alta beauty (Ulta) reported strong results in its second-quarter earnings report on Thursday, beating expectations, although the market did not have an excessive response.
For the quarter ended July 29, Ulta reported revenue growth of 10.1% to $2.5 billion, as diluted earnings per share (EPS) increased 5.6% to $6.02. The company said the increase in revenue was driven by higher comparable-store sales, which were up 8%, strong new-store performance, and growth in other revenue.
“The Ulta Beauty team delivered another quarter of strong performance, as sales, gross profit, and SG&A expenses were better than our internal forecasts,” CEO Dave Kimble said. Ulta’s earnings report. “The beauty category continued to see healthy growth, as consumers maintain their post-pandemic routines and broaden their definition of beauty.”
Although Ulta outperformed earnings, its margins were under pressure this quarter, including a 110 basis point gross margin contraction to 39.3%, which is said to be “primarily due to lower merchandise margin, higher inventory shrinkage, supply chain rise. costs, partially offset by strong growth in other revenue and benefit from store fixed costs.
The cosmetic retailer stock reacted slightly lower to the news at the opening of today’s trading session. It was down about 3% by early Friday afternoon.
“Shrink,” a term for theft in the retail industry, has been a major theme this earnings season, especially in reports Dick’s Sporting GoodsGoal, dollar treeAnd foot lockerAs Kiplinger recently reported.
“Inventory shrinkage continued to be a headwind in the quarter. Our efforts to address the contraction are having an impact, but the overall environment remains challenging,” said Scott Cetersten, Chief Financial Officer. conference call.
Fortunately, Ulta has managed to overcome many of the issues facing the industry and continues to generate better-than-expected earnings. As a result, Ulta has raised its full-year forecast for 2023. It now expects revenue in the range of $11.05 billion to $11.15 billion, comparable store sales growth of 4.5% to 5.5%, and operating margin in the range of 14.6% to 14.6%. 14.8%, and diluted earnings per share from $25.10 to $25.60.
“Our updated outlook reflects our strong first-half performance while continuing to consider risks and uncertainties that could affect demand in the second half of the year, including rising levels of consumer debt and an expected resumption of student loan repayments,” said Cestersten.
“As we look to the future, we are focused on capitalizing on growth opportunities in the cosmetic category and implementing our strategic framework to achieve long-term sustainable growth for all of our stakeholders,” Cestersten concluded.