Ulta Magnificence (ULTA) earnings This fall 2022

Kylie cosmetics show at an ULTA retailer in New York.

Scott Mlyn | CNBC

Ulta Beauty topped Wall Road’s expectations for its holiday-quarter earnings and income, as buyers continued to avoid wasting room of their tighter budgets for magnificence merchandise throughout the celebration season.

The vacation season meant extra individuals had been shopping for magnificence merchandise to organize for events and to make use of as items. “We describe it as ‘gifting and glamming,'” CEO Dave Kimbell advised CNBC.

The inexpensive luxuries of the wonder sector have made it a mainstay spending category, whilst inflation shrinks shopper wallets and makes requirements like groceries dearer. Kimbell mentioned that shopper spending throughout revenue ranges remained strong within the fourth quarter and that clients should not buying and selling all the way down to cheaper choices, regardless of greater costs on the corporate’s merchandise.

Similar-store gross sales grew 15.6% within the fourth quarter, slower development than the 21.4% bounce it posted in the identical quarter the earlier yr, however nicely above analysts’ estimates of 8.4%, based on StreetAccount.

Kimbell mentioned that make-up, haircare, skincare and perfume merchandise all noticed double-digit gross sales development within the fourth quarter. He added that the wellness section, which incorporates objects like dietary dietary supplements and silk pillowcases, can be rising after the pandemic put a renewed emphasis on self care.

As a proportion of internet gross sales, gross revenue stayed flat in comparison with the year-ago quarter partly as a consequence of greater stock shrink. Kimbell cited organized retail crime as the first purpose for shrink, which he mentioned is a “retail-wide challenge.”

This is how the corporate did within the fourth quarter, ended Jan. 28, in contrast with Refinitiv consensus estimates:

  • Earnings per share: $6.68 vs. $5.68 estimated
  • Income: $3.23 billion vs. $3.03 billion estimated

Web revenue rose 17.8% yr over yr to $340.8 million, or $6.68 per share, from $289.4 million, or $5.41 per share, within the fourth quarter of 2021.

Trying forward, the corporate is anticipating full-year income for 2023 to be between $10.95 billion and $11.05 billion together with earnings per share of between $24.70 and $25.40. Wall Road was anticipating 2023 income of $10.74 billion and earnings per share of $24.25, based on Refinitiv.

Ulta expects the vast majority of that development to come back throughout the first half of 2023 and degree off within the again half. Kimbell mentioned although greater costs will not essentially come down, the corporate is planning to decelerate the extent of its value hikes.

The corporate can be engaged on increasing its footprint. It opened 12 new shops within the fourth quarter and is taking pictures for between 25 and 30 new places in 2023. The last word purpose is to open roughly 100 new shops within the subsequent two years, Kimbell advised CNBC.

Ulta can be seeking to preserve constructing on its partnership with Target. Ulta shop-in-shops are at present in 350 Goal places nationwide, and Kimbell mentioned the corporate is on monitor to be in as much as 450 extra over time.

Together with brick-and-mortar, the make-up vendor desires to strengthen its digital footprint. Kimbell mentioned the corporate is within the ultimate levels of its “digital retailer of the longer term,” an effort to revamp its e-commerce platforms.

As of Thursday’s market shut, Ulta shares are up about 11% this yr, outpacing the S&P 500, which is up about 2% yr thus far.

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