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Ulta Beauty (ULTA) Shines on Skincare, Omnichannel Strength
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Ulta Beauty, Inc. (ULTA - Free Report) appears in solid shape due to strength in its skincare category and robust omnichannel operations. These upsides continued to fuel the specialty retailer of cosmetics, fragrances, haircare and skincare products and related services in the fourth quarter of fiscal 2022. During the quarter, the top and bottom lines cruised past the Zacks Consensus Estimate and grew year over year.
Further, management stated that it remains confident about witnessing continued growth in the U.S. beauty category and offered an encouraging view for fiscal 2023. The Zacks Consensus Estimate for current fiscal-year earnings per share (EPS) has increased by a couple of cents to $25.23 over the past seven days.
Shares of this Zacks Rank #2 (Buy) company have rallied 7.1% in the past three months compared to the industry’s decline of 12.4%. Let’s delve deeper.
Ulta Beauty Inc. Price, Consensus and EPS Surprise
Net sales 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.
Ulta Beauty posted an EPS of $6.68 in the fiscal fourth quarter, which beat the Zacks Consensus Estimate of $5.69. The company’s EPS increased 23.5% from $5.41 in the year-ago period.
Fourth-quarter results gained from solid sales momentum across the company’s store and business channels. ULTA generated strong double-digit comparable sales growth across all major categories. It witnessed an increased market share in prestige beauty. Strong consumer demand was a driver.
Ulta Beauty expects fiscal 2023 net sales in the band 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.
For fiscal 2023, earnings are envisioned in the band of $24.70-$25.40 per share. This suggests a rise from the $24.01 per share reported in fiscal 2022.
Main Drivers
Ulta Beauty has been enriching its omnichannel experience through launches like Beauty to Go, options like same-day delivery (in some stores) and unique salon services across stores, among others. In fiscal 2022, the company launched its new alliance with Target and has more than 350 Ulta Beauty at Target shop-in-shop locations (as of the end of the fourth quarter). Management expects this number to reach up to 800 Target locations over time.
Moreover, Ulta Beauty is benefiting from its Wellness Shop launch (in the fourth quarter of fiscal 2021). It is a cross-category platform providing guests with self-care for the mind, body and spirit across several stores as well as online.
The company’s buy online, pickup in store (BOPIS) continued to gain traction in the fourth quarter. Additionally, ULTA’s initiatives to boost online promotions and customer engagement have been supporting online sales growth.
With consumers’ growing enthusiasm about online sales, management remains on track with expanding capacity at fulfillment centers, the expansion of ship-from-store capabilities as well as curbside pickups. The company is also benefiting from its mobile app and virtual try-on capabilities.
Among BOPIS, same-day delivery and ship-from-store capabilities, 31% of Ulta Beauty’s digital orders were fulfilled by stores in fiscal 2022, up from 28% year over year. That said, store traffic trends were robust in the fourth quarter, rising in the double digits.
During the fourth quarter, the company introduced 12 stores, remodeled 12 and relocated one. For fiscal 2023, ULTA expects 25-30 net new stores, along with 20-30 store remodeling and relocation projects.
Moving on, Ulta Beauty has been seeing market share gains in major beauty categories for a while now, with skincare standing out due to consumers’ rising interest in self-care and the company’s focus on newness and innovation. The trend continued in the fourth quarter of fiscal 2022, wherein skincare delivered the highest growth.
Moreover, the company saw double-digit growth in both mass and prestige, mainly backed by serums, moisturizers, acne treatments and holiday gift sets. Results gained from newness in brands like Drunk Elephant, The Ordinary and Hero cosmetics. These upsides are likely to help Ulta Beauty keep adding new leaves to its growth story.
The Zacks Consensus Estimate for Build-A-Bear Workshops’ current financial-year sales and earnings suggests growth of 6.2% and 12.3%, respectively, from the year-ago reported numbers.
Kroger, a renowned grocery retailer, currently sports a Zacks Rank #1. KR has a trailing four-quarter earnings surprise of 9.8%, on average.
The Zacks Consensus Estimate for Kroger’s current financial-year EPS suggests growth of 6.6% from the year-ago reported figure. KR has an expected EPS growth rate of 6% for three to five years.
DICK'S Sporting, which operates as a major omnichannel sporting goods retailer, currently carries a Zacks Rank of 2. DKS has a trailing four-quarter earnings surprise of 10%, on average.
The Zacks Consensus Estimate for DKS’ current financial-year sales and earnings suggests growth of almost 3% and 12.1%, respectively, from the corresponding year-ago reported figures.
