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Ulta Beauty (ULTA) Up on Omni-channel Strength & Skincare Sales
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Strength in omni-channel capabilities has been working in Ulta Beauty, Inc.’s (ULTA - Free Report) favor. The leading beauty retailer is benefiting from healthy traffic trends in the booming beauty space. Incidentally, management is seeing market share gains in major beauty categories, with skincare standing out. Consistent focus on six key priorities is yielding.
Let’s discuss this in detail.
Strong Omni-channel Presence
People are effortlessly moving between physical and digital channels as ULTA continues to invest in enhancing guest experience in all touch points. In August 2023, management concluded the transition of the digital commerce experience, including cart, promotions, checkout and member account data, to its new architecture. The modernization of its digital technology ecosystem is helping the company elevate and optimize existing guest experiences while driving digital innovation, utilizing a modern and agile approach.
Ulta Beauty is keen on enhancing its in-store experiences to drive spending, increase frequency and create loyalty. In the fiscal third quarter, the company launched a guest engagement model to enhance guest experience via real engagement, experiences and interactions. Management is on track to expand the Ulta Beauty at Target experience.
Image Source: Zacks Investment Research
Favorable Trends Boost Growth
A positive view of the beauty space is keeping Ulta Beauty well-positioned. The company is benefiting from healthy traffic trends, greater brand awareness and the expansion of its loyalty program. Management is on track with transformational initiatives, which are yielding. These factors boosted third-quarter fiscal 2023 results, with net sales rising 6.4% to $2,488.9 million on higher comparable sales, solid new store performance and an increase in other revenues. Comparable sales rose 4.5%, driven by a 5.9% improvement in transactions stemming from healthy traffic across all channels.
The company is seeing market share gains in skincare thanks to consumers’ rising interest in self-care and its focus on newness and innovation. The trend continued in the fiscal third quarter, wherein skincare was the company’s fastest-growing category. Results gained from strength in brands like Drunk Elephant, La Roche-Posay, Cetaphil, Dermalogica and COSRX. Guests’ increased focus on self-care and maintaining healthy skincare routines works well for the skincare category.
Focus on Key Priorities
Ulta Beauty is focused on its six strategic priorities. The company’s foremost priority is to strengthen its omnichannel business and explore the potential of physical and digital facets. The company is undertaking various tools to enhance the experience of guests, like offering a virtual try-on tool and in-store education and reimagining fixtures, among others. Thirdly, the company concentrates on providing customers a curated and exclusive range of beauty products through innovation. Fourthly, the company is focused on deepening customer engagement by boosting rewards and loyalty programs. Fifthly, management is committed to optimizing its cost structure. Apart from these, the company strives to boost organizational talent and strengthen its culture.
Final Thoughts
Ulta Beauty is witnessing persistent margin pressure thanks to higher supply-chain costs and reduced merchandise margins, among other reasons. Rising SG&A expenses continue to hamper the company’s profitability. That being said, the upsides mentioned above are likely to keep narrating Ulta Beauty’s growth story.
The Zacks Rank #3 (Hold) company’s shares have rallied 27.8% in the past three months compared with the industry’s growth of 17.7%.
The Zacks Consensus Estimate for Gap’s current financial-year earnings suggests growth of 387.5%, from the year-ago reported figure.
DICK’S Sporting Goods (DKS - Free Report) , which operates as a major omni-channel sporting goods retailer, offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment, carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for DICK’S Sporting’s current fiscal year’s sales and earnings suggests growth of 3.8% and 2.7%, respectively, from the year-ago reported figures. DKS has a trailing four-quarter negative earnings surprise of 0.04%, on average.
American Eagle (AEO - Free Report) , a leading apparel retailer, currently carries a Zacks Rank #2. AEO delivered an earnings surprise of 23% in the trailing four quarters.
The Zacks Consensus Estimate for American Eagle’s current financial-year sales and earnings suggests growth of almost 5% and 43.3%, respectively, from the year-ago reported figures.
