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Ulta Beauty, Inc. (ULTA - Free Report) has been making the most of the favorable trends in the beauty industry with its robust omnichannel efforts. Healthy traffic, increased brand awareness and loyalty program expansion are working well for this beauty retailer.
These upsides, along with solid transformational efforts, reflected positively on fourth-quarter fiscal 2023 results, wherein the top and bottom lines increased year over year and came ahead of the Zacks Consensus Estimate. While the macroeconomic landscape remains dynamic in the near term, management expressed optimism about the beauty industry's resilience, highlighting growth opportunities for the company.
To fortify its leading position, the company aims to progress its transformative initiatives this year, including the completion of pivotal projects. Additionally, investments will be directed toward core traffic and experience enhancement strategies, aiming to bolster engagement levels and enrich the overall customer experience.
Image Source: Zacks Investment Research
Focus on Core Priorities, a Major Driver
Ulta Beauty has been focused on its six strategic priorities. The company’s foremost priority is to strengthen its omnichannel business and explore the potential of both physical and digital facets. ULTA 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 with a curated and exclusive range of beauty products through innovation.
Moving on, ULTA 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.
Speaking of omnichannel, guests are effortlessly moving between physical and digital channels as management continues to invest in enhancing guest experience in all touch points. Ulta Beauty introduced 13 new stores, remodeled two and relocated two stores in the fourth quarter. For fiscal 2024, the company expects 60-65 net new stores, along with 40-45 store remodeling and relocation projects.
The modernization of its digital technology ecosystem has been aiding ULTA in elevating and optimizing existing guest experience while driving digital innovation, utilizing a modern and agile approach. On its fourth-quarter fiscal 2023 earnings call, management highlighted that comparable sales growth was driven by high-single-digit growth from its digital channels.
Moreover, ULTA has been enhancing the Ulta Beauty at Target experience. The company opened 155 Ulta Beauty at Target shops during fiscal 2023, taking the total to 510 shops.
The Skincare Category Stands Out
Ulta Beauty has been seeing market share gains in major beauty categories for a while now, with skincare standing out. The trend continued in the fourth quarter of fiscal 2023, wherein skincare was the company’s fastest-growing category, witnessing double-digit comp growth. Results gained from strength in brands like Bioma, Bubble, Good Molecules, La Roche-Posay, Dermalogica and Cetaphil. Guests’ increased focus on self-care and maintaining healthy skincare routines, together with the company’s focus on newness and innovation, keeps the skincare category well-positioned for continued growth.
Wrapping Up
Ulta Beauty’s SG&A expenses have been rising year over year for a while now. Management expects SG&A deleverage in fiscal 2024 due to wage pressure, efforts to support core traffic and a focus on transformational agenda. SG&A is expected to increase by the high single digits in fiscal 2024, including a low-double-digit increase in the first half and mid-single-digit growth in the second half. The company also expects gross margin to decline modestly in fiscal 2024 due to soft merchandise margins and supply-chain cost deleverage.
However, Ulta Beauty anticipates continued revenue and earnings growth in fiscal 2024 due to its omnichannel strategy, customer engagement initiatives and curated product offerings. Management expects fiscal 2024 net sales in the range of $11.7-$11.8 billion, which suggests an increase from the $11.2 billion reported in fiscal 2023. Comparable sales are expected to rise 4-5%. For fiscal 2024, earnings are envisioned in the band of $26.20-$27 per share, which implies a rise from the $26.03 per share reported in fiscal 2023.
Shares of the Zacks Rank #3 (Hold) company have risen 15.2% in the past six months compared with the industry’s growth of 25.7%.
The Zacks Consensus Estimate for Burlington Stores’ current fiscal-year sales and EPS implies growth of 10.2% and 22.3%, respectively, from the year-ago reported figure.
Abercrombie & Fitch (ANF - Free Report) , a specialty retailer, currently sports a Zacks Rank #1. ANF has a trailing four-quarter average earnings surprise of 715.6%.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales and earnings implies growth of 5.6% and 19.1%, respectively, from the year-ago reported figure.
The Kroger Co. (KR - Free Report) , a renowned food retailer, currently carries a Zacks Rank #2 (Buy). KR has a trailing four-quarter average earnings surprise of 8.5%.
The Zacks Consensus Estimate for Kroger's current fiscal-year earnings per share has increased by 1.6% to $4.43 in the past 30 days.
