Shareholders of Ulta Magnificence (NASDAQ: ULTA) could be in for an enormous week. The inventory of the spa and wonder merchandise retailer has crushed a surging market to date in 2021, primarily due to the encouraging working information that the corporate introduced again in late Could. As well as, gross sales developments spiked within the first quarter, which led to late April.
Buyers are hoping that this optimistic momentum carried via into the early summer season months, however there are another key metrics to look at past the essential gross sales developments.
Let’s take a better have a look at the second-quarter report, due out on Wednesday, Aug. 25.
Picture supply: Getty Pictures.
The well being of the make-up trade
Ulta stunned Wall Avenue three months in the past by portray a a lot brighter image of the make-up trade and its market share in that area of interest. Gross sales jumped 65% to trounce expectations for a 40% income rebound from pandemic lows. Stripping out the noise from COVID-19, comparable-store gross sales have been up 7% from the identical interval two years in the past.
CEO Dave Kimbell and his workforce described a booming make-up area of interest supported by stimulus spending and a flood of latest product launches. Most buyers who observe the inventory are predicting one other record-setting efficiency this quarter. Gross sales are anticipated to succeed in $1.72 billion, in comparison with $1.7 billion two years in the past and $1.2 billion final yr. Beneath that headline determine, look ahead to indicators of energy in buyer visitors and Ulta Magnificence’s market share in comparison with rivals.
No want for promotions
Buyers have been thrilled to see robust profitability via the early phases of the financial reopening three months in the past. Ulta improved its working margin by 2 full share factors due to rising demand for premium merchandise, decreased promotions throughout the portfolio, and better total gross sales.
ULTA working margin (TTM) information by YCharts. TTM = trailing 12 months.
Look for the same enhance this quarter, particularly on condition that the chain entered the second quarter with gentle stock ranges. Assuming no main delivery challenges, that posture doubtless allowed Ulta to shortly reply to any demand shifts for make-up, skincare, and wonder care merchandise.
An up to date outlook?
The largest issue more likely to transfer the inventory this week is any shift in administration’s outlook. That forecast impressed an enormous improve in late Could, with comps now anticipated to rise by 23% to 25% this yr. As well as, the working margin ought to hit roughly 11%, marking an enchancment over the prior 9% forecast.
Strong shopper spending since then suggests Ulta might need room to elevate that outlook once more on Wednesday. However new COVID outbreaks will minimize towards that bullish studying.
In any case, search for administration to reiterate a modest growth plan that has the chain including about 40 new stand-alone areas in 2021, along with the launches inside Goal (NYSE: TGT) shops.
That retailing partnership has room to develop if it continues to be a win-win for each corporations. However first, Ulta has to indicate that its first-quarter gross sales rebound was greater than only a short-term spike brought on by pent-up demand from social distancing in late 2020.
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Demitri Kalogeropoulos has no place in any of the shares talked about. The Motley Idiot owns shares of and recommends Ulta Magnificence. The Motley Idiot has a disclosure coverage.
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