Thursday's Market Minute: Ulta Beauty (ULTA) Earnings Preview

Ulta Beauty (ULTA) reports 2Q earnings after the bell today. Zacks estimates earnings of $4.93/share on revenue of $2.2 billion, and the stock has beaten its estimates for the last seven quarters. The stock has had some choppy moves over the last year, and while it is trading below 52-week highs made in April, it’s still up around 6%. Year-to-date, it’s almost flat. However, Ulta’s Market Maker Move is currently at almost $24.00 up or down – or around 6%.

The beauty industry is considered by many to be recession-proof, as social pressures on women’s appearances continue no matter the circumstances. However, beauty products have not been immune to inflation (NielsenIQ data cites average unit price increases up 10% Y/Y), which could lead consumers to seek deals or settle for cheaper brands – moving from Sephora to, perhaps, Ulta, which carries a wider range of products and is considered more budget-friendly. While Amazon and other online channels remain competitors, NPD data reported that brick-and-mortar comprised 65% of beauty retail sales in 2021.

Over the last two and a half years, Ulta has trended upward, from March of 2020 until now. Even during the pandemic, when socialization lessened and people worked in pajamas, the beauty category went strong. Will it continue its move up over the next three?

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