Ulta Beauty Beats First-Quarter Profit Estimates on Steady Demand for Skincare and Makeup

Ulta Beauty topped market expectations for first-quarter profit on Thursday, helped by steady demand for skincare and makeup as well as easing input costs.

Shares of the company, which have fallen 22 percent so far this year, were up 8.4 percent in extended trading.

Demand for beauty and personal care products has stayed resilient in the United States despite strained discretionary budgets.

Excluding items, the beauty retailer earned $6.47 per share, beating expectations of $6.24 apiece.

With consumers looking for cheaper options for makeup and skincare, Ulta Beauty has offered targeted promotions to retain customers, while also launching its luxury line with brands such as Chanel and Dior last year to help boost demand and support margins.

Lower input costs and normalising prices for its products has also helped support margin growth at the company.

The company’s quarterly net sales rose 3.5 percent to $2.73 billion. Analysts expected $2.72 billion, as per LSEG data.

According to data from Placer.ai, Ulta’s foot traffic gains surpassed those in the overall beauty and wellness segment in the February through April period, signalling strength in demand for affordable luxuries in a choppy macro environment.

The company lowered its annual profit and revenue forecast. Still-high rental and interest rates have raised concerns that discretionary spending could be pressured for the year.

It now sees annual adjusted earnings per share between $25.20 and $26.00, compared with its earlier expectation of $26.20 to $27.00.

Ulta forecast annual net sales between $11.5 billion to $11.6 billion, versus prior expectations of $11.7 to $11.8 billion.

As a percentage of net sales, quarterly gross profit decreased to 39.2 percent, compared with 40 percent last year.

By Juveria Tabassum and Sneha S K; Editing by Alan Barona

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