Ulta Beauty gets squeezed

Ulta Beauty shares fell to a three-month low after the cosmetics retailer said its profit margin was squeezed in the third quarter and warned fourth-quarter sales growth would be slower than last year.

The Bolingbrook, Illinois chain’s stock slumped 13.1 percent to $254.47, its lowest price since early September.

Ulta runs 1,163 retail stores across 50 states. Chief Financial Officer Scott Settersten told analysts that Ulta’s operating margin fell during the quarter, despite higher sales. He blamed steep discounting in the second quarter that continued into the third. “While the clearance event did pressure margin rate more than plan, we’re happy with the end results and are in great shape for Q4,” Settersten said.

Settersten also forecast comparable sales growth would slow to between 7 and 8 percent in the fourth quarter, down from 8.8 percent growth in the same period last year.

Ulta Beauty shares have gained about 17 percent so far this year.