Beauty retailer Ulta Beauty is expecting a slowdown in the beauty category, but Israeli cosmetics platform Oddity Tech is defying the trend. Oddity, which uses artificial intelligence (AI) to develop products, reported first-quarter results that exceeded expectations and raised its full-year guidance. The company’s earnings per share were 61 cents adjusted, surpassing the expected 49 cents, and its revenue reached $211.63 million, exceeding the expected $205 million. Net income for the three-month period ending March 31 was $32.98 million, compared to $19.59 million the previous year. Sales rose to $212 million, up 28% from the previous year. Oddity now expects full-year revenue to be between $626 million and $635 million, with adjusted earnings per share between $1.57 and $1.62.
Oddity’s success lies in its use of AI to disrupt the beauty industry. By developing new products and tailoring recommendations, the company believes that beauty and wellness products are best sold online. It aims to improve product selection so that consumers do not need to visit physical beauty shops like Ulta and Sephora. This approach aligns with the growing trend of consumers moving online and seeking high-efficacy products that solve their problems. Lindsay Drucker Mann, Oddity’s CFO, emphasized that there is no slowdown for the company, with both new and existing users showing strong demand for online beauty products.
Ulta Beauty, on the other hand, has experienced a slowdown in the beauty category. CEO Dave Kimbell acknowledged the moderation in growth, which has affected various price points and beauty categories, particularly prestige makeup and hair care. This announcement caused a 15% drop in Ulta Beauty’s stock and also impacted e.l.f. Beauty, Estée Lauder, and Coty.
Despite Ulta Beauty’s concerns, Oddity’s strong performance suggests that there is still significant demand for beauty products online. The industry is undergoing transformation, with consumers shifting their purchasing habits to e-commerce platforms. The convenience and efficacy of online beauty products are driving this change. By leveraging AI and catering to these evolving consumer preferences, Oddity is leading the way in the industry.
In conclusion, Oddity Tech’s impressive first-quarter results demonstrate the potential for AI-driven beauty platforms in the online marketplace. While Ulta Beauty predicts a slowdown in the beauty category, Oddity’s success highlights the transformative power of AI and the increasing demand for high-quality, problem-solving beauty products. As the industry continues to evolve, companies like Oddity are well-positioned to meet the changing needs of consumers and drive future growth in the beauty sector.
