Ulta Beauty Q3 sales fall 7.8%

Ulta Beauty’s sales declined in the third quarter as the retailer continues to feel the impact of the pandemic. But its income still topped Street expectations. 

The beauty retailer reported net income of $74.8 million for the quarter ended Oct. 31, compared to $129.7 million in the year-ago quarter. Adjusted earnings were $1.64 a share, better than analysts had expected. Ulta said the decline in income was due to asset impairment and restructuring costs primarily related to the suspension of its expansion into Canada, which has been put on hold amid the pandemic. 

Ulta’s net sales fell 7.8%  to $1.6 billion. Transactions declined 15.4% and average ticket increased 7.6%. Comparable sales (sales for stores open at least 14 months, including stores temporarily closed due to COVID-19, and e-commerce sales) were down 8.9%.  

E-commerce fell 8.9% from the second quarter, which the company said was “expected” after a increase during store closures in the spring.

"Today, we reported financial results that exceeded our expectations as we continue to navigate a year of uncertainties with agility and strength,” said Mary Dillon, CEO. “We know guests are changing how they shop beauty, but importantly, their engagement with the category remains strong.”

Noting that it is difficult to predict future impacts of the pandemic on demand this holiday season, Ulta increased its sales expectations for the fourth quarter and now anticipate comparable store sales will decline in the range of 12% to 14%.

"We know this holiday season will be like no other, but our team is ready and excited to help our guests see the joy of the season,” said Dillon. 

Ulta continues to expect to open at least 30 new stores in fiscal 2021. The company said it will continue to evaluate the plans based on demand and location economics. Ulta ended the quarter with 1,262 stores.