In the first fiscal quarter, Ulta Beauty recorded a strong comparable sales gain based on increased traffic as it beat Wall Street sales and earnings estimates.
Ulta posted net sales of $347.1 million, or $6.88 per diluted share, versus $331.4 million, or $6.30 per diluted share, in the year-prior quarter.
For the quarter, Ulta bettered a MarketBeat-published analyst consensus estimate for earnings per diluted share of $6.82 as revenues topped a $2.52 billion estimate.
Comparable sales were up 9.3% based on an 11% increase in transactions and a 1.5% decrease in average ticket versus the year-previous quarter, the company maintained.
Net sales gained 12.3% to $2.63 billion from the year-earlier quarter due to the higher comps, strong new store performance and growth in other revenue. Operating income increased 1% to $442.1 million in the period.
In a conference call transcribed by the Motley Fool, Dave Kimbell, Ulta CEO, noted that the company opened four Ulta Beauty shops in Target stores during the first quarter, ending with 359 locations. The aforementioned other revenue increase was $19 million, primarily due to growth in credit card income and royalty income from the Target partnership.
He observed that category growth in the beauty sector remains healthy but is moderating after two years of unprecedented growth. As category growth normalizes, he added, promotional activity is increasing, but Ulta has no plans to lead promotional intensity. Rather, he said, the company intends to respond as appropriate to protect and expand its market share.
Kimbell pointed out that sales in Ulta’s mass category grew faster than in prestige categories, which established the company as positioned to capture consumer shifts within price points. Although other categories at Ulta tended to gain, the hair category was flat for the quarter. Lower demand for tools, as the company lapped strong newness in 2022, offset growth in hair care products and color.
“The year is off to a positive start as the Ulta Beauty team delivered revenue, operating margin and diluted EPS consistent with our internal expectations,” Kimbell said in announcing the financial results. “Store traffic remained healthy, member growth showed continued strength, we delivered growth across key categories, and we strengthened engagement with the Ulta Beauty brand. While we expect the operating environment to continue evolving, we remain confident in the resilience of the beauty category and in our ability to drive share and profitable growth with our proven business model, a diverse, best-in-class assortment, an industry-leading loyalty program and our world-class team.”
