By Savyata Mishra
(Reuters) -Cosmetics retailer Ulta Beauty (NASDAQ:ULTA) on Monday forecast a strong fourth quarter and said insider Kecia Steelman will replace retiring CEO Dave Kimbell in the top role, sending its shares up 1.5% in extended trading.
Ulta expects quarterly comparable sales to increase modestly and said its operating margin will be above the high end of its previously expected range of 11.6% to 12.4% of sales, thanks to stronger-than-expected demand during the holidays.
Kimbell spent 11 years with the company and in his nearly four years as CEO, Ulta grew to more than $11 billion in annual revenue. He will serve as an adviser through June 28.
Steelman, currently president and operating chief of Ulta, has served in a variety of executive roles with the company since 2014 and will also join the board.
The CEO transition comes at a time when Ulta is battling a pullback in demand and rising competition in high-end skincare and makeup as years of inflation have strained consumer budgets.
The company slashed its annual sales and profit forecasts twice last year before raising it in December on signs of a rebound in demand during the holiday shopping season.
"While we think Steelman is the right person to replace Kimbell, we remain sidelined as beauty retail competition continues to intensify with new entrants," Jefferies analyst Ashley Helgans said in a client note.
Ulta in December forecast annual sales of between $11.1 billion and $11.20 billion and profit of between $23.20 and $23.75 per share.
It plans to report fourth-quarter results on March 13.
Major companies including Nike (NYSE:NKE), Starbucks (NASDAQ:SBUX) and CVS Health (NYSE:CVS) reshuffled their top brass last year, leaning on experienced executives to take the helm in a bid to quell investor concerns amid economic uncertainty.