeback?

Key Points

• Ulta Beauty is the largest beauty retailer in the United States with over 1,380 stores throughout all 50 states and a loyalty program with 44.5 million active users.
• e.l.f. Beauty reported its 24^th consecutive quarter of revenue growth, posting a 31.2% YoY revenue growth of $355.3 million.
• Coty and e.l.f. Beauty issued lowered guidance for the fiscal full year 2025.

However, retail and wholesale beauty stocks have been in a steady decline, with losses accelerating in 2025. Once a Wall Street favorite, Ulta Beauty Inc. NASDAQ: ULTA ended 2024 down 11.24% and is currently down 16.05% YTD. Coty Inc. NYSE: COTY fared worse, closing 2024 with a 43.96% loss and sliding 19.83% YTD. e.l.f. Beauty Inc. NYSE: ELF also struggled, finishing 2024 with a 13.02% drop.

The biggest loser in 2025 so far is e.l.f. Beauty, which has plummeted 41.86% YTD as of Feb. 14, 2025. While the sector’s rough start has been anything but glamorous, beauty stocks may be approaching a capitulation point—setting up at least one for a potential comeback this year.

Ulta Beauty: The Incumbent Retailer Giant

Ulta Beauty is the nation's largest beauty supply retailer, selling mass and high-end premium cosmetics, skincare, fragrances, and hair care products in all 50 states through 1,385 locations.

The company even has store-within-stores at select Target Co. NYSE: TGT department stores.

The compound annual growth rate (CAGR) for Ulta Beauty has been 17% since 2010, with operating margins consistently in the 12% to 15% range. Of the five categories, including cosmetics, skincare, bath & fragrance, and hair care, skincare has been the strongest growth driver at a CAGR of 19.3%.

Ulta Reports Solid FQ3 Earnings and Raised Guidance

Ulta Beauty reported fiscal Q3 2025 EPS of $5.14, beating consensus estimates by 61 cents. Revenues rose 1.7% YoY to $2.53 billion, beating consensus estimates of $2.5 billion. Same-store comps rose 0.6% YoY. The company addressed normalization in the beauty industry as customers remained focused on extracting the most from their tightening budgets.

Ulta Beauty issued upside guidance for fiscal 2025 with EPS of $23.20 to $23.75, up from 22.60 to $23.50 previously forecast, versus $23.13 consensus estimates. Revenues are expected between $11.1 billion to $11.2 billion, versus $11.17 billion. The company expects YoY comps to be negative 1% to flat.

Coty: Pockets of Headwinds Causing Top and Bottom-Line Miss

Coty is a manufacturer of beauty products and also a licensor of fragrance brands. Coty saw weakness in China, which led to weak sales of its color cosmetics. Prestige Fragrances continued to outperform. Coty’s Prestige portfolio of brands includes Tiffany & Co. Burberry, Calvin Klein, Cloe, Davidoff, Gucci, Hugo Boss, Joop!, Kylie Cosmetics, Lancaster, Marc Jacobs and SKKN.

Coty reported fiscal Q2 2025 EPS of 11 cents, missing consensus estimates by 10 cents. Revenues fell 3.3% YoY to $1.67 billion, which also missed consensus estimates of $1.72 billion. The company issued in-line guidance for fiscal FY 2025 EPS of 50 cents to 52 cents vs. 52 cents consensus estimates.

CEO Sue Nabi commented, “Pressure in pockets of our business, which we discussed at length on the last earnings call, namely in China, Travel Retail Asia, Australia, and in Consumer Beauty U.S., cumulatively impacted us even more significantly in Q2.”

e.l.f. Beauty: Flying Too Close to the Sun

e.l.f. Beauty shareholders have been on a rollercoaster ride as shares surged to a high of $221.83 in 2024 but have since unraveled to 52-week lows on its recent earnings miss. e.l.f. Beauty is also a manufacturer of cosmetic and skincare products under its e.l.f. Cosmetics, e.l.f. Skin, Well People, Keys Soulcare, and Naturium brands.

The company’s products had a perfect storm of social media buzz, Gen-Z buyers, value, quality, and affordability in the age of inclusivity. However, the stock has been unraveling just as fast as it surged. Even with the sell-off, shares are still trading at a P/E of 43.2, which is much higher than the 24.3 industry average, and a price-to-free cash flow (FCF) of 173.4, much higher than the industry average of 22.05.

The Higher They Go, The Harder They Fall

e.l.f. Beauty reported fiscal Q3 2025 EPS of 74 cents, missing estimates by 2 cents. Revenues still surged impressively by 31.2% YoY to $355.3 million, crushing $330.4 million. FQ3 was the 24^th consecutive quarter of revenue growth as U.S. market share increased by 220 bps. Softer-than-expected consumption trends at the start of the calendar year 2025 are attributed to the declining category. The company cut its Q4 net sales outlook to a range of negative 1% to 2%,

e.l.f. Beauty lowered its guidance for the fiscal full-year 2025 of EPS of $3.27 to $3.32, down from earlier estimates of $3.47 to $3.53, versus $3.60 consensus estimates. FY 2025 revenue is expected to be between $1.300 to $1.310 billion, down from the previous estimate of $1.315 to $1.335 billion, vs. $1.34 billion.

e.l.f. CEO Mandy Fields commented, “Given softer-than-expected trends in January, we are taking a prudent approach and lowering our outlook for the final quarter of our fiscal year. Our updated outlook for fiscal 2025 reflects an expected 27-28% year-over-year increase in net sales, as compared to an expected 28-30% increase previously.”

The Bottom Line: Ulta Stands Out for a 2025 Comeback

The beauty sector has struggled in 2025, with Ulta, Coty, and e.l.f. Beauty all facing steep declines. While challenges persist, Ulta Beauty appears best positioned for a rebound. Unlike Coty and e.l.f., Ulta benefits from a diverse product lineup, strong customer loyalty, and growing digital engagement.

With 44.4 million active loyalty members and steady earnings, Ulta has the foundation to weather industry headwinds better than its peers. e.l.f. still trades at a premium valuation, while Coty’s exposure to international markets adds risk.

For investors seeking stability in the beauty sector, Ulta could be the best bet for a 2025 turnaround.