Ulta Beauty has surpassed market expectations for its first-quarter profit, buoyed by consistent demand for skincare and makeup, as well as easing input costs.
The company’s shares, which have experienced a 22% decline year-to-date, surged by 8.4% in after-hours trading.
Despite tight discretionary budgets, demand for beauty and personal care products has remained robust in the United States.
Excluding exceptional items, the beauty retailer achieved earnings of $6.47 per share, surpassing the anticipated $6.24 per share.
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Strategies to Retain Customer Base and Expand Offerings
To cater to consumers seeking more affordable makeup and skincare options, Ulta Beauty has implemented tailored promotions to retain its customer base. Additionally, it introduced its luxury line featuring prestigious brands like Chanel and Dior last year, aiming to stimulate demand and bolster profit margins.
The company has also benefited from reduced input expenses and stabilized product pricing, contributing to margin expansion.
According to LSEG data, the company’s quarterly net sales increased by 3.5% to $2.73 billion, slightly surpassing analysts’ expectations of $2.72 billion.
Placer.ai data reveals that Ulta’s increase in foot traffic outpaced that of the broader beauty and wellness segment from February to April. This suggests a robust demand for accessible luxuries amid a volatile macroeconomic landscape.
Revised Projections Amid Economic Uncertainty
Amid elevated rental and interest rates, the company has revised down its annual profit and revenue projections. This has sparked concerns about potential pressure on discretionary spending throughout the year.
The company has revised its annual adjusted earnings per share outlook to fall within the range of $25.20 to $26.00, down from its previous estimate of $26.20 to $27.00.
Ulta predicts annual net sales to range between $11.5 billion and $11.6 billion, adjusting from its earlier forecast of $11.7 billion to $11.8 billion.
The quarterly gross profit, as a percentage of net sales, declined to 39.2%, down from 40% reported last year.
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