Ulta posts strong holiday quarter as shoppers squeeze makeup into their budgets

Ulta Beauty topped Wall Street's expectations for its holiday-quarter net and revenue, arsenic shoppers continued to prevention country successful their tighter budgets for quality products during the solemnisation season.

The vacation play meant much radical were buying quality products to hole for parties and to usage arsenic gifts. "We picture it arsenic 'gifting and glamming,'" CEO Dave Kimbell told CNBC.

The affordable luxuries of the quality assemblage person made it a mainstay spending category, adjacent arsenic ostentation shrinks user wallets and makes necessities similar groceries much expensive. Kimbell said that user spending crossed income levels remained strong successful the 4th fourth and that customers are not trading down to cheaper options, contempt higher prices connected the company's products.

Same-store income grew 15.6% successful the 4th quarter, slower maturation than the 21.4% leap it posted successful the aforesaid 4th the erstwhile year, but good supra analysts' estimates of 8.4%, according to StreetAccount.

Kimbell said that makeup, haircare, skincare and fragrance products each saw double-digit income maturation successful the 4th quarter. He added that the wellness segment, which includes items similar nutritional supplements and silk pillowcases, is besides increasing aft the pandemic enactment a renewed accent connected aforesaid care.

As a percent of nett sales, gross nett stayed level compared to the year-ago 4th successful portion owed to higher inventory shrink. Kimbell cited organized retail transgression arsenic the superior crushed for shrink, which helium said is simply a "retail-wide challenge."

Here's however the institution did successful the fourth quarter, ended Jan. 28, compared with Refinitiv statement estimates:

• Earnings per share: $6.68 vs. $5.68 estimated
• Revenue: $3.23 cardinal vs. $3.03 cardinal estimated

Net income roseate 17.8% twelvemonth implicit twelvemonth to $340.8 million, oregon $6.68 per share, from $289.4 million, oregon $5.41 per share, successful the 4th fourth of 2021.

Looking ahead, the institution is expecting full-year gross for 2023 to beryllium betwixt $10.95 cardinal and $11.05 cardinal on with net per stock of betwixt $24.70 and $25.40. Wall Street was anticipating 2023 gross of $10.74 cardinal and net per stock of $24.25, according to Refinitiv.

Ulta expects the bulk of that maturation to travel during the archetypal fractional of 2023 and level disconnected successful the backmost half. Kimbell said though higher prices won't needfully travel down, the institution is readying to decelerate the level of its terms hikes.

The institution is besides moving connected expanding its footprint. It opened 12 caller stores successful the 4th fourth and is shooting for betwixt 25 and 30 caller locations successful 2023. The eventual extremity is to unfastened astir 100 caller stores successful the adjacent 2 years, Kimbell told CNBC.

Ulta is besides looking to support gathering connected its concern with Target. Ulta shop-in-shops are presently successful 350 Target locations nationwide, and Kimbell said the institution is connected way to beryllium successful up to 450 much implicit time.

Along with brick-and-mortar, the constitution seller wants to fortify its integer footprint. Kimbell said the institution is successful the last stages of its "digital store of the future," an effort to revamp its e-commerce platforms.

As of Thursday's marketplace close, Ulta shares are up astir 11% this year, outpacing the S&P 500, which is up astir 2% twelvemonth to date.