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Piper Sandler has downgraded Ulta Beauty (ULTA) from Overweight to Neutral. Piper Sandler senior research analyst Korinne Wolfmeyer joins Market Domination to discuss her reasoning behind the call and how it is faring against other big names in the beauty industry.

Wolfmeyer points to Ulta's promotions as a "reaction to the competitive intensity we've seen over the past several months and even years, both from brick-and-mortar retail peers such as Sephora that's really ramped up its store count with its partnership with Kohl's (KSS), but also with online players like Amazon (AMZN) that's really ramped up its prestige beauty offering and seen a lot more brands feel comfortable selling on digital platforms like Amazon."

She notes that this competition has placed Ulta under pressure, and that "there's a lot less confidence in the margin opportunity going forward."

She adds that Amazon is a "threat to everybody," as it has a wide offering of products. Wolfmeyer explains that Ulta has a mass offering larger than Sephora, so it may be losing some share to Amazon. While Ulta's target demographic is broad-based, she argues that overall, customers are "diversifying where they're shopping, and they want to shop at all the different retailers. They don't want to stay loyal to just one."

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This post was written by Melanie Riehl