Shares of Ulta Beauty rose in after-hours trading Thursday, as the corporate said its third-quarter sales rose while shoppers showed once more they’re willing to spend on fragrances, skincare and more even when the budget is tight.
The specialty beauty retailer raised the underside end of its range for full-year sales and earnings expectations. It said it expects net sales for the fiscal yr to be between $11.10 billion and $11.15 billion, and comparable sales to range from 5.0% to five.5%. It said adjusted earnings per share for the yr will range from $25.20 to $25.60.
On an earnings call with investors, CEO Dave Kimbell said the retailer saw healthy traffic at its stores and on its website. He said the corporate expects a more promotional holiday season in the sweetness category this yr, however the season is “off to start” and stores are stocked with “each value-first and splurge-worthy items.”
“Our insights suggest that customers are able to have a good time at the same time as they navigate in an uncertain economic environment,” he said.
Here’s what Ulta reported for the three-month period that ended Oct. 28 compared with what Wall Street was anticipating, based on a survey of analysts by LSEG, formerly referred to as Refinitiv:
- Earnings per share: $5.07 vs. $4.95 expected
- Revenue: $2.49 billion vs. $2.47 billion expected
The corporate’s shares rose as much as 10% in prolonged trading.
Ulta also announced a leadership change Thursday. Chief Financial Officer Scott Settersten is retiring in April after nearly twenty years at the sweetness retailer. The corporate said he shall be replaced by Paula Oyibo, Ulta’s senior vice chairman of finance.
Within the fiscal third quarter, net income rose to $249.5 million, or $5.07 per share, from $274.6 million, or $5.34 per share, within the year-ago period. Revenue increased from $2.34 billion within the year-ago period.
Comparable sales, a metric that tracks Ulta stores open at the very least 14 months together with online sales, increased 4.5% yr over yr.
Throughout the quarter, customers made more trips to Ulta’s stores and website, but spent barely less. Transactions went up by nearly 6% and average ticket declined by 1.4% compared with the year-ago period.
Beauty has been certainly one of the most popular categories for retailers over the past yr. At the same time as consumers pull back on other varieties of discretionary purchases, they’ve continued to spend on makeup, face masks, fragrances and more.
That is inspired retailers, including Macy’s, Goal and Kohl’s to lean into the category by adding latest brands, products and square footage. Goal, for instance, has a growing variety of Ulta shops in its stores.
In Ulta’s third quarter, nearly every category saw growth. Skincare was Ulta’s fastest-growing segment throughout the period, posting double-digit growth yr over yr, Kimbell said on an earnings call with investors Thursday. The fragrance and bath category grew by low double digits.
Sales within the makeup category were flat, as mid-single-digit growth in mass brands of makeup offset a decline in prestige makeup, he said. Sales within the hair segment decreased within the low single-digit range, as customers bought fewer hair tools.
Kimbell noted the resilience of the sweetness category in nearly every economic environment. On the earnings call, he referred to data from Euromonitor that showed that the U.S. beauty category has grown within the low- to mid-single-digit range every yr for greater than a decade, except throughout the Great Recession and in 2020 throughout the Covid pandemic.
“While we expect growth will proceed to normalize to historic ranges, we remain confident the category will proceed to grow, barring a macroeconomic event,” he said.
He said customers usually are not only coming to Ulta’s stores and website to hunt latest brands and products but in addition seeing beauty as a part of their wellness routine.
As of Thursday’s close, Ulta shares had fallen about 9% to this point this yr. That compares with the S&P 500, which is up about 19% yr so far.
Shares of the corporate closed at $425.99 on Thursday, bringing the corporate’s market value to about $20.97 billion.