Ulta soars in Q3 amid ‘sustained resilience” of beauty category; comp sales jump

Ulta Beauty reported better-than-expected quarterly earnings, revenue and comparable sales as shoppers kept spending on beauty despite higher prices.

On the heels of its very strong quarter, the beauty giant boosted its outlook.

Customer spending at Ulta was up across all income levels during the quarter, CEO Dave Kimbell said on the company’s earnings call. And the retailer said it is pleased with trends it saw during Thanksgiving weekend, including Cyber Monday.

“While predicting holiday shopping patterns this year is challenging, I am optimistic about the opportunity for Ulta Beauty holiday season,” Kimbell told analysts.

Net income rose 27.5% to $274.6 million, or $5.34 per share, in the quarter ended Oct.29. from $215.29 million, or $3.94 per share, a year ago.

Revenue rose 17.2% to $2.3 billion, which Ulta attributed primarily to the “favorable impact from the continued resilience of the beauty category,” retail price increases, and the impact of new brands and product innovation. Comparable sales jumped 14.6%, on top of a 25.8% increase in the year-ago period.

By category, cosmetics sales increased 44%, hair care rose 21% percent, skin care 16%, fragrance and bath 12%, services 4% and accessories 3%.

“Amidst a challenging macro environment, the Ulta Beauty team delivered yet another outstanding quarter, with strong top and bottom-line results and growth across all major categories and channels,” Kimbell stated in the third-quarter earnings release. “Our third quarter results reflect the sustained resilience of the beauty category and the strong emotional connection and loyalty we have cultivated with our guests. I am confident our business model, which offers unmatched breadth, value, and convenience, is even more relevant today and unlocks opportunities to further delight guests as we continue to lead the beauty category.”

[Read More: Ulta Beauty develops cutting-edge digital experiences via ‘low code’ strategy]

Ulta raised its full-year profit and sales outlook. The company said it now expects full-year earnings of between $22.60 and $22.90 per share and full-year revenue of between $9.95 billion and $10 billion, which is well ahead of its prior forecast of $20.70 to $21.20 per share on revenue of between $9.65 billion and $9.75 billion.

Comparable sales will range from 12.6% to 13.2%, compared to a prior forecast of 9.5% to 10.5% growth.

During the first nine months of fiscal 2022, Ulta opened 35 new stores, relocated 11 locations and remodeled eight stores. It operated 1,343 stores at the end of the quarter.