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Ulta’s Stock Soars on Better-than-expected Earnings Amid ‘Healthy’ Traffic Trends

December 1, 2023
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Ulta Beauty Inc.'s stock witnessed a remarkable surge of 8.8% in after-hours trading on Thursday following the beauty company's impressive performance in the third quarter, surpassing consensus estimates for profit, sales, and same-store sales, and providing a more focused guidance.

Based in Bolingbrook, Illinois, Ulta reported a net income of $249.5 million, translating to $5.07 per share for the quarter. This marked a decrease from the previous year's figures of $274.6 million, or $5.34 per share. Despite the dip in net income, sales experienced a notable increase from $2.339 billion a year ago to $2.489 billion in the current quarter.

The FactSet consensus projections had anticipated earnings per share of $4.96 and sales of $2.470 billion, making Ulta's actual performance exceed expectations. Same-store sales demonstrated a noteworthy uptick of 4.5%, surpassing FactSet's prediction of a 3.3% rise.

CEO Dave Kimbell expressed satisfaction with the company's performance, emphasizing that sales, gross profit, and earnings per share all outperformed Ulta's internal forecasts. He highlighted the positive trends in traffic, increased brand awareness, and the expansion of the loyalty program, which now boasts a record 42.2 million members.

During the quarter, Ulta undertook strategic initiatives, including the opening of 12 new stores, relocating two others, and renovating 11 existing stores.

Encouragingly, Ulta revised its full-year sales guidance, narrowing the range to $11.10 billion to $11.15 billion from the previous estimate of $11.05 billion to $11.10 billion. Projections for same-store sales were also revised upwards to an expected rise of 5.0% to 5.5%, compared to the earlier guidance of 4.5% to 5.5%. Likewise, the company adjusted its anticipated earnings per share range to $25.20 to $25.60, as opposed to the prior guidance of $25.10 to $25.60.

While the FactSet consensus forecasts an earnings per share of $25.34 on sales of $11.19 billion, with a same-store sales increase of 5.6%, Ulta's revised guidance sets optimistic expectations for the company's future performance.

Despite a 9% decline in the stock year-to-date, it is noteworthy that Ulta's performance stands out, particularly when compared to the broader market represented by the S&P 500, which has gained 19% over the same period. The after-hours surge in Ulta's stock underscores the positive market sentiment in response to the company's robust quarterly results and strengthened guidance, providing investors with newfound confidence in the beauty retailer's future prospects.

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