The ultimate beauty beat Wall Street’s fiscal third-quarter expectations on Thursday, amid fears of stiffer competition and slowing demand for makeup and skin care.
The retailer raised its full-year outlook slightly to reflect better-than-expected results. For the fiscal year, it said it now expects net sales to be in the range of $11.1 billion to $11.2 billion, compared with a previous forecast of $11 billion to $11.2 billion.
He said he now expects full-year earnings to be in the range of $23.20 to $23.75. Between $22.60 and $23.50. For the full year, the comparable sales forecast is down 1% to flat. The comparable sales metric tracks sales at Ulta stores open for at least 14 months along with online sales.
Despite the upward outlook, the company expects holiday quarter sales to dip into the low single digits.
In a news release, CEO Dave Kimbell said he was “proud” of the company’s progress and “encouraged by early signs that our efforts to strengthen our market position and drive better performance are gaining momentum.”
Here’s what the beauty retailer reported for the three-month period ended Nov. 2 compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: $5.14 vs. $4.54 was expected
- Income: $2.53 billion vs $2.50 billion expected
Ulta shares rose more than 10% in after-hours trading.
Beauty has been a strong category for many retailers, holding up over the past two years even as inflation stretched family budgets and many shoppers pulled back on discretionary purchases. The resilience of the category was influenced by companies, among others the goal, Walmart, Kohl’s and Macy’sto expand the offer of make-up and skin care.
However, Ulta began to foreshadow potential problems with Kimbell in April Notice of cooling request at an investor conference.
In recent quarters, Ulta’s results have been driven by discerning shoppers and increased competition. the company lost earnings results and in August it cut its full-year outlook after a drop in same-store sales. It was the first time for that dealer He lost hope on Wall Street about four years
The company’s shares also fell. As of Thursday’s close, Ulta’s shares are down about 19% this year, outpacing the S&P 500’s roughly 28% gain over the same period.
For the fiscal third quarter, the retailer reported revenue of $242.2 million, or $5.14 per share, up from $249.5 million, or $5.07 per share. during the quarter of last year.
Revenue was up from $2.49 billion in the year-ago period.
Comparable sales increased 0.6% year over year as the retailer saw a slight increase in traffic and average ticket.
Customer transactions on its website and in stores were up 0.5% year-over-year and the average ticket, spent by shoppers on those visits, was up 0.1% year-over-year.
On the company’s earnings call, Kimbell said new brand launches, expanding digital tools and in-store events helped drive Ulta’s better performance in the quarter.
For example, she said Ulta is selling an exclusive makeup line tied to the release universal‘s “Wicked” movie. It has also added new features to the line, including virtual test drive enhancements and new digital buying guides. And she held in-store events, including workshops where customers were trained by Ulta’s stylists on how to get “salon-worthy bangs.”
For beauty retailers, including Ulta, the holidays are a critical time of year. Kimbell said the company was “encouraged by our performance during Cyber Monday.”
However, it still hinted at a challenging background. He said the company is ready for the shopping season, although “our insights suggest that economic concerns are driving a greater focus on value.”
On the earnings call, CEO Paula Oyibo said the company is following a “cautious view of the consumer and operating environment” and factored that into its outlook. A compressed holiday season with five fewer days between Thanksgiving and Christmas could also hurt sales, he said.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is the distributor of “Wicked.”
