(Reuters) -Ulta Beauty cut its annual sales and profit forecasts on Thursday, hurt by slowing demand for higher-priced cosmetics and fragrances at its stores.

The company’s shares, which have already fallen about 22% this year, were down 7% in extended trading.

Once pandemic-related restrictions were lifted in the United States, people initially splurged on affordable luxury products, particularly in the beauty category, but with costs of living still remaining high customers are now even cutting back on cosmetics and skincare as well.

Ulta Beauty’s second-quarter comparable sales fell 1.2%, driven by a 1.8% decrease in transactions.

Customer traffic at Ulta Beauty in the United States moderated in recent months, according to data from Placer.ai.

“Our second quarter performance did not meet our expectations,” said CEO Dave Kimbell, adding that the company has updated its annual expectations due to a more cautious outlook.

MAC lipstick maker Estee Lauder also forecast annual profits and sales below market expectations, citing reduced demand for its luxury beauty products in the key China market.

Ulta Beauty’s quarterly net sales rose roughly 1% to $2.55 billion in the second quarter, missing LSEG expectations of $2.62 billion.

The beauty retailer earned $5.30 per share, compared with expectations of $5.46.

It sees annual net sales between $11 billion and $11.20 billion, versus prior expectations of $11.5 billion to $11.6 billion.

The company forecast annual earnings per share between $22.60 and $23.50, compared with its earlier expectation of $25.20 to $26.00.

(Reporting by Juveria Tabassum and Ananya Mariam Rajesh; Editing by Mohammed Safi Shamsi and Maju Samuel)