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Ulta Beauty (ULTA) Up on Omni-channel Strength & Skincare Sales
Strength in omni-channel capabilities has been working in Ulta Beauty, Inc.’s (ULTA - Free Report) favor. The leading beauty retailer is benefiting from healthy traffic trends in the booming beauty space. Incidentally, management is seeing market share gains in major beauty categories, with skincare standing out. Consistent focus on six key priorities is yielding.
Let’s discuss this in detail.
Strong Omni-channel Presence
People are effortlessly moving between physical and digital channels as ULTA continues to invest in enhancing guest experience in all touch points. In August 2023, management concluded the transition of the digital commerce experience, including cart, promotions, checkout and member account data, to its new architecture. The modernization of its digital technology ecosystem is helping the company elevate and optimize existing guest experiences while driving digital innovation, utilizing a modern and agile approach.
Ulta Beauty is keen on enhancing its in-store experiences to drive spending, increase frequency and create loyalty. In the fiscal third quarter, the company launched a guest engagement model to enhance guest experience via real engagement, experiences and interactions. Management is on track to expand the Ulta Beauty at Target experience.
Image Source: Zacks Investment Research
Favorable Trends Boost Growth
A positive view of the beauty space is keeping Ulta Beauty well-positioned. The company is benefiting from healthy traffic trends, greater brand awareness and the expansion of its loyalty program. Management is on track with transformational initiatives, which are yielding. These factors boosted third-quarter fiscal 2023 results, with net sales rising 6.4% to $2,488.9 million on higher comparable sales, solid new store performance and an increase in other revenues. Comparable sales rose 4.5%, driven by a 5.9% improvement in transactions stemming from healthy traffic across all channels.
The company is seeing market share gains in skincare thanks to consumers’ rising interest in self-care and its focus on newness and innovation. The trend continued in the fiscal third quarter, wherein skincare was the company’s fastest-growing category. Results gained from strength in brands like Drunk Elephant, La Roche-Posay, Cetaphil, Dermalogica and COSRX. Guests’ increased focus on self-care and maintaining healthy skincare routines works well for the skincare category.
Focus on Key Priorities
Ulta Beauty is focused on its six strategic priorities. The company’s foremost priority is to strengthen its omnichannel business and explore the potential of physical and digital facets. The company is undertaking various tools to enhance the experience of guests, like offering a virtual try-on tool and in-store education and reimagining fixtures, among others. Thirdly, the company concentrates on providing customers a curated and exclusive range of beauty products through innovation. Fourthly, the company is focused on deepening customer engagement by boosting rewards and loyalty programs. Fifthly, management is committed to optimizing its cost structure. Apart from these, the company strives to boost organizational talent and strengthen its culture.
Final Thoughts
Ulta Beauty is witnessing persistent margin pressure thanks to higher supply-chain costs and reduced merchandise margins, among other reasons. Rising SG&A expenses continue to hamper the company’s profitability. That being said, the upsides mentioned above are likely to keep narrating Ulta Beauty’s growth story.
The Zacks Rank #3 (Hold) company’s shares have rallied 27.8% in the past three months compared with the industry’s growth of 17.7%.
Tops 3 Picks
Gap (GPS - Free Report) , a fashion retailer of apparel and accessories, currently sports a Zacks Rank of 1 (Strong Buy). GPS has a trailing four-quarter earnings surprise of 137.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s current financial-year earnings suggests growth of 387.5%, from the year-ago reported figure.
DICK’S Sporting Goods (DKS - Free Report) , which operates as a major omni-channel sporting goods retailer, offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment, carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for DICK’S Sporting’s current fiscal year’s sales and earnings suggests growth of 3.8% and 2.7%, respectively, from the year-ago reported figures. DKS has a trailing four-quarter negative earnings surprise of 0.04%, on average.
American Eagle (AEO - Free Report) , a leading apparel retailer, currently carries a Zacks Rank #2. AEO delivered an earnings surprise of 23% in the trailing four quarters.
The Zacks Consensus Estimate for American Eagle’s current financial-year sales and earnings suggests growth of almost 5% and 43.3%, respectively, from the year-ago reported figures.