Market Commentary

Ulta Beauty Rises on Beat and Raise Quarter

Abdul Rehman
6 Feb 2024 · 2 minutes read

Ulta Beauty (ULTA:US) shares rose modestly on Friday following the company’s second-quarter earnings report. The beauty products retailer announced better-than-expected comparable sales and increased its full-year profit forecast. 

The results were robust, particularly the outperformance in comparable sales, which rose 8% year-over-year, ahead of the expected 6.6% growth.

The company reported EPS of $6.02, an increase from $5.70 in the same period last year and surpassing the average analyst estimate for EPS of $5.88. Ulta’s net sales reached $2.53 billion, reflecting a 10% YoY increase and exceeding the expected $2.51 billion.

“The Ulta Beauty team delivered another quarter of strong performance, with sales, gross profit, and SG&A expenses all better than our internal expectations. During the quarter, we drove growth across all major categories, increased the number of loyalty members, and strengthened engagement with the Ulta Beauty brand,” said Dave Kimbell, chief executive officer.

On the negative side, the gross margin came at 39.3%, a decrease from the 40.4% reported in the previous year, and below the estimated 40%.

Ulta Beauty said its merchandise inventories stood at $1.82 billion, marking a 9% increase YoY and aligning closely with the estimated $1.8 billion.

When it comes to the FY24 forecast, the company sees EPS to be in the range of $25.10 to $25.60, up from the previously projected range of $24.70 to $25.40 and somewhere in line with the consensus of $25.31.

Ulta Beauty forecasts net sales to range between $11.05 billion to $11.15 billion. It previously projected FY sales of $11.0 billion to $11.1 billion. Analysts were looking for $11.13 billion.

Finally, the company sees comparable sales growth to be in the range of 4.5% to 5.5%, up from the prior range of 4% to 5%. The consensus for FY comparable sales stood at above 5.2%.

Congress members were mostly selling ULTA shares this year. Representatives Ro Khanna, Dan Newhouse, Lois Frankel, and Senator Dan Sullivan were all trading the stock in 2023.