Ulta Beauty’s annual sales surpass $10 billion for the first time – WWD

While there are indications that shoppers are falling off concerns that the US economy could slide into recession later this year, this was not the case for Ulta Beauty during the significant holiday quarter.

Fueled by shoppers stocking up on serums, moisturizers, acne treatments and holiday gift sets, the beauty retailer smashed Wall Street estimates in the final three months of its fiscal year that ended Jan. 28, posting annual sales of more than $10 billion for the first time -Dollar time in 33-year history.

All major categories posted double-digit growth for the quarter, with price increases not deterring shoppers at the checkout, the retailer said. In the fastest-growing skincare category, Ulta Name ranked Drunk Elephant, The Ordinary, Hero Cosmetics and dermatology-based brands like Roche Pose and Survey as particularly successful.

The growth of the makeup category, meanwhile, continued its post-pandemic recovery, accelerating from the third quarter with double-digit growth in both prestige and mass makeup, with Fenty Beauty, REM Beauty and the recently launched Dior makeup contributed to gains for the quarter.

As WWD reported last month, Ulta is strengthening its luxury range, including products from Chanel, Hourglass, Dior, Natasha Denona, Tom Ford, Viktor & Rolf, Gucci, Tiffany and Givenchy, Chief Executive Officer Dave Kimbell told analysts on the Post Earnings Call Thursday that he sees “luxurious beauty as a looming opportunity.”

He also referenced the continued success of the company’s partnership with Target Corp., which added 254 Target Ulta Beauty shop-in-shop locations during the year.

Net sales increased 18.2 percent to $3.2 billion compared to $2.7 billion in the fourth quarter of fiscal 2021, beating Wall Street’s expectations of $3.03 billion.

Net income increased 17.8 percent to $340.8 million compared to $289.4 million in the same period last year, while diluted earnings per share increased 23.5 percent to $6.68 up, ahead of analysts’ forecast of $5.70.

“Ulta Beauty’s strong fourth quarter results underscore an exceptional year of record sales, profitability and membership growth, reflecting robust demand and world-class execution,” continued Kimbell.

As a result of a strong holiday quarter, net sales for the year increased 18.3 percent to $10.2 billion and net income increased 26 percent to $1.2 billion.

“For the first time in our 33-year history, Ulta Beauty’s annual sales exceeded $10 billion, our annual net income exceeded $1 billion and we surpassed 40 million Ultamate Rewards members,” added Kimbell . “These milestones demonstrate the power of Ulta Beauty’s highly differentiated model, the health of the growing beauty category, and our winning culture and outstanding teams.”

For 2023, Ulta expects net sales to be in the range of $10.95 billion to $11.05 billion and diluted earnings per share to be in the range of $24.70 to $25.40.

Neil Saunders, Managing Director of GlobalData, noted that although the retailer’s performance has been very strong, Ulta’s outlook for the coming year is more conservative.

“The company expects comparable sales to grow in the range of 4 to 5 percent,” he said. “Compared to the bubbly growth of recent years, this may seem disappointing. However, it merely represents a normalization after a period of very strong growth. Importantly, it is still an outperformance of sorts and essentially means that none of the extensive gains made during the pandemic and beyond are being returned.”