After a stellar 2022 for a big chunk of the sweetness industry, some cracks are starting to indicate in two of the most important players’ financial results — the Estée Lauder Cos. and Ulta Beauty. But is that this an indication that an enormous slowdown is on its way for the industry after having fun with the fruits of a post-pandemic boom?

Based on analysts, the recent results shouldn’t sound the alarm for the industry as an entire, although expect some moderation in growth because the 2022 comps will likely be very tough to beat.

In any case, as consumers returned en masse to beauty post-COVID-19, despite soaring inflation and recession fears, 2022 was a 12 months that Ulta Beauty clocked in annual revenue of greater than $10 billion for the primary time in its 33-year history, E.l.f. Cosmetics was named the perfect performing stock in fashion and sweetness, Coty’s fragrance business was booming and Inter Parfums barreled toward $1 billion in sales.

Still, there are headwinds. Lauder, which last 12 months acquired Tom Ford, once more slashed its full-year forecasts in May for each the highest and bottom lines because of a slower-than-expected recovery in travel retail in Asia, on which it is especially reliant, causing the corporate’s share price to tumble around 18 percent.

Just a few weeks later, Ulta’s rapid pace of growth seemed to be moderating because it unveiled its first-quarter fiscal 2023 results, while it also revealed that inventory shrink, partly attributable to organized retail crime, was putting pressure on its operating margin.

Analysts stressed that Lauder and Ulta are facing very different and really specific issues. “Though they’re all in the identical general family, it’s really quite different because Estée is prestige skincare and global and Ulta is almost one hundred pc domestic,” Oliver Chen, a senior equity research analyst at TD Cowen, told Beauty Inc. “I believe all of them have really different stories. Estée Lauder is pretty different. Their issue has been more Hainan and Korea related to travel retail.”

In addition they appear to have differing prognoses. In a note, Chen detailed that he continues to see Ulta as a best-in-class retailer, but the character of tough comparisons combined with higher promotions and inventory shrink are aspects to watch. “We consider the underlying business momentum stays healthy, but stock could also be volatile within the near term until there may be a transparent visibility into sustained growth and margins,” he said. “We remain outperform-rated but acknowledge that temporary headwinds may limit upside.”

For Lauder, Olivia Tong, an analyst at Raymond James, stressed on the time of its results that there’ll likely be continued volatility in near-term earnings because of travel retail accounting for 27 percent of the corporate’s FY22 sales, significantly higher exposure compared with other beauty firms, and “an unclear strategy on find out how to address the disconnect.”

For the remainder of the industry, while recession fears within the U.S. look like dampening (for this 12 months anyway), most analysts agreed that there’ll likely be some moderation in the general rapid pace of growth the sweetness industry witnessed in 2022.

Beauty surged greater than 15 percent in 2022, a figure that is anticipated to say no over the following couple of years. In its Global Health and Beauty market index, the consultancy GlobalData forecast a worldwide increase of 5.5 percent this 12 months, 2.7 percent next 12 months and 4.9 percent in 2025. In 2026, growth is anticipated to are available in at 4.4 percent, before rising to 4.7 percent in 2027, the ultimate 12 months of the forecast.

For the U.S., it’s forecasting growth of 5.5 percent this 12 months, 1.4 percent in 2024, 3 percent in 2025, 2.2 percent in 2026 and a couple of.5 percent in 2027.

“After that massive boom, we expect the market to decelerate a bit. Obviously it’s not going to be in decline, it’s not reversing, it’s just normalizing after that,” said Tash Van Boxel, a retail analyst at GlobalData.

“We still have gotten that market in growth,” she continued. “I believe that is generally since it’s underpinned by such strong demand. Beauty appears to be quite resilient, even when things are quite tough financially. People still buy skincare, they still buy their usual conditioner, shampoo, all of that, no matter their financial situation.”

Tong agreed that the environment will likely be a bit more difficult as there are very difficult comps to go against, but believes there remains to be significant opportunity, especially if there may be a robust innovation pipeline at work.

“High-end fragrances remain very, very strong. Prestige hair can be an area that as a category has been expanding, and makeup now starts younger and persons are using more products,” she told Beauty Inc.

And after all, there could still be some standout individual performances. Take E.l.f., which saw net sales jump 78 percent to $187.4 million within the three months ended March 31, blowing through Wall Street forecasts and marking its seventeenth consecutive quarter of growth.

“We reiterate our Buy rating and lift our PO to $120 from $105 prior on our increased estimates,” said Bank of America research analyst Anna Lizzul in a note. “We consider this premium multiple is warranted as the corporate remains to be in a high growth phase and continues to diversify its portfolio and customer base.”