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Ulta Beauty, Inc. (ULTA - Free Report) delivered robust first-quarter fiscal 2021 results, wherein both top and bottom lines increased year over year and came way past the Zacks Consensus Estimate. Increased consumer confidence, government stimulus and lifting of COVID-related curbs boosted results and also encouraged management to raise its guidance for fiscal 2021. Notably, the company’s shares gained 4.7% in the after-market trading session on May 27. Further, this Zacks Rank #2 (Buy) stock has rallied 19.2% in the past six months compared with the industry’s growth of 9.2%.
Quarterly Numbers
Ulta Beauty posted earnings per share (EPS) of $4.10 in the first quarter of fiscal 2021, which came considerably ahead of the Zacks Consensus Estimate of $1.92. The company posted a loss of $1.39 per share in the same period last year, while adjusted loss per share was $1.13 in first-quarter fiscal 2020.
Ulta Beauty Inc. Price, Consensus and EPS Surprise
Net sales of this beauty retailer surged 65.2% year over year to $1,938.5 million and easily beat the Zacks Consensus Estimate of $1,673 million. The rise in sales can be attributable to positive impacts in the United States from government stimulus payments, better consumer confidence and relaxation of pandemic-related curbs. Also, the desire for newness is driving consumer spending in the beauty space.
Comparable sales or comps soared 65.9% against a 35.3% slump recorded in the prior-year quarter. This solid growth was broad-based, with better-than-expected performance across categories, regions and channels, especially stores (with consumers becoming extremely comfortable with in-store shopping). Notably, comps take into account stores that were open for at least 14 months, including stores temporarily closed due to the pandemic and e-commerce sales. During the quarter under review, the company registered a jump in transactions of 52.5% and a rise of 8.8% in average ticket. Comps grew 7% from the figure reported the first quarter of fiscal 2019.
Also, e-commerce delivered a solid performance, rising in the mid-teens range on the back of robust traffic and increased average order. Markedly, buy online, pick up in-store or BOPIS penetration elevated to roughly 16% of total e-commerce sales in the first quarter, up from 4% in the same period last year. Apart from these, the company’s stores and ship-to-home channels drove e-commerce sales.
Gross profit advanced from $303.6 million to $753.8 million. Gross margin rose from 25.9% to 38.9% owing to improved merchandise margins, fixed cost leverage on higher sales, positive channel mix shifts and reduced salon costs.
SG&A expenses escalated from $380.9 million to $443.9 million in the first quarter of fiscal 2021. This can be mainly accountable to elevated store payroll and benefits, together with increased advertising costs. SG&A expenses (as a percentage of sales) declined from 32.5% to 22.9% in the quarter under review owing to greater net sales.
Operating income came in at $305.3 million and the operating margin was 15.8%. In the first quarter of fiscal 2020, the company posted adjusted operating loss of $81.9 million. The year-over-year growth can be accountable to sturdy sales growth (especially in brick and mortar) and the impact of cost-containment efforts.
Other Updates
Ulta Beauty ended the quarter with cash and cash equivalents of $947.5 million. Net merchandise inventories came in at $1,353.6 million. Stockholders’ equity at the end of the quarter stood at $1,844.7 million. Net cash provided by operating activities was $330.1 million for the 13 weeks ended May 1, 2021.
Additionally, the company repurchased shares worth $382.3 million during the first quarter. As of May 1, 2021, the company had $1.1 billion worth of shares remaining under its $1.6-billion buyback program announced in March 2020. The company expects share buybacks of nearly $850 million in fiscal 2021.
Ulta Beauty’s capital expenditures amounted to $34.6 million during the first quarter. For fiscal 2021, capital expenditures are expected in the bracket of $225-$250 million now compared with $200-$250 million forecasted earlier.
During the first quarter, the company introduced 28 stores, alongside relocating one and closing two. That said, Ulta Beauty ended the quarter with 1,290 stores. For fiscal 2021, the company plans to open approximately 40 stores along with carrying out 19 store remodeling and relocation projects.
Outlook
Ulta Beauty began fiscal 2021 on a robust note, with splendid sales momentum, improved consumer sentiment and increased market share. Further, the company remains well placed for recovery in the beauty category, thanks to its differentiated model and endeavors to build important guest connections.
Impressively, the company raised its sales, comps, operating margin and earnings guidance for fiscal 2021. Management now expects net sales of $7.7-$7.8 billion, up from $7.2-$7.3 billion expected before. The Zacks Consensus Estimate is currently pegged at $7.5 billion.
Comps growth is now expected in the range of 23-25% compared with the prior band of 15-17%. Further, management expects operating margin to be around 11% now, up from 9% projected before. Growth in operating margin is likely to be driven by an expansion in gross margin. Earnings are now envisioned in the range of $11.5-$11.95 per share, in comparison with $8.85-$9.30 per share forecasted earlier. The Zacks Consensus Estimate is currently pegged at $9.91 per share.
DICK'S Sporting Goods (DKS - Free Report) , with a Zacks Rank #1, has a long-term EPS growth rate of 5.6%.
