Consumer demand boosts Ulta Beauty as Q2 revenue, income, comp sales jump

Citing the “resilience” of the beauty category, Ulta Beauty delivered a strong second quarter and lifted its full-year outlook at a time when many retailers are doing the opposite.

The beauty powerhouse reported that its net income increased 17.8% to $295.7 million, or $5.70 a share, for the quarter ended July 30, compared with net income of $250.9 million, or $4.56 share, in the year-ago quarter. Adjusted earnings were $5.73 a share. Analysts had expected $4.99 a share.

Net sales jumped 16.8 % to $2.3 billion, ahead of Street estimates for $2.21 billion. In reporting the increase, Ulta cited the resilience of the beauty category, the impact of new brands and product innovation, and the easing of COVID-19 restrictions compared to the year-ago quarter.

Comparable sales increased 14.4% (compared to an increase of 56.3% in the second quarter of fiscal 2021),  driven by an 8.3% increase in transactions and a 5.6% increase in average ticket. The company said it had double-digit comp sales growth across all major categories.

“Strong consumer demand and broad-based momentum across our business continued as our teams executed our plans with excellence,” said CEO Dave Kimbell. “As we look to the second half of the year, we continue to operate in a dynamic environment, but I am confident that our unique model and one-of-a-kind assortment, paired with the strong emotional connection guests have to beauty, position us well to continue to deliver profitable growth.”

The company opened seven new stores during the second quarter (and relocated four stores.) During the first six months of fiscal 2022, Ulta opened 17 new stores (and relocated 10 stores), for a total of 1,325 stores. It is on track to open 50 stores for the full year.

Also during the quarter, Ulta launched a retail media network, UB Media.

For the first six month of fiscal 2022, Ulta’s net sales increased 18.9% to $4.6 billion. Comparable sales increased 16.2%. Net income increased 30.3% to $627.1 million

Based on its results for the first six months and sales trends to date in August, Ulta increased its outlook for fiscal 2022. It now expects net sales in the range of $9.65 billion to $9.75 billion, up from its previous range of  $9.35 billion to $9.55 billion. Comp sales are expected to range from 9.5% to 10.5%, up from 6% to 8%.

The company raised its earnings per share range to $20.70 to $21.20 from its previous forecast of $19.20 to $20.10.