Price increases didn’t stop consumers from stocking up on skincare products, makeup and other items at Ulta Beauty during the fourth quarter.
In a performance that reflected the resilience of the beauty category, the nation’s largest beauty retailer easily topped Wall Street estimates for its fourth quarter. Strong holiday sales helped Ulta surpass the $10 billion mark in annual revenue for the first time in its 33-year history.
On the company’s earnings call, CEO Dave Kimbell said Ulta plans to open 25 to 30 new stores and remodel or relocate 20 to 30 locations in 2023. Ulta’s long-term outlook remains 1,500 to 1,700 stores and 800 in-store shops at Target. (At the end of the fourth quarter, the company operated 1,355 stores and 350 Target shop-in-shops.)
“As we expand our physical footprint, we will also accelerate growth across digital platforms, supported by the completed transition of our digital store to a modern technology and architecture, as well as the expansion of our buy anywhere, fill anywhere capabilities,” Kimbell told analysts. “Our partnership with Target will continue to expand as we support additional Ulta Beauty at Target shops, evolve the assortment, and leverage our dedicated field team to deliver elevated guest experiences.”
Ulta’s net income rose 17.8% year over year to $340.8 million, or $6.68 per share, in the quarter ended Jan. 28, from $289.4 million, or $5.41 per share, in the fourth quarter of 2021.
Net sales rose 18.2% to $3.2 billion, topping Wall Street expectations of $3.03 billion. Same-store sales grew 15.6% nearly double what analysts were expecting. All major categories experienced double-digit growth during the quarter. The fastest growing category was skincare.
For the full year, Ulta’s net sales increased 18.3% to $10.2 billion, primarily due to the favorable impact from the continued resilience of the beauty category, retail price increases, the impact of new brands and product innovation, increased social occasions and fewer COVID-19 limitations compared to fiscal 2021, the company said. Net income rose 26% to $1.2 billion.
“For the first time in our 33-year history, Ulta Beauty’s annual revenue surpassed $10 billion, our annual net income exceeded $1 billion, and we exceeded 40 million Ultimate Rewards members,” Kimbell stated. “These milestone achievements demonstrate the power of Ulta Beauty’s highly differentiated model, the health of the growing beauty category, and our winning culture and outstanding teams.”
For 2023, Ulta expects full-year revenue to between $10.95 billion and $11.05 billion and earnings per share of between $24.70 and $25.40. Analysts were looking for revenue of $10.74 billion and earnings per share of $24.25.
“As we move into fiscal 2023, we remain optimistic about the strength and resiliency of the beauty category, and I am excited about the opportunities ahead to continue to expand our leadership position, capture market share gains, and drive long-term value for all our stakeholders,” added Kimbell.
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