Other retailers may be posting soft second-quarter results and gloomy forecasts, but not Ulta Beauty. The company's comparable sales soared 14.4%, with strong consumer demand driving double-digit gains across all its categories.
Total sales rose 16.8% to $2.3 billion, compared to $2 billion in the year-ago period.
Net income increased 17.8% to $295.7 million, compared to $250.9 million in the second quarter of last year.
It beat Wall Street expectations in both sales and profits. And as it looks ahead to the second half, it now expects to report sales gains of between 9.5% and 10.5% for its full fiscal year. Previously, it estimated that growth would be between 6% and 8%.
"Consumer engagement with beauty remains strong, reflecting a deep emotional connection with the category, as well as the continued importance of self-care and wellness," says Dave Kimbell, chief executive officer, in a conference call to discuss the results.
Ulta continues to benefit from its investment in CRM capabilities and life cycle marketing strategies. "Today, we are leveraging predictive decisioning to target strategic member segments with personalized communications and offers to increase frequency and drive higher lifetime value," adds Kimbell.
"Outperforming department store competitors that have suffered softer sales trends, Ulta Beauty posted stellar results in second-quarter 2022," writes David Swartz, an analyst who follows the company for Morningstar. "Ulta shook off concerns that inflation is cutting into spending…Moreover, in contrast to some others, it reported that sales trends have improved recently as inflation has cooled. We believe Ulta continues to take share in prestige beauty from department stores."
Perhaps even more promising is that the demand for beauty and personal care products is holding up well for customers of all income levels.
"Big picture, we remain confident in Ulta's competitive position, profitably taking share in a growing category," writes Mark R. Altschwager, an analyst who follows the company for Baird. He continues to rate the company as likely to outperform competitors.
Altschwager notes that sales growth is "fueled by strength in both core and newness. We're encouraged by healthy loyalty member growth, up 10% year-over-year, as initiatives to attract new customers (such as Ulta at Target) and [attempts to] reactivate lapsed customers prove successful."