Ulta Beauty Crushes Expectations for Q2

When Ulta Beauty Inc. (NASDAQ: ULTA) released its most recent quarterly results after the markets closed on Thursday, the firm said that it had $0.73 in earnings per share (EPS) and $1.2 billion in revenue. Consensus estimates were calling for $0.06 in EPS and revenue of $1.24 billion. The fiscal second quarter of last year reportedly had EPS of $2.72 on $1.67 billion in revenue.

During the latest quarter, net sales decreased 26.3% year over year. Comparable sales, which include stores that were temporarily closed due to the COVID-19 crisis, as well as e-commerce sales, decreased 26.7%, compared with an increase of 6.2% in the second quarter of fiscal 2019. Also in the most recent quarter, transactions declined 36.2% and average ticket increased 14.9%.

Management noted that it is encouraged by the recent improvement in sales trends, but it still believes it will take time to return fully to pre-pandemic levels. Given continued disruption, new operational protocols and near-term employment and economic uncertainty, Ulta expects sales will continue to be challenged for the rest of the year.

The company withdrew guidance for the fiscal 2020 year back in March, and it will not be reinstating it anytime soon. However, the firm did give some insight. The company expects to incur between $35 million and $40 million in PPE- and COVID-19-related costs. It also anticipates capital expenditures will be between $180 million and $200 million.

On the books, the company ended the second quarter with $1.2 billion in cash and cash equivalents. In the fiscal first quarter, the company drew down $800 million under its $1.0 billion credit facility.

Analysts were calling for $1.67 in EPS and $1.63 billion in revenue for the fiscal third quarter. For the 2021 fiscal year, they expect $4.16 in EPS and $6.4 billion in revenue.

Ulta Beauty stock traded about 12% on Friday to $251.07, in a 52-week range of $124.05 to $304.65. The consensus price target is $262.59.

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