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Ulta Beauty, Inc. (ULTA - Free Report) saw its share price surge nearly 12% on Thursday after hours, following strong third-quarter fiscal 2024 results. The company reported growth in its top and bottom lines, which surpassed their respective Zacks Consensus Estimates. Stronger top-line performance, disciplined financial management, effective expense control and favorable shrink trends contributed to the better-than-expected results.
The company reported an earnings per share (EPS) of $5.14 in the quarter, surpassing the Zacks Consensus Estimate of $4.47. The bottom line increased from $5.07 in the year-ago period.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Net sales of this beauty product retailer advanced 1.7% year over year to $2,530.1 million. The increase was primarily fueled by contributions from new stores. These were somewhat offset by soft other revenues. Nevertheless, the metric surpassed the Zacks Consensus Estimate of $2,488.2 million.
Comparable sales, which include sales from stores open for at least 14 months and e-commerce transactions, inched up 0.6%. The upside was fueled by a 0.5% rise in transactions and a 0.1% increase in average ticket size.
In the third-quarter fiscal 2024, Ulta Beauty’s gross profit totaled $1,005.6 million, up from $992.1 million from the year-ago quarter’s level. As a percentage of net sales, gross profit declined to 39.7% from 39.9%. The decline was primarily due to the deleveraging of store and supply chain fixed costs, along with a decrease in other revenues. This was partially offset by a favorable channel mix and reduced inventory shrinkage.
Selling, general and administrative (SG&A) expenses increased to $682.3 million from $661.4 million reported in the prior-year quarter. As a percentage of net sales, SG&A expenses increased to 27% from 26.6%. This increase was due to deleveraging of store payroll and benefits, as well as higher corporate overhead due to strategic investments, partially offset by reduced incentive compensation.
Operating income was $318.5 million, compared to $327.2 million in the same quarter last year. As a percentage of net sales, operating income was 12.6%, down from 13.1% last period.
ULTA’s Financial Health Snapshot & Store Update
The Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $177.8 million. Net merchandise inventories were $2.4 billion at the end of the reported quarter. Stockholders’ equity at the end of the quarter stood at $2,329 million. Net cash provided by operating activities was $302 million for the 39 weeks ended Nov. 2, 2024.
The company repurchased 731,458 shares for $267 million in the quarter. As of Nov. 2, 2024, Ulta Beauty had shares worth $2.9 billion left under its $3 billion buyback program announced in October 2024. Management expects to buy back shares worth nearly $1 billion in fiscal 2024. For the said period, capital expenditures are expected to be $400-$425 million.
In the reported quarter, the company opened 28 stores, remodeled 27 stores and shuttered two stores. It ended the fiscal third quarter with 1,437 stores, totaling 15 million square feet. For fiscal 2024, ULTA expects 60-65 net new stores, along with 40-45 store remodeling and relocation projects.
Image Source: Zacks Investment Research
What to Expect From ULTA in FY24?
Ulta Beauty expects fiscal 2024 net sales of $11.1-$11.2 billion compared with the earlier mentioned $11-$11.2 billion. The company reported net sales of $11.2 billion in fiscal 2023. Comparable sales are expected to remain flat to down 1% year over year. The metric was earlier anticipated to remain flat to down 2%.
Management expects an operating margin between 12.9% and 13.1% compared with the previously mentioned 12.7% and 13%. For fiscal 2024, EPS is envisioned to be $23.20-$23.75, higher than the earlier stated $22.60-$23.50. Ulta Beauty’s earnings came in at $26.03 per share in fiscal 2023.
While the company is encouraged by its fiscal third-quarter performance and year-to-date results, it recognizes that the fourth quarter may be impacted by a compressed holiday season, a dynamic operating environment and ongoing uncertainty surrounding consumer demand. For the quarter, the company anticipates a low single-digit decline in comparable sales and expects operating margins to range between 11.6% and 12.4%.
Ulta Beauty’s stock has gained 14.7% in the past three months compared with the industry’s growth of 9.5%.
The Zacks Consensus Estimate for Deckers’ current financial-year sales and earnings indicates growth of 13.6% and 12.8%, respectively, from the year-ago reported figures.
Dillard's, Inc. (DDS - Free Report) , a department store retailer, currently sports a Zacks Rank #1. DDS has a trailing four-quarter earnings surprise of 8.8%, on average.
The Zacks Consensus Estimate for Dillard's current financial-year sales and earnings suggests a decline of 5.2% and 21.9%, respectively, from the year-ago levels.
Kroger (KR - Free Report) , a renowned grocery retailer, currently carries a Zacks Rank #2 (Buy). KR has a trailing four-quarter earnings surprise of 8.2%, on average.
The Zacks Consensus Estimate for Kroger’s current financial-year sales and earnings suggests a decline of 0.9% and 6.3%, respectively, from the year-ago levels.
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Ulta Beauty Q3 Earnings & Sales Top Estimates, Stock Soars 12%
Ulta Beauty, Inc. (ULTA - Free Report) saw its share price surge nearly 12% on Thursday after hours, following strong third-quarter fiscal 2024 results. The company reported growth in its top and bottom lines, which surpassed their respective Zacks Consensus Estimates. Stronger top-line performance, disciplined financial management, effective expense control and favorable shrink trends contributed to the better-than-expected results.
