ULTA Stock Drops Late, Despite Big Beat; Revenue Tops $10 Billion

Ulta Beauty comfortably beat expectations for its fourth-quarter report late Thursday. ULTA stock slumped after hours Thursday on a lower-than-expected comparable sales guidance.

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The Bolingbrook, Ill.-based Ulta Beauty operates 1,355 stores across the U.S. Ulta's earnings and revenue have grown for the past seven consecutive quarters. Over the last four quarters leading up to Thursday's report, Ulta averaged 43% earnings growth and roughly 20% revenue growth, respectively.

On Wednesday, Deutsche Bank analyst Krisztina Katai noted that the beauty category's momentum carried into February, although at a slightly moderated pace. Industry and competitor data indicate a same-store sale upside for Ulta for Q4, with mi-teen comparable sales growth implied, Katai wrote.

Last month, competitor ELF Beauty blew away quarterly earnings as adjusted earnings doubled to 48 cents per share. ELF shares are up 32% since its report.

Earnings Results

Ulta adjusted earnings spiked 23.5% to $6.68 per share as revenue jumped 18.2% to $3.22 billion.

For the fourth quarter, Wall Street expected Ulta adjusted earnings to rise 4.6% to $5.66 per share on roughly 11% revenue growth to $3.03 billion.

Comparable sales climbed 15.6%, compared to 21.4% growth during Q4 last year. The FactSet consensus guided for an 8.7% comparable sales increase.

Full-year sales surged 18.2% to $10.2 billion and net sales leapt 26% to $1.2 billion, both records for the company.

“As we move into fiscal 2023, we remain optimistic about the strength and resiliency of the beauty category, and I am excited about the opportunities ahead,” CEO Dave Kimbell said in the release.

For fiscal 2023, Ulta forecasts diluted earnings to range from $24.70 to $25.40 per share on $10.95 billion to $11.05 billion in sales. The guidance is fairly higher than the FactSet consensus of $23.07 earnings per share on $10.15 billion in revenue. However, Ulta's comparable sales estimates of 4% to 5% growth are well below analyst predictions of a 13.5% increase.