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Ulta Beauty (ULTA) Shines on Skincare, Omnichannel Strength
Ulta Beauty, Inc. (ULTA - Free Report) appears in solid shape due to strength in its skincare category and robust omnichannel operations. These upsides continued to fuel the specialty retailer of cosmetics, fragrances, haircare and skincare products and related services in the fourth quarter of fiscal 2022. During the quarter, the top and bottom lines cruised past the Zacks Consensus Estimate and grew year over year.
Further, management stated that it remains confident about witnessing continued growth in the U.S. beauty category and offered an encouraging view for fiscal 2023. The Zacks Consensus Estimate for current fiscal-year earnings per share (EPS) has increased by a couple of cents to $25.23 over the past seven days.
Shares of this Zacks Rank #2 (Buy) company have rallied 7.1% in the past three months compared to the industry’s decline of 12.4%. Let’s delve deeper.
Ulta Beauty Inc. Price, Consensus and EPS Surprise
Ulta Beauty Inc. price-consensus-eps-surprise-chart | Ulta Beauty Inc. Quote
Robust Q4 & Guidance
Net sales 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.
Ulta Beauty posted an EPS of $6.68 in the fiscal fourth quarter, which beat the Zacks Consensus Estimate of $5.69. The company’s EPS increased 23.5% from $5.41 in the year-ago period.
Fourth-quarter results gained from solid sales momentum across the company’s store and business channels. ULTA generated strong double-digit comparable sales growth across all major categories. It witnessed an increased market share in prestige beauty. Strong consumer demand was a driver.
Ulta Beauty expects fiscal 2023 net sales in the band 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.
For fiscal 2023, earnings are envisioned in the band of $24.70-$25.40 per share. This suggests a rise from the $24.01 per share reported in fiscal 2022.
Main Drivers
Ulta Beauty has been enriching its omnichannel experience through launches like Beauty to Go, options like same-day delivery (in some stores) and unique salon services across stores, among others. In fiscal 2022, the company launched its new alliance with Target and has more than 350 Ulta Beauty at Target shop-in-shop locations (as of the end of the fourth quarter). Management expects this number to reach up to 800 Target locations over time.
Moreover, Ulta Beauty is benefiting from its Wellness Shop launch (in the fourth quarter of fiscal 2021). It is a cross-category platform providing guests with self-care for the mind, body and spirit across several stores as well as online.
The company’s buy online, pickup in store (BOPIS) continued to gain traction in the fourth quarter. Additionally, ULTA’s initiatives to boost online promotions and customer engagement have been supporting online sales growth.
With consumers’ growing enthusiasm about online sales, management remains on track with expanding capacity at fulfillment centers, the expansion of ship-from-store capabilities as well as curbside pickups. The company is also benefiting from its mobile app and virtual try-on capabilities.
Among BOPIS, same-day delivery and ship-from-store capabilities, 31% of Ulta Beauty’s digital orders were fulfilled by stores in fiscal 2022, up from 28% year over year. That said, store traffic trends were robust in the fourth quarter, rising in the double digits.
During the fourth quarter, the company introduced 12 stores, remodeled 12 and relocated one. For fiscal 2023, ULTA expects 25-30 net new stores, along with 20-30 store remodeling and relocation projects.
Moving on, Ulta Beauty has been seeing market share gains in major beauty categories for a while now, with skincare standing out due to consumers’ rising interest in self-care and the company’s focus on newness and innovation. The trend continued in the fourth quarter of fiscal 2022, wherein skincare delivered the highest growth.
Moreover, the company saw double-digit growth in both mass and prestige, mainly backed by serums, moisturizers, acne treatments and holiday gift sets. Results gained from newness in brands like Drunk Elephant, The Ordinary and Hero cosmetics. These upsides are likely to help Ulta Beauty keep adding new leaves to its growth story.
3 Other Picks
Some other top-ranked stocks are Build-A-Bear Workshop, Inc. (BBW - Free Report) , Kroger (KR - Free Report) and DICK'S Sporting Goods (DKS - Free Report) .
Build-A-Bear has a trailing four-quarter earnings surprise of 17.4%, on average. BBW currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Build-A-Bear Workshops’ current financial-year sales and earnings suggests growth of 6.2% and 12.3%, respectively, from the year-ago reported numbers.
Kroger, a renowned grocery retailer, currently sports a Zacks Rank #1. KR has a trailing four-quarter earnings surprise of 9.8%, on average.
The Zacks Consensus Estimate for Kroger’s current financial-year EPS suggests growth of 6.6% from the year-ago reported figure. KR has an expected EPS growth rate of 6% for three to five years.
DICK'S Sporting, which operates as a major omnichannel sporting goods retailer, currently carries a Zacks Rank of 2. DKS has a trailing four-quarter earnings surprise of 10%, on average.
The Zacks Consensus Estimate for DKS’ current financial-year sales and earnings suggests growth of almost 3% and 12.1%, respectively, from the corresponding year-ago reported figures.