Wednesday, December 6, 2023

Ulta posts strong holiday quarter as shoppers squeeze makeup into their budgets

Kylie cosmetics show at an ULTA retailer in New York.

Scott Mlyn | CNBC

Ulta Magnificence topped Wall Avenue’s expectations for its holiday-quarter earnings and income, as customers continued to save lots of room of their tighter budgets for magnificence merchandise through the celebration season.

The vacation season meant extra individuals had been shopping for magnificence merchandise to organize for events and to make use of as presents. “We describe it as ‘gifting and glamming,'” CEO Dave Kimbell instructed CNBC.

The reasonably priced luxuries of the sweetness sector have made it a mainstay spending class, at the same time as inflation shrinks client wallets and makes requirements like groceries costlier. Kimbell mentioned that client spending throughout revenue ranges remained robust within the fourth quarter and that prospects usually are not buying and selling all the way down to cheaper choices, regardless of greater costs on the corporate’s merchandise.

Similar-store gross sales grew 15.6% within the fourth quarter, slower progress than the 21.4% soar it posted in the identical quarter the earlier yr, however properly above analysts’ estimates of 8.4%, in keeping with StreetAccount.

Kimbell mentioned that make-up, haircare, skincare and perfume merchandise all noticed double-digit gross sales progress within the fourth quarter. He added that the wellness section, which incorporates gadgets like dietary dietary supplements and silk pillowcases, can be rising after the pandemic put a renewed emphasis on self care.

As a share of web gross sales, gross revenue stayed flat in comparison with the year-ago quarter partially because of greater stock shrink. Kimbell cited organized retail crime as the first motive for shrink, which he mentioned is a “retail-wide problem.”

Here is how the corporate did within the fourth quarter, ended Jan. 28, in contrast with Refinitiv consensus estimates:

  • Earnings per share: $6.68 vs. $5.68 estimated
  • Income: $3.23 billion vs. $3.03 billion estimated

Internet revenue rose 17.8% yr over yr to $340.8 million, or $6.68 per share, from $289.4 million, or $5.41 per share, within the fourth quarter of 2021.

Wanting forward, the corporate is anticipating full-year income for 2023 to be between $10.95 billion and $11.05 billion together with earnings per share of between $24.70 and $25.40. Wall Avenue was anticipating 2023 income of $10.74 billion and earnings per share of $24.25, in keeping with Refinitiv.

Ulta expects nearly all of that progress to come back through the first half of 2023 and stage off within the again half. Kimbell mentioned although greater costs will not essentially come down, the corporate is planning to decelerate the extent of its worth hikes.

The corporate can be engaged on increasing its footprint. It opened 12 new shops within the fourth quarter and is capturing for between 25 and 30 new areas in 2023. The last word objective is to open roughly 100 new shops within the subsequent two years, Kimbell instructed CNBC.

Ulta can be seeking to hold constructing on its partnership with Goal. Ulta shop-in-shops are at present in 350 Goal areas nationwide, and Kimbell mentioned the corporate is on observe to be in as much as 450 extra over time.

Together with brick-and-mortar, the make-up vendor needs to strengthen its digital footprint. Kimbell mentioned the corporate is within the remaining levels of its “digital retailer of the long run,” an effort to revamp its e-commerce platforms.

As of Thursday’s market shut, Ulta shares are up about 11% this yr, outpacing the S&P 500, which is up about 2% yr thus far.

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