MarineMax (HZO - Free Report) , with a Zacks Rank #1, delivered an earnings surprise in the trailing four quarters, on average.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year. Free: See Our Top Stock and 4 Runners Up >>
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Ulta Beauty (ULTA) Shares Rise on Q1 Earnings Beat & Raised View
Ulta Beauty, Inc. (ULTA - Free Report) delivered robust first-quarter fiscal 2021 results, wherein both top and bottom lines increased year over year and came way past the Zacks Consensus Estimate. Increased consumer confidence, government stimulus and lifting of COVID-related curbs boosted results and also encouraged management to raise its guidance for fiscal 2021. Notably, the company’s shares gained 4.7% in the after-market trading session on May 27. Further, this Zacks Rank #2 (Buy) stock has rallied 19.2% in the past six months compared with the industry’s growth of 9.2%.
Quarterly Numbers
Ulta Beauty posted earnings per share (EPS) of $4.10 in the first quarter of fiscal 2021, which came considerably ahead of the Zacks Consensus Estimate of $1.92. The company posted a loss of $1.39 per share in the same period last year, while adjusted loss per share was $1.13 in first-quarter fiscal 2020.
Ulta Beauty Inc. Price, Consensus and EPS Surprise
Ulta Beauty Inc. price-consensus-eps-surprise-chart | Ulta Beauty Inc. Quote
Net sales of this beauty retailer surged 65.2% year over year to $1,938.5 million and easily beat the Zacks Consensus Estimate of $1,673 million. The rise in sales can be attributable to positive impacts in the United States from government stimulus payments, better consumer confidence and relaxation of pandemic-related curbs. Also, the desire for newness is driving consumer spending in the beauty space.
Comparable sales or comps soared 65.9% against a 35.3% slump recorded in the prior-year quarter. This solid growth was broad-based, with better-than-expected performance across categories, regions and channels, especially stores (with consumers becoming extremely comfortable with in-store shopping). Notably, comps take into account stores that were open for at least 14 months, including stores temporarily closed due to the pandemic and e-commerce sales. During the quarter under review, the company registered a jump in transactions of 52.5% and a rise of 8.8% in average ticket. Comps grew 7% from the figure reported the first quarter of fiscal 2019.
Also, e-commerce delivered a solid performance, rising in the mid-teens range on the back of robust traffic and increased average order. Markedly, buy online, pick up in-store or BOPIS penetration elevated to roughly 16% of total e-commerce sales in the first quarter, up from 4% in the same period last year. Apart from these, the company’s stores and ship-to-home channels drove e-commerce sales.
Gross profit advanced from $303.6 million to $753.8 million. Gross margin rose from 25.9% to 38.9% owing to improved merchandise margins, fixed cost leverage on higher sales, positive channel mix shifts and reduced salon costs.
SG&A expenses escalated from $380.9 million to $443.9 million in the first quarter of fiscal 2021. This can be mainly accountable to elevated store payroll and benefits, together with increased advertising costs. SG&A expenses (as a percentage of sales) declined from 32.5% to 22.9% in the quarter under review owing to greater net sales.
Operating income came in at $305.3 million and the operating margin was 15.8%. In the first quarter of fiscal 2020, the company posted adjusted operating loss of $81.9 million. The year-over-year growth can be accountable to sturdy sales growth (especially in brick and mortar) and the impact of cost-containment efforts.
Other Updates
Ulta Beauty ended the quarter with cash and cash equivalents of $947.5 million. Net merchandise inventories came in at $1,353.6 million. Stockholders’ equity at the end of the quarter stood at $1,844.7 million. Net cash provided by operating activities was $330.1 million for the 13 weeks ended May 1, 2021.
Additionally, the company repurchased shares worth $382.3 million during the first quarter. As of May 1, 2021, the company had $1.1 billion worth of shares remaining under its $1.6-billion buyback program announced in March 2020. The company expects share buybacks of nearly $850 million in fiscal 2021.
Ulta Beauty’s capital expenditures amounted to $34.6 million during the first quarter. For fiscal 2021, capital expenditures are expected in the bracket of $225-$250 million now compared with $200-$250 million forecasted earlier.
During the first quarter, the company introduced 28 stores, alongside relocating one and closing two. That said, Ulta Beauty ended the quarter with 1,290 stores. For fiscal 2021, the company plans to open approximately 40 stores along with carrying out 19 store remodeling and relocation projects.
Outlook
Ulta Beauty began fiscal 2021 on a robust note, with splendid sales momentum, improved consumer sentiment and increased market share. Further, the company remains well placed for recovery in the beauty category, thanks to its differentiated model and endeavors to build important guest connections.
Impressively, the company raised its sales, comps, operating margin and earnings guidance for fiscal 2021. Management now expects net sales of $7.7-$7.8 billion, up from $7.2-$7.3 billion expected before. The Zacks Consensus Estimate is currently pegged at $7.5 billion.
Comps growth is now expected in the range of 23-25% compared with the prior band of 15-17%. Further, management expects operating margin to be around 11% now, up from 9% projected before. Growth in operating margin is likely to be driven by an expansion in gross margin. Earnings are now envisioned in the range of $11.5-$11.95 per share, in comparison with $8.85-$9.30 per share forecasted earlier. The Zacks Consensus Estimate is currently pegged at $9.91 per share.
Other Key Picks
Sally Beauty (SBH - Free Report) has a Zacks Rank #1 (Strong Buy) and its bottom line has outpaced the Zacks Consensus Estimate by 37.8%, on average, in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
DICK'S Sporting Goods (DKS - Free Report) , with a Zacks Rank #1, has a long-term EPS growth rate of 5.6%.
MarineMax (HZO - Free Report) , with a Zacks Rank #1, delivered an earnings surprise in the trailing four quarters, on average.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>