Beauty store chain Ulta Beauty has posted growth in both top and bottom lines for the fourth quarter, extending the strong improvements in the previous quarters.
The Illinois-based retailer reported net sales of $3.6 billion for the 14 weeks ended February, up 10.2 per cent year on year. Without the additional week of trading, sales rose 4.5 per cent.
Comparable sales grew 2.5 per cent, beating the company’s fourth-quarter guidance. Net income increased 15.7 per cent to $394.4 million.
Neil Saunders, MD of GlobalData, said Ulta has capped a strong year with another “stellar set of numbers”.
“Ulta is fortunate in that it plays in the beauty segment which is still the fastest growing category of retail. Even so, the company deserves a lot of credit for pulling off growth in the final quarter.”
Elevated promotional activity was more than offset by trading up and reduced costs in the supply chain, which resulted in a modest expansion in operating margins, Saunders continued. “While discounting was necessary to compete with rivals, Ulta did not have to resort to sales tactics to aid conversion because of the balance in its range.”
A good marketing campaign also helped the chain secure more customers, even in an environment that has become more competitive, the analyst added.
For the full year, Ulta’s net sales increased 9.8 per cent to $11.2 billion, while comparable sales rose 5.7 per cent. On the bottom line, net income was up 3.9 per cent to $1.3 billion. The company ended FY23 with 1385 stores totaling 14.5 million sqft.
The retailer expects net sales to be in the range of $11.7 billion to $11.8 billion in FY24, with comparable sales up 4 to 5 per cent.
Saunders listed several challenges in the year ahead, including more pressure on consumer spending, more competition from rivals like Sephora and Target, and a raft of DTC specialists.
“Against this backdrop, Ulta’s forecast suggests it will more than hold its own in the year ahead which, in our book, is a good result.
“This will be achieved by a continued focus on ranges, select physical expansion, and leaning in more heavily to the loyalty scheme” he concluded.
