Ulta Beauty Inc (NASDAQ:ULTA) shares jumped more than 11% after it reported better-than-expected first quarter earnings and raised its full-year guidance.
Earnings per share of $6.70 were significantly higher than the Wall Street estimate of $5.77.
Sales of $2.85 billion, up 4.5% year-over-year, surpassed estimates of $2.79 billion.
Comparable store sales were up 2.9%, well above the consensus estimate of about 0.4%, driven by a 2.3% increase in average ticket and a 0.6% increase in transactions.
Following its strong Q1 performance, Ulta now expects net sales in the range of $11.5 billion to $11.7 billion, compared to its earlier forecast of $11.5 billion to $11.6 billion.
It guided EPS in the range of $22.65 to $23.20, up from its previous range of $22.50 to $22.90.
“The operating environment is fluid, and our outlook reflects uncertainty around how consumer demand could evolve,” Ulta Beauty CEO Kecia Steelman said.
“We believe our model uniquely positions us to win, and we will continue to focus on serving our guests while staying agile as we move through the year."
Jefferies analysts welcomed the better-than-expected report but repeated their ‘Hold’ rating on Ulta, highlighted that the company only modestly lifted its full-year guidance. They see this as a cautious approach amid uncertain macro dynamics and competitive headwinds.
Ulta management pointed to a resilient and engaged consumer base, with continued enthusiasm for beauty products despite macroeconomic pressures.
“Ulta reported a strong and engaged consumer, noting shoppers shifting discretionary spend from other categories into beauty,” Jefferies wrote.
They highlighted strength in fragrance, which led with double-digit growth, particularly in new women's and gender-neutral scents.
The analysts added that while Ulta gained share in the mass-market beauty and prestige segments during the quarter, broader industry growth is outpacing the company’s performance.
“Though the company gained share in the quarter, assumed growth of approximately 1.5%, versus industry growth rate of 2% to 5%, implies another year of share loss,” they wrote.
Management acknowledged that “the intensity of the competitive environment is stable,” but noted lingering effects from recent distribution expansions by key competitors. In Q4, 90% of Ulta stores were affected by one competitor, and two-thirds were impacted by two or more, particularly in the prestige makeup segment.
The analysts raised their price target to $425 from $410. Shares of Ulta traded up 11.2% at about $469 in the early afternoon on Friday.