'Another Stellar Delivery': Ulta Beauty (ULTA) Leaps Higher as Sales Grew 60% on Robust Demand for Makeup, Firms Raise Numbers
Shares of Ulta Beauty (NASDAQ: ULTA) are up today after the company delivered better-than-expected Q2 results.
EPS came in at $4.56 to crush analyst consensus of $2.42. Sales were reported at $2 billion, again higher than the consensus of $1.72 billion.
“The Ulta Beauty team delivered strong results for the second quarter. This performance reflects the recovery of the beauty category, investments and choices we’ve made over the last year to adapt to the market disruption and strengthen our leadership position, and the ongoing efforts of our associates to deliver great experiences for our guests. Our value proposition is strong, and we are evolving and innovating to lead in the new beauty landscape, capture additional market share, and drive profitable growth,” said Dave Kimbell, chief executive officer.
On the outlook, ULTA projects FY2021 EPS of $14.50-$14.70, versus the consensus of $12.28. Ulta Salon sees FY2021 revenue of $8.1-8.3 billion, versus the consensus of $7.88 billion.
UBS analyst Michael Lasser raised the price target to $455.00 per share from $415.00 on the Buy-rated stock.
“We believe ULTA's 2Q results demonstrate that the beauty category is gaining momentum and that ULTA's gaining share. Importantly, its 56.3% SSS growth in 2Q marked a 340 bps acceleration on the 2-yr CAGR to 7.0%. Plus, its in-store comps have now exceeded '19 levels, driven by ticket growth as traffic continues to recover. While makeup sales remained below prior levels, ULTA highlighted improving category sales in 2Q, with the mass channel even seeing growth on a 2-yr basis. Notably, this has not come at the expense of other self care categories such as hair, skin and fragrance, which all saw strong double digit growth relative to 2Q'19. Plus, ULTA generated 4% member growth in its loyalty program from 2Q'19. Impressively, ULTA generated 43% incremental margins on its sales growth in 2Q, driving considerable margin outperformance (OM of 16.9% vs cons. 10.7%),” Lasser wrote in a client note.
Oppenheimer analyst Rupesh Parikh reiterated his ‘Top Pick’ view on ULTA following Q2 earnings and raised the PT to $450.00 per share from $415.00.
“We expected meaningful upside as we previewed here, but the bottom line delivery easily topped our most bullish scenarios fueled by stronger gross margins and expense leverage. ULTA management continues to execute at a very high level. The company also lifted FY21 EPS guidance to $14.50–14.70 from $11.50–11.95 previously. We view updated guidance as conservative. ULTA remains a top pick for us. We are lifting our PT to $450 from $415 previously. From here, we are closely watching the Delta variant, which appears to have had limited impacts to-date,” Parikh said.
Ulta share price trades about 4% higher in today’s trading session.