Ulta Beauty boosts outlook, as shoppers keep splurging on makeup

Earnings

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Shoppers line up outside of Ulta Beauty before the 6am opening on Black Friday.
Aimee Dilger | LightRocket | Getty Images

Ulta Beauty on Thursday boosted its outlook and surpassed Wall Street’s quarterly earnings and sales expectations, as shoppers kept replenishing their makeup bags even while paying more at the grocery store.

CEO Dave Kimbell said as shoppers weigh their purchasing decisions amid rising prices, they are still choosing to spend on beauty. In a news release, he said Ulta’s results “reflect the sustained resilience of the beauty category and the strong emotional connection and loyalty we have cultivated with our guests.”

Shares of the company touched a 52-week high of $477.08 on Thursday and rose another 3% in aftermarket trading.

Here’s how the company did in the three-month period ended Oct. 29, compared with Refinitiv consensus estimates:

  • Earnings per share: $5.34 vs. $4.15 estimated
  • Revenue: $2.34 billion vs. $2.21 billion estimated

Net income rose 27.5% to $274.6 million, or $5.34 per share, from $215.29 million, or $3.94 per share, a year ago.

Comparable sales soared by 14.6% year over year. That growth comes on top of a 25.8% jump in the year-ago period and far surpasses the 8.8% increase that analysts expected for the third quarter, according to StreetAccount.

The retailer said it now anticipates full-year earnings of between $22.60 and $22.90 per share and full-year revenue of between $9.95 billion and $10 billion. That’s well higher than a prior forecast of between $20.70 and $21.20 per share on revenue of between $9.65 billion and $9.75 billion.

The increased guidance also topped Wall Street expectations: Analysts had been looking for full-year projections of $21.40 earnings per share and $9.77 billion in revenue.

The company is estimating for the full year its comparable sales will come in 12.6% to 13.2% higher than the year-ago period, versus a prior forecast of 9.5% to 10.5% growth.

The company said its strong third quarter was due in part to selling products at a higher price point.

Ulta reported a profit margin of 41.2%, significantly above the 39.6% it reported in the year-ago period and the 39.3% that analysts had forecast, according to StreetAccount estimates.

As of Thursday’s close, Ulta shares are up about 15% so far this year. That compares to the S&P 500, which is down about 14% year to date. Shares of the company closed at $472.53, bringing the company’s market value to about $24 billion.

This story is developing. Please check back for updates.

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