Ulta Beauty had an attractive third quarter, beating Wall Street estimates on sales and earnings as consumers kept spending to look their best.
Ulta topped a third-quarter $4.09 per diluted share analyst consensus estimate published by MarketBeat as well as a $2.21 billion sales estimate.
Comparable sales advanced 14.6% driven by a 10.7% increase in transactions and a 3.5% increase in average ticket, the company noted.
Net sales gained 17.2% in the quarter to $2.34 billion, Ulta reported, primarily due to the current consumer response to the beauty category, retail price increases and the impact of new brands and product innovation over the past year.
Operating income increased 27.3% to $361.9 million in the year-earlier period.
In a conference call, Dave Kimbell, Ulta CEO, stated that pricing increases contributed more to the company’s comp than last quarter, but he emphasized that the majority of Ulta’s third quarter comp resulted from growth of core product assortment and newness. Sales of new products typically are 20% to 30% of the company’s revenue, he said, and 2022 has been consistent with that tendency. As to categories, skincare, fragrance and bath, hair care, and makeup delivered double-digit comp growth versus last year’s third quarter. Ulta enjoyed double-digit sales growth across both prestige and mass segments, Kimbell added. Mass generally outperformed prestige. However, the evidence hasn’t been such that the company could determine if customers had been trading down. The company’s partnership with Target, although still in early days, has created another touchpoint between Ulta and its loyalty program members, who are a critical priority for the company. Ulta has seen members who have signed up at Target bounce back to its own banner stores, Kimbell said.
“Amidst a challenging macro environment, the Ulta Beauty team delivered yet another outstanding quarter, with strong top and bottom-line results and growth across all major categories and channels,” Kimbell, said in announcing the financial results. “Our third quarter results reflect the sustained resilience of the beauty category, and the strong emotional connection and loyalty we have cultivated with our guests. I am confident our business model, which offers unmatched breadth, value and convenience, is even more relevant today and unlocks opportunities to further delight guests as we continue to lead the beauty category.”
