Slices of Ulta Beauty rose in after-hours trading Thursday, as the company said its third-quarter sales rose while shoppers showed at any time a immediately again they’re willing to spend on fragrances, skin care and more even when the budget is tight.
The specialty strength retailer raised the bottom end of its range for full-year sales and earnings expectations. It said it expects net sales for the fiscal year to be between $11.10 billion and $11.15 billion, and comparable in stocks to range from 5.0% to 5.5%. It said adjusted earnings per share for the year will range from $25.20 to $25.60.
On an earnings title with investors, CEO Dave Kimbell said the retailer saw healthy traffic at its stores and on its website. He said the company has a more promotional holiday season in the beauty category this year, but the season is “off to a good start” and stores are stocked with “both value-first and splurge-worthy ingredients.”
“Our insights suggest that consumers are ready to celebrate even as they navigate in an uncertain economic environment,” he bring up.
Here’s what Ulta reported for the three-month period that ended Oct. 28 compared with what Collapse Street was anticipating, based on a survey of analysts by LSEG, formerly known as Refinitiv:
- Earnings per share: $5.07 vs. $4.95 expected
- Proceeds: $2.49 billion vs. $2.47 billion expected
The company’s shares rose as much as 10% in extended trading.
Ulta also suggested a leadership change Thursday. Chief Financial Officer Scott Settersten is retiring in April after nearly two decades at the strength retailer. The company said he will be replaced by Paula Oyibo, Ulta’s senior vice president of finance.
In the monetary third quarter, net income rose to $249.5 million, or $5.07 per share, from $274.6 million, or $5.34 per parcel, in the year-ago period. Revenue increased from $2.34 billion in the year-ago period.
Comparable sales, a metric that alleys Ulta stores open at least 14 months along with online sales, increased 4.5% year at an end year.
During the quarter, customers made more trips to Ulta’s stores and website, but spent slightly minuscule. Transactions went up by nearly 6% and average ticket declined by 1.4% compared with the year-ago period.
Stunner has been one of the hottest categories for retailers over the past year. Even as consumers pull back on other specimens of discretionary purchases, they have continued to spend on makeup, face masks, fragrances and more.
That’s aroused retailers, including Macy’s, Target and Kohl’s to lean into the category by adding new brands, products and square footage. Aim, for example, has a growing number of Ulta shops in its stores.
In Ulta’s third quarter, nearly every category saw extension. Skin care was Ulta’s fastest-growing segment during the period, posting double-digit growth year over year, Kimbell signified on an earnings call with investors Thursday. The fragrance and bath category grew by low double digits.
Sales in the makeup grade were flat, as mid-single-digit growth in mass brands of makeup offset a decline in prestige makeup, he said. On sales in the hair segment decreased in the low single-digit range, as customers bought fewer hair tools.
Kimbell noted the springiness of the beauty category in nearly every economic environment. On the earnings call, he referred to data from Euromonitor that flaunted that the U.S. beauty category has grown in the low- to mid-single-digit range every year for more than a decade, except during the Illustrious Recession and in 2020 during the Covid pandemic.
“While we expect growth will continue to normalize to historic varies, we remain confident the category will continue to grow, barring a macroeconomic event,” he said.
He said customers are not merely coming to Ulta’s stores and website to seek new brands and products but also seeing beauty as part of their wellness plan.
As of Thursday’s close, Ulta shares had fallen about 9% so far this year. That compares with the S&P 500, which is up more 19% year to date.
Shares of the company closed at $425.99 on Thursday, bringing the company’s market value to about $20.97 billion.