Ulta Beauty beats on the quarter, alleviating the worries over decelerating beauty-product demand and growing competition. Its shares increased more than 10 percent after the company reported during the trading session.
Ulta reported $5.14 earnings per share in the three months through Nov 2, topping a projected $4.54 among analysts. Revenue came at $2.53 billion from quarter-end, just a step above the expected $2.50 billion. Overall, comparable sales grew a little 0.6% year-over-year — and both traffic and average transaction size increased slightly during that period.
The better-than-expected results sent the company’s shares soaring in early trading. It also boosted its full-year outlook. Net sales are expected between $11.1 billion and $11.2 billion, against the prior view of $11 billion to $11.2 billion. Net sales during the holiday quarter could decline by a low single-digit percentage, Ulta warned, which is considered a critical quarter for the company. The net earnings per share is expected to be between $23.20 and $23.75, against prior guidance of $22.60 to $23.50.
The company’s CEO, Dave Kimbell, was pleased with the performance of the company as it noted efforts to strengthen its market position. “We’re encouraged by early signs that our efforts to reinforce our market position and drive improved performance are gaining traction,” Kimbell said in a statement.
Although upbeat, Ulta remains cautious about consumer behavior. Chief Financial Officer Paula Oyibo said the company is taking a “cautious view” on the operating environment, partly because of continued economic uncertainty. The company also mentioned the impact of a shorter holiday shopping season this year because of five fewer days between Thanksgiving and Christmas.
During the third quarter, net income at Ulta was up to $242.2 million down from $249.5 million during the same period a year ago. The brand said its success was due to the new brands that came in, along with digital innovations and even in-store events. Notably, Ulta released exclusive products relating to Universal’s Wicked film and also made its online shop experience more virtual with virtual try-on and digital buying guides.
Although the holiday period is still very important to beauty retailers, Ulta seems well-prepared for success in this front, considering the strategic initiatives going on and the continued appeal of beauty products. Despite this, the company still recognizes that challenges may range from changes in consumer purchasing habits to other external effects of the economy.
