Shares of Ulta Beauty (NASDAQ: ULTA) popped 12.5% on Friday after the cosmetics retailer’s earnings came in far above investors’ expectations.
Ulta’s net sales climbed 21% year over year to $2.3 billion in its fiscal first quarter, which ended on April 30.
Traffic rose 10% as people returned to the beauty-focused company’s stores after coronavirus-related restrictions were lifted. Additionally, Ulta’s average ticket price increased by 7.3%, as shoppers spent more during their visits. Together, this drove an 18% rise in Ulta’s comparable sales.
“Solid execution of our strategies, paired with strong guest demand, fueled our financial performance and continued market share gains,” CEO Dave Kimbell said in a press release.
Ulta’s profitability improved along with its sales. The company’s gross margin expanded to 40.1% compared to 38.9% in the prior-year period, while its operating margin checked in at 18.7%, up from 15.8%.
All told, Ulta’s net income surged 44% to $331.4 million. And its earnings per share, which were boosted by stock buybacks, soared 54% to $6.30. That crushed Wall Street’s estimates, which had called for per-share profits of $4.46.
With people returning to traditional work locations and attending more social events, they’re increasing their spending on items that can improve their appearance. This includes skin and hair care products, as well as other cosmetics. As a leading beauty products retailer, Ulta stands to benefit from this trend perhaps more than any other company.
The retailer’s management appears to agree. Ulta boosted its full-year earnings forecast to $19.20-$20.10 per share, up from a prior estimate of $18.20 to $18.70.
10 stocks we like better than Ulta Beauty
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now… and Ulta Beauty wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
*Stock Advisor returns as of April 27, 2022