Ulta Beauty, Inc.

Ulta Beauty, Inc. Accused of Selling Used Products as New

Purchasers of Ulta Beauty, Inc. (ULTA) filed a securities class action complaint against the company’s officers and directors for alleged violations of the Securities Exchange Act of 1934 between March 30, 2016 and February 23, 2018. According to the complaint, Ulta represented that the company’s returned merchandise policy “does not permit the resale of used, damaged, or expired products” and that Ulta aimed to ensure that only the highest quality products are sold in its stores and online. Contrary to these representations, Ulta engaged in the widespread practice of reselling unsanitary used cosmetics as new. On February 9, 2018, media outlets reported that a consumer class action had been filed against Ulta alleging that Ulta was repacking returned cosmetics and re-shelving them alongside unblemished products to sell at full price. Then, according to a CBS News report on February 23, 2018, a former Ulta employee revealed that Ulta management frequently pressured employees to resell used products. Since news of Ulta’s surreptitious practices became public, Ulta’s stock fell nearly 9% to close at $198.93 per share on February 26, 2018.

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