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Ulta Beauty (ULTA) Q4 Earnings Top Estimates, Sales Rise Y/Y
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Ulta Beauty, Inc. (ULTA - Free Report) posted solid fourth-quarter fiscal 2022 results, with the top and bottom lines beating the Zacks Consensus Estimate. Both revenues and earnings improved year over year.
Results gained from solid sales momentum across its store and business channels. The company generated strong double-digit comparable sales growth across all major categories. It witnessed increased market share in prestige beauty. Management noted that strong consumer demand and outstanding execution by their team fuelled strength across its businesses.
This Zacks Rank #2 (Buy) stock has gained 13.4% in the past six months compared with the industry’s 11.1% growth.
Quarterly Numbers
Ulta Beauty posted earnings per share (EPS) of $6.68 in the fiscal fourth quarter, which beat the Zacks Consensus Estimate of $5.69. The company’s earnings per share increased 23.5% from $5.41 in the year-ago period.
Ulta Beauty Inc. Price, Consensus and EPS Surprise
Net sales of this beauty products retailer rose 18.2% year over year to $3,226.8 million and beat the Zacks Consensus Estimate of $3,037.9 million. The uptick can be attributed to the favorable impacts of the continued resilience of the beauty category, retail price increases, and the impacts of new brands and product innovation compared with the fourth quarter of fiscal 2021.
Comps jumped 15.6%, driven by a 13.6% improvement in transactions and a 1.8% increase in the average ticket. The metric was driven by higher average selling price, which was partially offset by lower units per transactions.
The gross profit increased 18% to $1,212.5 million. Gross profit, as a percentage of net sales, was 37.6%, in line with the figure reported in the year-ago quarter. The company benefited from leverage of fixed costs, favorable channel mix shifts and strong growth in other revenues. This was offset by higher inventory shrink.
Selling, general and administrative (SG&A) expenses rose 17.3% to $762.7 million. As a percentage of net sales, SG&A expenses stood at 23.6%, down from 23.8% reported in the year-ago quarter, led by leverage of marketing expenses and incentive compensation due to higher sales, which was partially offset by deleverage of store payroll and benefits because of wage investments, and also deleverage in corporate overhead owing to strategic investments.
The operating income increased 19.2% to $447.6 million. The operating margin increased to 13.9% from 13.8% reported in the fourth quarter of fiscal 2021. The operating margin performance was supported by healthy top-line growth and the impacts of its ongoing cost optimization efforts.
Other Updates
Ulta Beauty ended the quarter with cash and cash equivalents of $737.9 million. Net merchandise inventories were $1.6 billion at the end of the fourth quarter of fiscal 2022. Stockholders’ equity at the end of the quarter stood at $1,959.8 million. Net cash provided by operating activities was $1,481.9 million in the 52 weeks ended Jan 28, 2023.
The company repurchased 722,457 shares for $328.1 million in the fourth quarter. As of Jan 28, 2023, Ulta Beauty had shares worth $1.1 billion left under its buyback program announced in March 2022.
For fiscal 2023, capital expenditure is expected to be $400-$475 million.
In the reported quarter, the company introduced 12 stores, remodeled 12 and relocated one. Ulta Beauty ended the quarter with 1,355 stores totaling 14.2 million square feet.
For fiscal 2023, ULTA expects 25-30 net new stores, along with 20-30 store remodeling and relocation projects.
Guidance
Ulta Beauty expects fiscal 2023 net sales of $10.95-$11.05 billion compared with the $10.2 billion reported in fiscal 2022. Comps are expected to rise 4-5%.
The company expects comp growth in the first half will be in the high-single-digit range, driven by stronger growth in the first quarter and moderate to low-single-digit growth in the second half of the year.
Management expects the operating margin between 14.7% and 15%. The company anticipates seeing operating margin driven primarily by SG&A deleverage, reflecting investments to support its strategic priorities and higher store expenses, as well as ongoing wage pressures. The company expects gross margin to deleverage modestly as it laps benefits from the timing of retail price changes in 2022.
For fiscal 2023, earnings are envisioned to be $24.70-$25.40 per share, suggesting a rise from the $24.01 per share reported in fiscal 2022. The company anticipates share repurchase of $900 million in fiscal 2023.
Other Stocks to Consider
Here we highlighted three other top-ranked stocks, namely Arhaus, Inc. (ARHS - Free Report) , Deckers Outdoor Corporation (DECK - Free Report) and The Kroger Co. (KR - Free Report) .
Arhaus, which operates as a lifestyle brand and premium retailer in the home furnishing market, carries a Zacks Rank #2 at present. The expected EPS growth rate for three to five years is 16.1%.
The Zacks Consensus Estimate for ARHS’ current financial-year revenues and EPS suggests growth of 54% and 26.1%, respectively, from the year-ago reported figure. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. DECK has a Zacks Rank #2 at present.
The Zacks Consensus Estimate for DECK’s’ current financial-year sales and EPS suggests growth of 12.2% and 13.6%, respectively, from the year-ago reported figures. Deckers has a trailing four-quarter earnings surprise of 31%, on average.
Kroger, which operates in the thin-margin grocery industry, carries a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for KR’s current financial-year revenues and EPS suggests growth of 2.6% and 6.2%, respectively. KR gave an earnings surprise of 10% in the last reported quarter. KR has a trailing four-quarter earnings surprise of 9.8%, on average.
