Douglas shares drop on weak outlook, profit miss

Shares of Douglas, Europe's largest beauty retailer, fell on Friday after the company reported preliminary third-quarter results that missed market expectations and lowered its full-year guidance.

The company said preliminary Q3 sales declined 2.1% year-over-year to €832 million ($902 million), below the €860 million consensus estimate tracked by Refinitiv. Adjusted EBITDA also came in below forecasts at €101 million, compared with the €108 million expected by analysts.

Douglas attributed the weaker-than-expected performance to subdued consumer demand in its core German market and softer-than-anticipated discretionary spending across Europe. The company noted that inflationary pressures and reduced foot traffic in physical stores continued to weigh on sales.

In response, Douglas revised its full-year outlook, now expecting adjusted EBITDA of €420 million to €440 million, down from a prior range of €450 million to €470 million. The company also lowered its sales growth guidance to between 1% and 3%, compared with the previous 3% to 5% forecast.

Analysts at Jefferies downgraded Douglas to 'Hold' from 'Buy', citing the weaker outlook and margin pressures. The stock fell as much as 6% in early trading, extending losses from Thursday's 3.2% decline.

Douglas, which operates over 2,400 stores across 20 countries, has faced challenges in recent quarters as consumers prioritize essential spending amid economic uncertainty. The company has been expanding its online presence and loyalty programs to offset weaker store performance.

The shares were last down 5.1% at €12.40 in Frankfurt trading, underperforming the broader European retail sector.