The company reported an earnings per share (EPS) of $5.14 in the quarter, surpassing the Zacks Consensus Estimate of $4.47. The bottom line increased from $5.07 in the year-ago period.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Net sales of this beauty product retailer advanced 1.7% year over year to $2,530.1 million. The increase was primarily fueled by contributions from new stores. These were somewhat offset by soft other revenues. Nevertheless, the metric surpassed the Zacks Consensus Estimate of $2,488.2 million.
Comparable sales, which include sales from stores open for at least 14 months and e-commerce transactions, inched up 0.6%. The upside was fueled by a 0.5% rise in transactions and a 0.1% increase in average ticket size.
Ulta Beauty Inc. Price and Consensus
Ulta Beauty Inc. price-consensus-chart | Ulta Beauty Inc. Quote
ULTA’s Quarterly Results: Key Metrics & Insights
In the third-quarter fiscal 2024, Ulta Beauty’s gross profit totaled $1,005.6 million, up from $992.1 million from the year-ago quarter’s level. As a percentage of net sales, gross profit declined to 39.7% from 39.9%. The decline was primarily due to the deleveraging of store and supply chain fixed costs, along with a decrease in other revenues. This was partially offset by a favorable channel mix and reduced inventory shrinkage.
Selling, general and administrative (SG&A) expenses increased to $682.3 million from $661.4 million reported in the prior-year quarter. As a percentage of net sales, SG&A expenses increased to 27% from 26.6%. This increase was due to deleveraging of store payroll and benefits, as well as higher corporate overhead due to strategic investments, partially offset by reduced incentive compensation.
Operating income was $318.5 million, compared to $327.2 million in the same quarter last year. As a percentage of net sales, operating income was 12.6%, down from 13.1% last period.
ULTA’s Financial Health Snapshot & Store Update
The Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $177.8 million. Net merchandise inventories were $2.4 billion at the end of the reported quarter. Stockholders’ equity at the end of the quarter stood at $2,329 million. Net cash provided by operating activities was $302 million for the 39 weeks ended Nov. 2, 2024.
The company repurchased 731,458 shares for $267 million in the quarter. As of Nov. 2, 2024, Ulta Beauty had shares worth $2.9 billion left under its $3 billion buyback program announced in October 2024. Management expects to buy back shares worth nearly $1 billion in fiscal 2024. For the said period, capital expenditures are expected to be $400-$425 million.
In the reported quarter, the company opened 28 stores, remodeled 27 stores and shuttered two stores. It ended the fiscal third quarter with 1,437 stores, totaling 15 million square feet. For fiscal 2024, ULTA expects 60-65 net new stores, along with 40-45 store remodeling and relocation projects.
Image Source: Zacks Investment Research
What to Expect From ULTA in FY24?
Ulta Beauty expects fiscal 2024 net sales of $11.1-$11.2 billion compared with the earlier mentioned $11-$11.2 billion. The company reported net sales of $11.2 billion in fiscal 2023. Comparable sales are expected to remain flat to down 1% year over year. The metric was earlier anticipated to remain flat to down 2%.
Management expects an operating margin between 12.9% and 13.1% compared with the previously mentioned 12.7% and 13%. For fiscal 2024, EPS is envisioned to be $23.20-$23.75, higher than the earlier stated $22.60-$23.50. Ulta Beauty’s earnings came in at $26.03 per share in fiscal 2023.
While the company is encouraged by its fiscal third-quarter performance and year-to-date results, it recognizes that the fourth quarter may be impacted by a compressed holiday season, a dynamic operating environment and ongoing uncertainty surrounding consumer demand. For the quarter, the company anticipates a low single-digit decline in comparable sales and expects operating margins to range between 11.6% and 12.4%.
Ulta Beauty’s stock has gained 14.7% in the past three months compared with the industry’s growth of 9.5%.
Three Promising Retail Stocks
Deckers (DECK - Free Report) , a footwear and accessories dealer, currently sports a Zacks Rank #1 (Strong Buy). DECK delivered an average earnings surprise of 41.1% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Deckers’ current financial-year sales and earnings indicates growth of 13.6% and 12.8%, respectively, from the year-ago reported figures.
Dillard's, Inc. (DDS - Free Report) , a department store retailer, currently sports a Zacks Rank #1. DDS has a trailing four-quarter earnings surprise of 8.8%, on average.
The Zacks Consensus Estimate for Dillard's current financial-year sales and earnings suggests a decline of 5.2% and 21.9%, respectively, from the year-ago levels.
Kroger (KR - Free Report) , a renowned grocery retailer, currently carries a Zacks Rank #2 (Buy). KR has a trailing four-quarter earnings surprise of 8.2%, on average.
The Zacks Consensus Estimate for Kroger’s current financial-year sales and earnings suggests a decline of 0.9% and 6.3%, respectively, from the year-ago levels.