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Factors to Watch Ahead of Ulta Beauty's (ULTA) Q1 Earnings
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Ulta Beauty, Inc. (ULTA - Free Report) is likely to register top-line growth when it reports first-quarter fiscal 2024 earnings on May 30. The Zacks Consensus Estimate for revenues is pegged at $2.72 billion, which suggests an increase of 3.2% from the prior-year quarter’s reported figure.
However, the bottom line is likely to decline year over year. The consensus mark for quarterly earnings has decreased by 1 cent in the past seven days to $6.23 per share. This indicates a decline of 9.5% from the year-ago quarter’s reported figure. Nonetheless, ULTA has a trailing four-quarter earnings surprise of 3.4%, on average.
Factors to Note
Favorable trends in the beauty space keep Ulta Beauty well-positioned for the quarter under review. The company has been benefiting from healthy traffic trends, greater brand awareness and the expansion of its loyalty program. Ulta Beauty has been seeing market share gains in major beauty categories for a while now, with skincare standing out, thanks to consumers’ rising interest in self-care and the company’s focus on newness and innovation. Management’s transformational initiatives have also been yielding positively.
The company’s focus on its six strategic priorities has been aiding. These include strengthening its omnichannel business, undertaking various tools to enhance the guest experience, providing customers with a curated and exclusive range of beauty products through innovation, deepening customer engagement by boosting rewards and loyalty programs and optimizing the cost structure.
Ulta Beauty Inc. Price, Consensus and EPS Surprise
While the macroeconomic landscape remains dynamic in the near term, management expressed optimism about the beauty industry's resilience on its last earnings call, highlighting growth opportunities for the company. Our model suggests a 2.5% increase in same-store sales for the quarter under review.
However, ULTA expects the gross margin to decline modestly in fiscal 2024 due to soft merchandise margins and supply-chain cost deleverage, which raises concerns for the to-be-reported quarter as well. We expect a gross margin contraction of 40 basis points in the first quarter of fiscal 2024.
Additionally, management expects SG&A deleverage in fiscal 2024 due to wage pressure, efforts to support core traffic and a focus on the transformational agenda. SG&A is expected to rise by the high single digits in fiscal 2024, including a low-double-digit increase in the first half. We expect an SG&A expense increase of 11.3% in the first quarter of fiscal 2024, with the rate likely to expand 160 basis points to 24.8%.
Management expects a decline in the bottom line in the first half due to significant SG&A and gross margin deleverage.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Ulta Beauty this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
Ulta Beauty currently carries a Zacks Rank #3, while it has an Earnings ESP of -1.64%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.
Bath & Body Works (BBWI - Free Report) currently has an Earnings ESP of +5.23% and a Zacks Rank of 2. The Zacks Consensus Estimate for first-quarter fiscal 2024 earnings per share is pegged at 33 cents, flat year over year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bath & Body Works’ top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.37 billion, which indicates a drop of 2.1% from the figure reported in the prior-year quarter. BBWI has a trailing four-quarter earnings surprise of 23.2%, on average.
Dollar Tree (DLTR - Free Report) currently has an Earnings ESP of +0.16% and a Zacks Rank of 3. The company is likely to register a top-line increase when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for Dollar Tree’s quarterly revenues is pegged at $7.6 billion, which implies growth of 4.2% from the figure reported in the prior-year quarter.
However, the Zacks Consensus Estimate for Dollar Tree’s quarterly earnings of $1.43 suggests a drop of 2.7% from the year-ago quarter’s levels. DLTR has a trailing four-quarter negative earnings surprise of 1.9%, on average.
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +3.98% and a Zacks Rank #3. The company is likely to register an increase in the bottom line when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for quarterly earnings per share of 28 cents suggests a jump of 64.7% from the year-ago quarter.
American Eagle Outfitters’ top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $1.15 billion, which implies an increase of 6.2% from the figure reported in the year-ago quarter. AEO has a trailing four-quarter earnings surprise of 22.7%, on average.
