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Wall Street fears Ulta Beauty's ( ULTA ) glow-up may be coming to an end.

On Thursday after market close, the beauty retailer is expected to report second quarter results that depict slower growth compared to years past. Wall Street anticipates revenue to grow 3.4% year over year to $2.62 billion and earnings per share to drop 9% to $5.50.

Same-store sales are expected to increase by 1.38%, far less than the 8% increase seen in 2023 and 14.4% in 2022. Analysts fear consumers are becoming extra mindful about spending while competition is increasing and retail theft remains an issue.

"We think beauty demand may come under pressure in 2024 as consumer budgets remain stressed after two years of elevated rates. We think consumers will lean into shopping closer to refill, shopping for innovation-led solutions, and leveraging consumer rewards," CFRA analyst Ana Garcia wrote in a note to clients.

UBS analyst Michael Lasser anticipates Ulta Beauty will once again lower its 2024 guidance. However, "ULTA shares are still pricing in too much negativity on the long-term growth and margin prospects for this business," he said.

"We don't view ULTA's model as broken or structurally disadvantaged." Rather, it is "digesting several years of outsized category growth" and increased competition, including online players like Amazon and TikTok shops, that has caused investors to worry.

According to a report from foot traffic analytics platform Placer.ai, Ulta Beauty is still seeing outsized foot traffic compared to the rest of the beauty and wellness industry.

On Aug. 14, Berkshire Hathaway ( BRK-A , BRK-B ) revealed in a regulatory filing that it bought 690,106 Ulta shares in Q2, worth roughly $266 million as of the end of June, Yahoo Finance's Edwin Roman reported.

At the time, BMO Capital Markets managing director Simeon Siegel told Yahoo Finance that the move provided "a big stamp of approval for Ulta Beauty." Since Aug. 14, shares are up more than 11%.

This Q2 report comes as shares have been under pressure so far this year, down nearly 25% since January, compared to an 18% gain for the S&P 500 ( ^GSPC ).

Ulta's stock is up more than 50% in the past five years, benefiting from a boom in beauty and wellness post-COVID. However, it has underperformed the broader market; the S&P 500 is up more than 90% during the same period.

The earnings breakdown

Here's what Wall Street expects from Ulta Beauty in Q2, compared to what it reported in the same time period last year:

Following its fiscal first quarter results, the company lowered its fiscal 2024 outlook. This year's revenue is now expected to be in the range of $11.5 billion to $11.6 billion, down from $11.7 billion to $11.8 billion. Same-store sales are expected to grow in the range of 2% to 3%, compared to the previously expected 4% to 5%.

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BrookeDiPalma