Ulta Beauty Triumphs Despite Economic Uncertainties

Ulta Beauty’s shares experienced a significant boost in after-hours trading last Thursday, following its Q3 earnings call. Despite economic turbulence, consumers have shown a consistent commitment to purchasing beauty products, boosting Ulta’s sales, regardless of perceived inflation or not.

The beauty retailer increased the lower end of its annual sales and earnings forecast, projecting net sales for fiscal 2021 to lie between $11.10 billion and $11.15 billion and an adjusted earnings per share ranging from $25.20 to $25.60. This optimistic outlook, combined with a 4.5% year-over-year increase in comparable sales, indicates a robust performance this quarter. Skincare was Ulta’s fastest-growing segment during this period, showing double-digit growth. The makeup category, on the other hand, remains flat, with a rise in mass brands offsetting a decline in high-end makeup.

Ulta’s CEO, Dave Kimbell, highlighted the healthy traffic both in-store and online, as well as the anticipated surge in promotional activity this holiday season. Kimbell acknowledged the resilience of the beauty sector, pointing to its consistent growth over the past decade, except during the Great Recession and the COVID-19 pandemic. Furthermore, CFO Scott Settersten is set to retire in April 2022 and will be replaced by Paula Oyibo, Ulta’s senior vice president of finance.

“Our insights suggest that consumers are ready to celebrate even as they navigate in an uncertain economic environment.”

Dave Kimbell, Ulta Beauty CEO, via CNBC

However, despite the uptick in physical and online visits, Ulta did see a slight dip in average spending. Transactions increased by nearly 6%, but the average ticket witnessed a 1.4% decline compared to last year.

As of last Thursday, Ulta’s shares were valued at $425.99, establishing the company’s market value at around $20.97 billion. Despite the company shares falling by approximately 9% this year, Ulta continues to demonstrate resilience in a challenging economic environment.