After a slew of weaker than expected results from the beauty sector, Ulta bucked the trend, raising its full-year outlook on the back of a strong second quarter.
“During the quarter, we drove growth across all major categories, increased the number of loyalty members, and strengthened engagement with the Ulta Beauty brand,” said Dave Kimbell, chief executive officer. “The beauty category has continued to deliver healthy growth, as consumers maintain their post-pandemic routines and expand their definition of beauty.”
The beauty retailer now expects net sales to come in at a range between $11.05 billion and $11.15 billion. Previously it had forecast $11 billion to $11.1 billion. Estimates for diluted earnings per share have been lifted to $25.10 to $25.60, from $24.70 to $25.40.
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Net sales increased 10.1 percent to $2.5 billion in its second quarter ended July 29, compared to $2.3 billion a year earlier. This was in line with Wall Street forecasts.
Net income rose to $300.1 million compared to $295.7 million, while diluted earnings per share increased 5.6 percent to $6.02 compared to $5.70. Analysts had estimated $5.91 per share.
Skin care continued to be one of its strongest categories, with both prestige and mass components delivering double-digit growth.
Makeup delivered low single-digit growth, driven by strong performance in mass cosmetics, although prestige makeup was challenged as it lapped the significant impact of the Fenty launch last year.
In recent months, Ulta has made a dedicated push into luxury, adding brands such as Dior, Chanel, Hourglass and soon Pat McGrath Labs into around 200 stores. Kimbell declined to disclose its performance in numbers during a call with analysts, but stressed that it is an important part of overall strategy. “We know there’s growth in the luxury side of the business,” he said.
As for inventory shrink — the difference between a balance-sheet inventory and actual stock that is often blamed on organized retail crime, Ulta noted that it increased during the quarter. But Kecia Steelman, chief operating officer, added she is already seeing progress as Ulta moves to lock up fragrance in cabinets in 70 percent of stores by the end of the year.
“What we’re seeing is in the initial stores that we rolled out the locked fragrance cases for, we actually saw sales improvement because we were in stock with the product,” she said.