Ulta Beauty on Thursday raised its full-year forecast, after reporting progress in all main classes and topping Wall Street’s quarterly gross sales expectations.
The magnificence retailer mentioned it expects web gross sales of between $12 billion and $12.1 billion, up from its earlier vary of $11.5 billion and $11.7 billion, representing a rise from final fiscal yr’s web gross sales of $11.3 billion. It expects earnings per share of $23.85 to $24.30, up from its earlier vary of $22.65 to $23.20.
It expects comparable gross sales, a metric that takes out one-time components like retailer openings and closures, to develop between 2.5% to three.5%, up from projections of as a lot as 1.5%. The firm had raised its annual profit forecast and the higher finish of its full yr gross sales vary in May.
In the corporate’s information launch, CEO Kecia Steelman mentioned its outlook for the yr “reflects both the strength of our year-to-date performance and our caution around how consumer demand may evolve in the second half of the year.”
Shares of Ulta gained about 3% in prolonged buying and selling, after earlier hitting a 52-week throughout the common session.
Here’s what the corporate reported for the fiscal second quarter in contrast with what Wall Street anticipated, in keeping with LSEG:
- Earnings per share: $5.78. It was not instantly clear if that was akin to the $5.08 anticipated by analysts.
- Revenue: $2.79 billion vs. $2.67 billion anticipated
In the three-month interval that ended August 2, Ulta’s web earnings rose to $260.88 million, or $5.78 per share, from $252.6 million, or $5.30 per share, within the year-ago interval. Revenue elevated from $2.55 billion in the year-ago quarter.
Beauty has remained a scorching class for customers, at the same time as they pull again or watch their spending in different discretionary classes. Yet that is fueled harder competitors for Ulta Beauty as specialty gamers like LVMH-owned Sephora, big-box retailers like Walmart and department shops like Kohl’s have all bulked up their magnificence companies.
For traders, tariffs have been a carefully watched problem for retailers, too. Compared to different retailers, Ulta isn’t as instantly uncovered. Only about 1% of the corporate’s merchandise final fiscal yr was direct imports, then-CFO Paula Oyibo mentioned in May on the corporate’s earnings name. She mentioned on the time most of Ulta’s publicity to the upper duties was minor, resembling retailer fixtures and provides.
Even in tumultous financial instances, Steelman mentioned magnificence and wellness are likely to fare higher as a result of they “offer a unique sense of comfort and escape.”
“Our insight suggests consumers continue to prudently manage their day-to-day spending and are watchful of pricing trends in response to tariffs,” she mentioned on the earnings name. “At the same time, beauty enthusiasts tell us that they’re prioritizing their beauty regimens and remain strongly engaged within the category.”
In the second quarter, Ulta’s comparable gross sales grew 6.7% yr over yr, greater than double analysts’ expectations, in keeping with StreetAccount.
Customers visited extra and spent extra after they shopped on Ulta’s web site and in its shops in comparison with the year-ago quarter. Transactions rose by 3.7% and common ticket elevated by 2.9%.
Ulta added new manufacturers and merchandise that drove purchases within the quarter, together with extra merchandise from Sol de Janeiro, unique Korean magnificence model Peach & Lily and Shakira’s hair care model, Isima, Steelman mentioned on the corporate’s earnings name.
Plus, she mentioned, it is making an attempt to achieve extra of its current and potential clients in new methods. It had an activation on the Coachella and Lollapalooza music festivals and was the official magnificence retail associate of Beyonce’s Cowboy Carter Tour.
In a rising variety of Ulta shops, it’s dedicating area to wellness-related merchandise, resembling dietary supplements. It has opened a wellness store in about 370 shops and plans to broaden them to extra shops this quarter, Steelman mentioned.
Along with attracting extra clients within the U.S., Ulta has seemed internationally for progress. It introduced in July that had acquired Space NK, a British magnificence retailer, from Manzanita Capital. The deal permits Ulta to enter a brand new worldwide market, since Space NK has 83 shops within the United Kingdom and Ireland.
Ulta didn’t disclose the worth of the acquisition, saying it funded the transaction with money available and Ulta’s current credit score facility and that it might not be materials to monetary outcomes for the fiscal yr.
For Ulta, Space NK supplied a cheaper method to enter a brand new market, Steelman mentioned. Its enterprise, which is able to proceed to function independently, might supply learnings that might form Ulta’s technique, she mentioned. Compared to Ulta, its retailers are typically smaller, positioned on essential streets in cities and promote primarily status magnificence merchandise.
The firm is increasing in different worldwide markets, too. Ulta not too long ago marked the mushy opening of its first Ulta retailer in Mexico and it plans to open its first retailer within the Middle East later this yr, Steelman mentioned Thursday on the corporate’s earnings name.
Ulta can be introducing a third-party market, which Steelman mentioned will launch within the third quarter. A rising variety of retailers, including Best Buy, are launching the marketplaces a method to broaden the combo of merchandise they carry with no need extra retailer shelf area or shopping for extra of their very own stock.
At the identical time, Ulta not too long ago introduced the tip of considered one of its efforts to broaden attain. It cut ties with Target, which had opened mini Ulta shops in additional than 600 big-box shops. The licensing deal, which is able to finish in August 2026, allowed Target to promote a smaller and rotating assortment of make-up, skincare, hair care merchandise and extra which are carried by the total Ulta shops. Target carried these gadgets on its web site, and it staffed the retailers.
For Ulta, nonetheless, the Target deal contributed little to its funds, Steelman mentioned. Royalty income from the deal final fiscal yr “was well below 1% of net sales,” she mentioned on the corporate’s earnings name.
Ulta is in search of a brand new CFO as effectively. The firm’s former CFO, Oyibo, left Ulta in late June after a few yr within the function. Ulta has not but introduced her everlasting successor.