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Ulta Beauty (ULTA) Q4 Earnings Top Estimates, Sales Rise Y/Y
Ulta Beauty, Inc. (ULTA - Free Report) posted solid fourth-quarter fiscal 2022 results, with the top and bottom lines beating the Zacks Consensus Estimate. Both revenues and earnings improved year over year.
Results gained from solid sales momentum across its store and business channels. The company generated strong double-digit comparable sales growth across all major categories. It witnessed increased market share in prestige beauty. Management noted that strong consumer demand and outstanding execution by their team fuelled strength across its businesses.
This Zacks Rank #2 (Buy) stock has gained 13.4% in the past six months compared with the industry’s 11.1% growth.
Quarterly Numbers
Ulta Beauty posted earnings per share (EPS) of $6.68 in the fiscal fourth quarter, which beat the Zacks Consensus Estimate of $5.69. The company’s earnings per share increased 23.5% from $5.41 in the year-ago period.
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 products retailer rose 18.2% year over year to $3,226.8 million and beat the Zacks Consensus Estimate of $3,037.9 million. The uptick can be attributed to the favorable impacts of the continued resilience of the beauty category, retail price increases, and the impacts of new brands and product innovation compared with the fourth quarter of fiscal 2021.
Comps jumped 15.6%, driven by a 13.6% improvement in transactions and a 1.8% increase in the average ticket. The metric was driven by higher average selling price, which was partially offset by lower units per transactions.
The gross profit increased 18% to $1,212.5 million. Gross profit, as a percentage of net sales, was 37.6%, in line with the figure reported in the year-ago quarter. The company benefited from leverage of fixed costs, favorable channel mix shifts and strong growth in other revenues. This was offset by higher inventory shrink.
Selling, general and administrative (SG&A) expenses rose 17.3% to $762.7 million. As a percentage of net sales, SG&A expenses stood at 23.6%, down from 23.8% reported in the year-ago quarter, led by leverage of marketing expenses and incentive compensation due to higher sales, which was partially offset by deleverage of store payroll and benefits because of wage investments, and also deleverage in corporate overhead owing to strategic investments.
The operating income increased 19.2% to $447.6 million. The operating margin increased to 13.9% from 13.8% reported in the fourth quarter of fiscal 2021. The operating margin performance was supported by healthy top-line growth and the impacts of its ongoing cost optimization efforts.
Other Updates
Ulta Beauty ended the quarter with cash and cash equivalents of $737.9 million. Net merchandise inventories were $1.6 billion at the end of the fourth quarter of fiscal 2022. Stockholders’ equity at the end of the quarter stood at $1,959.8 million. Net cash provided by operating activities was $1,481.9 million in the 52 weeks ended Jan 28, 2023.
The company repurchased 722,457 shares for $328.1 million in the fourth quarter. As of Jan 28, 2023, Ulta Beauty had shares worth $1.1 billion left under its buyback program announced in March 2022.
For fiscal 2023, capital expenditure is expected to be $400-$475 million.
In the reported quarter, the company introduced 12 stores, remodeled 12 and relocated one. Ulta Beauty ended the quarter with 1,355 stores totaling 14.2 million square feet.
For fiscal 2023, ULTA expects 25-30 net new stores, along with 20-30 store remodeling and relocation projects.
Guidance
Ulta Beauty expects fiscal 2023 net sales of $10.95-$11.05 billion compared with the $10.2 billion reported in fiscal 2022. Comps are expected to rise 4-5%.
The company expects comp growth in the first half will be in the high-single-digit range, driven by stronger growth in the first quarter and moderate to low-single-digit growth in the second half of the year.
Management expects the operating margin between 14.7% and 15%. The company anticipates seeing operating margin driven primarily by SG&A deleverage, reflecting investments to support its strategic priorities and higher store expenses, as well as ongoing wage pressures. The company expects gross margin to deleverage modestly as it laps benefits from the timing of retail price changes in 2022.
For fiscal 2023, earnings are envisioned to be $24.70-$25.40 per share, suggesting a rise from the $24.01 per share reported in fiscal 2022. The company anticipates share repurchase of $900 million in fiscal 2023.
Other Stocks to Consider
Here we highlighted three other top-ranked stocks, namely Arhaus, Inc. (ARHS - Free Report) , Deckers Outdoor Corporation (DECK - Free Report) and The Kroger Co. (KR - Free Report) .
Arhaus currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks Rank #1 stocks (Strong Buy) here.
Arhaus, which operates as a lifestyle brand and premium retailer in the home furnishing market, carries a Zacks Rank #2 at present. The expected EPS growth rate for three to five years is 16.1%.
The Zacks Consensus Estimate for ARHS’ current financial-year revenues and EPS suggests growth of 54% and 26.1%, respectively, from the year-ago reported figure. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. DECK has a Zacks Rank #2 at present.
The Zacks Consensus Estimate for DECK’s’ current financial-year sales and EPS suggests growth of 12.2% and 13.6%, respectively, from the year-ago reported figures. Deckers has a trailing four-quarter earnings surprise of 31%, on average.
Kroger, which operates in the thin-margin grocery industry, carries a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for KR’s current financial-year revenues and EPS suggests growth of 2.6% and 6.2%, respectively. KR gave an earnings surprise of 10% in the last reported quarter. KR has a trailing four-quarter earnings surprise of 9.8%, on average.