Why We’re Buying the Dip on Ulta Beauty

Here's why Ulta’s post-earnings slide could be a golden opportunity... [Derby City Daily logo] [Derby City Daily logo] Why We’re Buying the Dip on Ulta Beauty By Andy Swan Retailers have a “shrink” problem in 2023. It's an industry term for theft and damaged inventory that’s been popping up more and more this earnings season. Last week, it was causing headaches when a “mob of criminals” ransacked an L.A. Nordstrom (JWN) for $300,000 in merchandise... This week, it was the excuse Dick’s Sporting Goods (DKS) used for falling short of profitability expectations in the second quarter. Dick’s CEO Lauren Hobart called it “an increasingly serious issue impacting many retailers.” And she’s right. Her company shed $3 billion in value on Tuesday as DKS shares sank over 20% on the revelation. Fellow retailer Ulta Beauty (ULTA) has faced its fair share of challenges with inventory shrink, theft, and organized retail crime (ORC). During its second-quarter earnings call last night, Ulta reported a decrease in gross profits as a percentage of net sales “primarily due to lower merchandise margin, higher inventory shrink, and higher supply chain costs.” So far today, Ulta shares have tumbled 4% on the announcement, down 26% from the stock’s $551.43 all-time high in April. And as surprising as this may sound, Ulta's post-earnings “shrink” sink has me thrilled. Not because we’re cynical and want Ulta to fail... or because we were betting against the company... But because Ulta’s pullback could be the “ulta-mate” buy-the-dip opportunity. [And I’ll show you why here today...]( [Click here to continue reading]( Until next time, [Andy Swan's signature] [Andy Swan's signature] Andy Swan Senior Analyst, Derby City Insights 🗞️ Nvidia Post-Earnings Report: Sometimes I Hate Being Right Earlier this week, we warned our Derby City Daily readers that a “buy the rumor, sell the news” event could hit Nvidia (NVDA) and [we were right](. Even with NVDA's incredible results and an initially bullish reaction across the tech sector on Thursday, the stock plummeted through the day from its opening highs and ended the day basically flat. I’m not saying this to brag. I’m saying this because being right means being prepared: It means understanding the market, following the data, and making informed decisions. Forget Nvidia: [The next big AI breakout is in the small-cap players](. Not the trillion-dollar behemoths. We see a massive opportunity ahead... and it all starts with [this tiny $2 AI stock set to soar in 2024](. [More here](. Get Instant Access Click to read these free reports and automatically sign up for research throughout the week. [25 Doomed Blue Chip Stocks]( [How A.I. Investing Can Improve Your Portfolio]( © 2023 TradeSmith, LLC t/a Derby City Insights. All Rights Reserved. 1125 N. Charles Street, Baltimore, MD 21201 To unsubscribe or change your email preferences, please [click here](. [Terms of Use]( | [Privacy Policy](