Ulta Beauty (ULTA): Here’s a look at the beauty retailer’s performance in Q3 2024

Shares of Ulta Beauty, Inc. (NASDAQ: ULTA) soared over 10% on Friday. The stock has gained 17% over the past three months. The company delivered better-than-expected earnings results for the third quarter of 2024 and raised its guidance for the full year. Here’s a look at how the beauty retailer performed in Q3:

Results beat estimates

In Q3 2024, Ulta Beauty’s net sales increased 1.7% year-over-year to $2.53 billion, driven mainly by new store contribution, partly offset by a drop in other revenue. Earnings per share rose 1% to $5.14 compared to last year. The top and bottom line numbers surpassed projections.

Business performance

As mentioned on its quarterly conference call, Ulta Beauty has been facing headwinds such as the normalization of the US beauty category, a dynamic consumer environment, and stiff competition, especially in the prestige beauty sector. Despite this, the company saw an improvement in its market share trends in prestige beauty in Q3, driven by a pickup in the makeup and hair categories as well as strength in the fragrance and skin care categories.

In Q3, Ulta Beauty’s comparable sales grew 0.6%, driven by increases in transactions and average ticket. The fragrance category saw the highest growth in comps, with a high single-digit increase driven by men’s fragrance, gender-neutral fragrances and new products.

The skin care category recorded mid-single-digit comp growth as strength in body care was partly offset by a drop in prestige skin care. Comp sales in both the makeup and hair care categories decreased in the low single-digit range while the services business recorded low single-digit comp growth during the third quarter.

Raised guidance  

Ulta Beauty slightly raised its guidance for the full year of 2024 based on its Q3 results but it still remains cautious of the consumer and operating environment. The company now expects net sales of $11.1-11.2 billion for FY2024 versus the previous expectation of $11.0-11.2 billion. Comparable sales are now expected to be down 1% to flat versus the prior outlook of down 2% to flat. Adjusted EPS is now expected to be $23.20-23.75 versus the previous range of $22.60-23.50.

Despite an encouraging performance thus far, ULTA believes that factors like a compressed holiday season, a dynamic operating environment, and uncertainty around consumer demand might have an impact on the fourth quarter of 2024. The company expects comp sales to decline in the low single-digit range in Q4.

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