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Ulta Beauty's (ULTA) Omnichannel Focus Aids, SG&A Costs Hurt
Ulta Beauty, Inc. (ULTA - Free Report) has been making the most of the favorable trends in the beauty industry with its robust omnichannel efforts. Healthy traffic, increased brand awareness and loyalty program expansion are working well for this beauty retailer.
These upsides, along with solid transformational efforts, reflected positively on fourth-quarter fiscal 2023 results, wherein the top and bottom lines increased year over year and came ahead of the Zacks Consensus Estimate. While the macroeconomic landscape remains dynamic in the near term, management expressed optimism about the beauty industry's resilience, highlighting growth opportunities for the company.
To fortify its leading position, the company aims to progress its transformative initiatives this year, including the completion of pivotal projects. Additionally, investments will be directed toward core traffic and experience enhancement strategies, aiming to bolster engagement levels and enrich the overall customer experience.
Image Source: Zacks Investment Research
Focus on Core Priorities, a Major Driver
Ulta Beauty has been focused on its six strategic priorities. The company’s foremost priority is to strengthen its omnichannel business and explore the potential of both physical and digital facets. ULTA 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 with a curated and exclusive range of beauty products through innovation.
Moving on, ULTA 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.
Speaking of omnichannel, guests are effortlessly moving between physical and digital channels as management continues to invest in enhancing guest experience in all touch points. Ulta Beauty introduced 13 new stores, remodeled two and relocated two stores in the fourth quarter. For fiscal 2024, the company expects 60-65 net new stores, along with 40-45 store remodeling and relocation projects.
The modernization of its digital technology ecosystem has been aiding ULTA in elevating and optimizing existing guest experience while driving digital innovation, utilizing a modern and agile approach. On its fourth-quarter fiscal 2023 earnings call, management highlighted that comparable sales growth was driven by high-single-digit growth from its digital channels.
Moreover, ULTA has been enhancing the Ulta Beauty at Target experience. The company opened 155 Ulta Beauty at Target shops during fiscal 2023, taking the total to 510 shops.
The Skincare Category Stands Out
Ulta Beauty has been seeing market share gains in major beauty categories for a while now, with skincare standing out. The trend continued in the fourth quarter of fiscal 2023, wherein skincare was the company’s fastest-growing category, witnessing double-digit comp growth. Results gained from strength in brands like Bioma, Bubble, Good Molecules, La Roche-Posay, Dermalogica and Cetaphil. Guests’ increased focus on self-care and maintaining healthy skincare routines, together with the company’s focus on newness and innovation, keeps the skincare category well-positioned for continued growth.
Wrapping Up
Ulta Beauty’s SG&A expenses have been rising year over year for a while now. Management expects SG&A deleverage in fiscal 2024 due to wage pressure, efforts to support core traffic and a focus on transformational agenda. SG&A is expected to increase by the high single digits in fiscal 2024, including a low-double-digit increase in the first half and mid-single-digit growth in the second half. The company also expects gross margin to decline modestly in fiscal 2024 due to soft merchandise margins and supply-chain cost deleverage.
However, Ulta Beauty anticipates continued revenue and earnings growth in fiscal 2024 due to its omnichannel strategy, customer engagement initiatives and curated product offerings. Management expects fiscal 2024 net sales in the range of $11.7-$11.8 billion, which suggests an increase from the $11.2 billion reported in fiscal 2023. Comparable sales are expected to rise 4-5%. For fiscal 2024, earnings are envisioned in the band of $26.20-$27 per share, which implies a rise from the $26.03 per share reported in fiscal 2023.
Shares of the Zacks Rank #3 (Hold) company have risen 15.2% in the past six months compared with the industry’s growth of 25.7%.
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Burlington Stores (BURL - Free Report) sports a Zacks Rank #1 (Strong Buy) at present. BURL, which operates as a branded merchandise retailer, has a trailing four-quarter average earnings surprise of 10.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Burlington Stores’ current fiscal-year sales and EPS implies growth of 10.2% and 22.3%, respectively, from the year-ago reported figure.
Abercrombie & Fitch (ANF - Free Report) , a specialty retailer, currently sports a Zacks Rank #1. ANF has a trailing four-quarter average earnings surprise of 715.6%.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales and earnings implies growth of 5.6% and 19.1%, respectively, from the year-ago reported figure.
The Kroger Co. (KR - Free Report) , a renowned food retailer, currently carries a Zacks Rank #2 (Buy). KR has a trailing four-quarter average earnings surprise of 8.5%.
The Zacks Consensus Estimate for Kroger's current fiscal-year earnings per share has increased by 1.6% to $4.43 in the past 30 days.