Ulta Beauty posted comparable sales and earnings gains in its second quarter and surpassed financial analyst expectations, causing the company to brighten its outlook while addressing the end of its Target Corp. partnership.
Net income increased to $260.9 million, or $5.78 per diluted share, from $252.6 million, or $5.30 per diluted share, in the year-earlier quarter.
A second-quarter analyst consensus estimate from Zacks Investment Research had Ulta earnings per diluted share coming in at $5.03 and revenues $2.65 billion.
Comparable sales increased 6.7% in the quarter year over year, the company reported, driven by a 3.7% increase in transactions and a 2.9% increase in average ticket.
Net sales increased to $2.79 billion from $2.55 billion in the year-before quarter, primarily due to increased comparable sales, the acquisition of British beauty retailer Space NK, and new store contributions. Operating income was $344.9 million versus $329.2 million in the year-previous period.
Updated guidance called for net sales of $12 billion to $12.1 billion from $11.5 billion to $11.7 billion, comps of 2.5% to 3.5% from 0% to 1.5% and diluted earnings per share of $23.85 to $24.30 from $22.65 to $23.20.
Kecia Steelman, Ulta president and CEO, said in a conference call that comp sales in the hair care category advanced in the mid single-digit range, given a lift by growth in professional hair care, accessories and hair tools, including a boost from Shark and Conair innovation. Steersman addressed the end of Ulta’s partnership with Target, noting Ulta would prioritize the execution of its “Ulta Beauty Unleashed” strategy as a path to capitalizing on growth opportunities in beauty and wellness by enabling it to address customers in new ways and define the next chapter of growth. Steelman added that royalty revenue from the Target partnership in fiscal 2024 was less than 1% of net sales. She noted Ulta’s recently announced invitation-only marketplace is ready to launch in the third quarter.
“The Ulta Beauty team delivered strong results in the second quarter, including 6.7% comparable sales growth,” Steelman said.”Outstanding top line performance, fueled by growth across all major categories, drove market share growth and better-than-expected profitability. As we look to the future, we remain committed to executing our ‘Ulta Beauty Unleashed’ strategy and strengthening our operating model. Our outlook for the remainder of the year reflects both the strength of our year-to-date performance and our caution around how consumer demand may evolve in the second half of the year. While near-term uncertainty persists, we’re staying focused on what we can control and on executing with excellence to deliver our uniquely Ulta Beauty experience.”
