Ulta Beauty surprised Wall Street on Thursday with better-than-expected fiscal third-quarter results, defying fears of slowing demand and increasing competition in the beauty market. The company raised its full-year forecast slightly, now projecting net sales between $11.1 billion and $11.2 billion, compared to the previous range of $11 billion to $11.2 billion. Earnings per share for the year are expected to rise to between $23.20 and $23.75, up from the earlier guidance of $22.60 to $23.50. However, despite this optimism, Ulta anticipates holiday-quarter comparable sales to decline in the low single digits.
The retailer reported earnings per share of $5.14 for the quarter, surpassing analysts’ expectations of $4.54. Revenue came in at $2.53 billion, slightly ahead of the forecasted $2.50 billion. Comparable sales increased 0.6% year over year, driven by a modest rise in customer transactions and average ticket size. These results, coupled with stronger-than-expected performance, sent Ulta’s shares soaring more than 10% in after-hours trading, a welcome boost after a challenging year that saw the stock drop 19%.
CEO Dave Kimbell expressed pride in the company’s progress and optimism about its strategies to strengthen its market position. He credited the launch of new products, enhanced digital tools, and interactive in-store events for boosting performance during the quarter. For example, the exclusive release of a makeup line inspired by Universal’s upcoming “Wicked” movie and new digital features like virtual try-on tools helped enhance customer engagement. In-store workshops, where customers received styling tips from Ulta professionals, also contributed to the retailer’s stronger-than-expected results.
The beauty sector has proven resilient over the past few years, even as inflation squeezed consumer budgets. This durability has prompted major retailers like Target, Walmart, and Macy’s to expand their offerings of beauty and skin care products. However, Ulta has faced challenges in recent quarters, including a miss in earnings expectations in August for the first time in four years, as it navigates increased competition and evolving consumer behavior. While recent results indicate a recovery, the company remains cautious, acknowledging ongoing economic concerns and consumer focus on value.
With the holiday season underway, Ulta is banking on strong performance to close out the year. The company highlighted encouraging sales through Cyber Monday, supported by promotions and strategic offerings. Still, CFO Paula Oyibo noted the challenges of a compressed holiday calendar, with fewer days between Thanksgiving and Christmas, as well as broader economic pressures. Ulta remains focused on balancing its growth strategies with a cautious outlook on consumer behavior, setting the stage for a competitive but promising year-end performance.
