While there are indications that shoppers are cutting back over fears that the US economy could slide into recession later this year, that was not the case at Ulta Beauty during the important holiday quarter.
Fueled by shoppers stocking up on serums, moisturizers, acne treatments and holiday gift sets, the beauty store topped Wall Street estimates in the last three months of its financial year ending Jan. than $10 billion in its 33-year history.
According to the retailer, all major categories showed double-digit growth during the quarter, with price increases not deterring customers at checkout. In skin care, the fastest growing category, the Ulta name checked that Drunk Elephant, The Ordinary, Hero Cosmetics and dermatology-based brands such as Roche Pose and Survey performed particularly well.
Growth in the makeup category, meanwhile, continued its post-pandemic recovery, accelerating from the third quarter onwards with double-digit growth in both prestige and mass makeup, with Fenty Beauty, REM Beauty and the recently launched Dior makeup contributed to the increases during the quarter .
As reported by WWD last month, Ulta is bolstering its luxury range, including products from Chanel, Hourglass, Dior, Natasha Denona, Tom Ford, Viktor & Rolf, Gucci, Tiffany and Givenchy, chief executive officer Dave Kimbell told analysts in a post on Thursday. that he sees “luxury beauty as an emerging opportunity.”
He also cited the continued success of the company’s partnership with Target Corp., which added 254 Ulta Beauty shop-in-shop locations during the year.
Net sales increased 18.2 percent to $3.2 billion compared to $2.7 billion in the fourth quarter of fiscal 2021, beating Wall Street’s expectations of $3.03 billion.
Net income increased 17.8 percent to $340.8 million, compared to $289.4 million in the same period a year earlier, while diluted earnings per share increased 23.5 percent to $6.68, above forecasts from analysts at $5.70.
“Ulta Beauty’s strong fourth quarter results underline an exceptional year of record sales, profitability and membership growth, reflecting strong demand and best execution,” Kimbell continued.
Due to a strong holiday quarter, net sales this year increased 18.3 percent to $10.2 billion and net income increased 26 percent to $1.2 billion.
“For the first time in our 33-year history, Ulta Beauty’s annual sales exceeded $10 billion, our annual net income exceeded $1 billion, and we exceeded 40 million Ultamate Rewards members,” added Kimbell. “These landmark achievements demonstrate the strength 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 net sales to be between $10.95 billion and $11.05 billion and diluted earnings per share to be between $24.70 and $25.40.
GlobalData CEO Neil Saunders noted that while the retailer’s performance has been very strong, Ulta’s outlook for the year ahead is more conservative.
“The company expects comparable store sales to grow between 4 and 5 percent,” he said. “When you compare this with some of the frothy growth of recent years, this may seem disappointing. However, it simply represents a normalization after a period of very strong growth. Importantly, it is still something of an outperformance and essentially means none of the extensive gains made during the pandemic and beyond will be returned.