Ulta Beauty Q3 earnings smash estimates; comp sales jump 6.3%
Ulta Beauty Inc. reported another strong quarter as shoppers continue to spend on fragrances, skin care and cosmetic items even as they pull back on other discretionary categories.
The beauty giant topped Wall Street’s third-quarter top and bottom line expectations and hiked its full-year sales and earnings outlook for the second time this year. On Ulta’s earnings call, CEO Kecia Steelman said that “beauty engagement remained healthy”
Ulta reported net income of $230.9 million, or $5.14 per share, for the quarter ended Nov. 1, compared with $242.2 million, or $5.14 per share in the year-ago period. Analysts had expected earnings of $4.61 per share.
Net sales increased 12.9% to $2.9 billion, topping analysts’ estimates of $2.71 billion, primarily due to increased comparable sales, the acquisition of Space NK and net new store contribution. (In June, Ulta acquired British beauty retailer Space NK Limited from a London investment firm. The company, which operates 83 stores in the U.K. and Ireland along with its online platform, operates as a standalone subsidiary of Ulta.)
Comparable sales rose 6.3%, driven by a 3.8% increase in the average ticket and a 2.4% increase in average transactions.
Fragrance remained Ulta’s strongest growing category, with double-digit comparable sales growth in the third quarter. Skin care was the second-fastest growing category.
“Exciting assortment newness, improved in-store and digital experiences, and bold marketing efforts are resonating with our guests and drove strong sales results, market share gains, and growth across all categories and channels, with notable strength in e-commerce,” Steelman, stated in the earnings release. “As we look ahead to the all-important holiday season, we know many consumers’ wallets are pressured and they are seeking value.”
During the third quarter, Ulta opened seven stores in Mexico through a joint venture partnership with Grupo Bakso. It also opened its first Ulta store in the Middle East in Kuwait last month through a franchise partnership with the Alshaya Group.
[READ MORE: Ulta opens first Middle East store with more on the way]
Ulta raised its full-year sales outlook to about $12.3 billion, up from a previous estimate of $12 billion to $12.1 billion. It expects earnings per share of $25.20 to $25.50, up from its prior expectations of $23.85 to $24.30.
At the end of the quarter, the company operated 1,500 Ulta Beauty stores across the U.S., excluding the 84 stores in the U.K. and Ireland operated by Space NK.
