Shoppers line up outdoors of Ulta Beauty earlier than the 6am opening on Black Friday.
Aimee Dilger | LightRocket | Getty Images
Ulta Beauty on Thursday boosted its outlook and surpassed Wall Street’s expectations for quarterly earnings and gross sales, as buyers saved replenishing their make-up baggage even whereas paying extra on the grocery retailer.
CEO Dave Kimbell mentioned as buyers weigh their buying selections and face rising costs, they’re nonetheless selecting to spend on magnificence. On a name with traders, he mentioned buyer spending went up throughout all revenue ranges.
“While it’s hard to know with certainty if we are starting to see consumers trade down — as the only beauty retailer that offers a wide variety of prices from entry-level mass to high-end luxury and everything in between, Ulta Beauty is uniquely positioned to capture any consumer shifts within price points in the beauty category,” he mentioned.
Here’s how the corporate did within the three-month interval ended Oct. 29, in contrast with Refinitiv consensus estimates:
- Earnings per share: $5.34 vs. $4.15 estimated
- Revenue: $2.34 billion vs. $2.21 billion estimated
As buyers decide the place to splurge and the place to chop again, magnificence has jumped out as a extra resilient class. Target, for instance, known as out the class as a brilliant spot even because it disappointed on third-quarter earnings and reduce its holiday-quarter outlook. Many of its big-box shops have a mini Ulta store inside. Kohl’s, which pulled its full-year forecast, additionally mentioned magnificence is driving gross sales. It has mini Sephora outlets within its shops.
At Ulta, comparable gross sales soared by 14.6% yr over yr. That progress comes on high of a 25.8% soar within the year-ago interval and much surpasses the 8.8% improve that analysts anticipated for the third quarter, based on StreetAccount.
Kimbell mentioned make-up, skincare, hair care and the perfume and bathtub class all delivered double-digit comparable gross sales progress yr over yr. He mentioned buyers snapped up basis, concealers and blushes in its make-up class. They restocked skincare merchandise to maintain up their routines, and so they tried newer manufacturers and purchased vacation perfume reward units early.
Net revenue rose 27.5% to $274.6 million, or $5.34 per share, from $215.29 million, or $3.94 per share, a yr in the past.
Ulta mentioned it now anticipates full-year earnings of between $22.60 and $22.90 per share and full-year income of between $9.95 billion and $10 billion. That’s properly larger than a previous forecast of between $20.70 and $21.20 per share on income of between $9.65 billion and $9.75 billion.
The elevated steering additionally topped Wall Street expectations: Analysts had been in search of full-year projections of $21.40 earnings per share and $9.77 billion in income.
The retailer is estimating for the total yr its comparable gross sales will are available 12.6% to 13.2% larger than the year-ago interval, versus a previous forecast of 9.5% to 10.5% progress.
Along with seeing rising gross sales, the corporate mentioned its robust third quarter was additionally due partially to promoting merchandise at a better worth level.
Ulta reported a revenue margin of 41.2%, considerably above the 39.6% it reported within the year-ago interval and the 39.3% that analysts had forecast, based on StreetAccount estimates.
Ulta is equipped for the vacation season, a time when buyers flip to its shops to prepare for events and to search for presents. So far, Chief Financial Officer Scott Settersten mentioned, the retailer is happy with traits it noticed throughout Thanksgiving weekend, together with Cyber Monday.
He acknowledged, nonetheless, that the corporate nonetheless has key gross sales weeks forward. He mentioned its fourth-quarter outlook elements in “the expected resilience of the beauty category as well as potential risks
from shifts in consumer spending, increased points of distribution for prestige beauty and higher promotional activity.”
As of Thursday’s shut, Ulta shares are up about 15% to this point this yr. That compares to the S&P 500, which is down about 14% yr to this point.
Shares of the corporate touched a 52-week excessive and closed at $472.53, bringing the corporate’s market worth to about $24 billion.