Timely Short Calls on Ulta Beauty Pay Off After Surprising Cut

(Bloomberg) -- Ulta Beauty Inc. shares are on pace to tumble by the most ever and erase the stock’s impressive 38% year-to-date gain. But not everyone was burned when the beauty retailer slashed its year profit forecast.

With the stock’s 29% plunge, short sellers made $339.1 million in daily mark-to-market profits Friday, turning them positive for the year, according to S3 Partners’ Ihor Dusaniwsky. Through Thursday, these bears were in the red by about $205 million, he said.

The short positions in Ulta shares have been “steadily increasing” since the middle of March, Dusaniwsky told Bloomberg in an email. Short interest is currently 6.25% of float, representing around $1.19 billion.

From a year-to-date low of 1.45 million shares shorted on March 14, the same day that Ulta reported better-than-expected fourth-quarter earnings, shorts have increased by 2.07 million shares, or 143%. The stock had gained 8% since the last earnings report through Thursday’s close.

In August alone, short interest increased by 26%, as Ulta’s stock fell about 3% through Thursday.

The short positions in Ulta shares have been “steadily increasing” since the middle of March. Dusaniwsky told Bloomberg in an e-mail. Short interest is currently 6.25% of float, representing around $1.19 billion.

To contact the reporter on this story: Janet Freund in New York at jfreund11@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Steven Fromm, Will Daley

©2019 Bloomberg L.P.