Ulta Magnificence on Thursday raised its full-year forecast, after reporting progress in all main classes and topping Wall Avenue’s quarterly gross sales expectations.
The wonder retailer stated it expects internet 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 internet 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 corporate had raised its annual revenue forecast and the higher finish of its full yr gross sales vary in Might.
Within the firm’s information launch, CEO Kecia Steelman stated its outlook for the yr “displays each the energy of our year-to-date efficiency and our warning round how shopper demand might evolve within the second half of the yr.”
Shares of Ulta gained about 3% in prolonged buying and selling, after earlier hitting a 52-week through the common session.
Here is what the corporate reported for the fiscal second quarter in contrast with what Wall Avenue anticipated, in accordance with LSEG:
- Earnings per share: $5.78. It was not instantly clear if that was similar to the $5.08 anticipated by analysts.
- Income: $2.79 billion vs. $2.67 billion anticipated
Within the three-month interval that ended August 2, Ulta’s internet 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. Income elevated from $2.55 billion within the year-ago quarter.
Magnificence has remained a scorching class for customers, whilst they pull again or watch their spending in different discretionary classes. But that is fueled harder competitors for Ulta Magnificence as specialty gamers like LVMH-owned Sephora, big-box retailers like Walmart and shops like Kohl’s have all bulked up their magnificence companies.
For traders, tariffs have been a carefully watched problem for retailers, too. In comparison with different retailers, Ulta shouldn’t be as immediately uncovered. Solely about 1% of the corporate’s merchandise final fiscal yr was direct imports, then-CFO Paula Oyibo stated in Might on the corporate’s earnings name. She stated on the time most of Ulta’s publicity to the upper duties was minor, similar to retailer fixtures and provides.
Even in tumultous financial instances, Steelman stated magnificence and wellness are inclined to fare higher as a result of they “supply a novel sense of consolation and escape.”
“Our perception suggests customers proceed to prudently handle their day-to-day spending and are watchful of pricing developments in response to tariffs,” she stated on the earnings name. “On the identical time, magnificence fans inform us that they are prioritizing their magnificence regimens and stay strongly engaged inside the class.”
Within the second quarter, Ulta’s comparable gross sales grew 6.7% yr over yr, greater than double analysts’ expectations, in accordance with StreetAccount.
Clients 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 stated on the corporate’s earnings name.
Plus, she stated, it is attempting to succeed in extra of its present and potential clients in new methods. It had an activation on the Coachella and Lollapalooza music festivals and was the official magnificence retail accomplice of Beyonce’s Cowboy Carter Tour.
In a rising variety of Ulta shops, it’s dedicating area to wellness-related merchandise, similar to dietary supplements. It has opened a wellness store in about 370 shops and plans to increase them to extra shops this quarter, Steelman stated.
Together with attracting extra clients within the U.S., Ulta has seemed internationally for progress. It introduced in July that had acquired House NK, a British magnificence retailer, from Manzanita Capital. The deal permits Ulta to enter a brand new worldwide market, since House NK has 83 shops in the UK and Eire.
Ulta didn’t disclose the value of the acquisition, saying it funded the transaction with money readily available and Ulta’s present credit score facility and that it might not be materials to monetary outcomes for the fiscal yr.
For Ulta, House NK supplied a cheaper method to enter a brand new market, Steelman stated. Its enterprise, which is able to proceed to function independently, might supply learnings that might form Ulta’s technique, she stated. In comparison with Ulta, its outlets are usually smaller, situated on most important streets in cities and promote primarily status magnificence merchandise.
The corporate is increasing in different worldwide markets, too. Ulta just lately marked the comfortable opening of its first Ulta retailer in Mexico and it plans to open its first retailer within the Center East later this yr, Steelman stated Thursday on the corporate’s earnings name.
Ulta can also be introducing a third-party market, which Steelman stated will launch within the third quarter. A rising variety of retailers, together with Finest Purchase, are launching the marketplaces a method to increase the combination of merchandise they carry with no need extra retailer shelf area or shopping for extra of their very own stock.
On the identical time, Ulta just lately introduced the top of one in all its efforts to increase attain. It reduce ties with Goal, which had opened mini Ulta outlets in additional than 600 big-box shops. The licensing deal, which is able to finish in August 2026, allowed Goal to promote a smaller and rotating assortment of make-up, skincare, hair care merchandise and extra which can be carried by the total Ulta shops. Goal carried these objects on its web site, and it staffed the outlets.
For Ulta, nonetheless, the Goal deal contributed little to its funds, Steelman stated. Royalty income from the deal final fiscal yr “was properly under 1% of internet gross sales,” she stated on the corporate’s earnings name.
Ulta is searching for a brand new CFO as properly. The corporate’s former CFO, Oyibo, left Ulta in late June after a few yr within the function. Ulta has not but introduced her everlasting successor.