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Factors to Watch Ahead of Ulta Beauty's (ULTA) Q1 Earnings
Ulta Beauty, Inc. (ULTA - Free Report) is likely to register top-line growth when it reports first-quarter fiscal 2024 earnings on May 30. The Zacks Consensus Estimate for revenues is pegged at $2.72 billion, which suggests an increase of 3.2% from the prior-year quarter’s reported figure.
However, the bottom line is likely to decline year over year. The consensus mark for quarterly earnings has decreased by 1 cent in the past seven days to $6.23 per share. This indicates a decline of 9.5% from the year-ago quarter’s reported figure. Nonetheless, ULTA has a trailing four-quarter earnings surprise of 3.4%, on average.
Factors to Note
Favorable trends in the beauty space keep Ulta Beauty well-positioned for the quarter under review. The company has been benefiting from healthy traffic trends, greater brand awareness and the expansion of its loyalty program. Ulta Beauty has been seeing market share gains in major beauty categories for a while now, with skincare standing out, thanks to consumers’ rising interest in self-care and the company’s focus on newness and innovation. Management’s transformational initiatives have also been yielding positively.
The company’s focus on its six strategic priorities has been aiding. These include strengthening its omnichannel business, undertaking various tools to enhance the guest experience, providing customers with a curated and exclusive range of beauty products through innovation, deepening customer engagement by boosting rewards and loyalty programs and optimizing the cost structure.
Ulta Beauty Inc. Price, Consensus and EPS Surprise
Ulta Beauty Inc. price-consensus-eps-surprise-chart | Ulta Beauty Inc. Quote
While the macroeconomic landscape remains dynamic in the near term, management expressed optimism about the beauty industry's resilience on its last earnings call, highlighting growth opportunities for the company. Our model suggests a 2.5% increase in same-store sales for the quarter under review.
However, ULTA expects the gross margin to decline modestly in fiscal 2024 due to soft merchandise margins and supply-chain cost deleverage, which raises concerns for the to-be-reported quarter as well. We expect a gross margin contraction of 40 basis points in the first quarter of fiscal 2024.
Additionally, management expects SG&A deleverage in fiscal 2024 due to wage pressure, efforts to support core traffic and a focus on the transformational agenda. SG&A is expected to rise by the high single digits in fiscal 2024, including a low-double-digit increase in the first half. We expect an SG&A expense increase of 11.3% in the first quarter of fiscal 2024, with the rate likely to expand 160 basis points to 24.8%.
Management expects a decline in the bottom line in the first half due to significant SG&A and gross margin deleverage.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Ulta Beauty this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
Ulta Beauty currently carries a Zacks Rank #3, while it has an Earnings ESP of -1.64%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.
Bath & Body Works (BBWI - Free Report) currently has an Earnings ESP of +5.23% and a Zacks Rank of 2. The Zacks Consensus Estimate for first-quarter fiscal 2024 earnings per share is pegged at 33 cents, flat year over year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bath & Body Works’ top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.37 billion, which indicates a drop of 2.1% from the figure reported in the prior-year quarter. BBWI has a trailing four-quarter earnings surprise of 23.2%, on average.
Dollar Tree (DLTR - Free Report) currently has an Earnings ESP of +0.16% and a Zacks Rank of 3. The company is likely to register a top-line increase when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for Dollar Tree’s quarterly revenues is pegged at $7.6 billion, which implies growth of 4.2% from the figure reported in the prior-year quarter.
However, the Zacks Consensus Estimate for Dollar Tree’s quarterly earnings of $1.43 suggests a drop of 2.7% from the year-ago quarter’s levels. DLTR has a trailing four-quarter negative earnings surprise of 1.9%, on average.
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +3.98% and a Zacks Rank #3. The company is likely to register an increase in the bottom line when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for quarterly earnings per share of 28 cents suggests a jump of 64.7% from the year-ago quarter.
American Eagle Outfitters’ top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $1.15 billion, which implies an increase of 6.2% from the figure reported in the year-ago quarter. AEO has a trailing four-quarter earnings surprise of 22.7%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.