• by Sarah Mahoney  @mahoney_sarah, December 7, 2022

Ulta's hot streak shows no sign of slowing, with the beauty retailer posting an enviable 17.2% in its fiscal third quarter sales. The company says the better-than-expected performance is proof of the beauty category's resilience and the power of new brands and product innovation.

Net sales for the Bolingbrook, Illinois-based company reached $2.3 billion, compared to $2 billion in the fiscal third quarter of last year. Comparable sales advanced by 14.6%.

Ulta's bottom line also sailed past forecasts, with net income jumping 27.5% to $274.6 million, up from $215.3 million in the year-ago quarter.

The results reflect "the strong emotional connection and loyalty we have cultivated with our guests," said Dave Kimbell, chief executive officer, in its announcement.

Observers continue to be impressed with Ulta's abilotu to outperform so many other retailers, even as it continues its rapid expansion.

"Despite concerns that consumer spending is slowing as a result of inflation, the company reports that the holiday season is off to a good start, and it sees no evidence of trading down to less expensive products," writes David Swartz, equity analyst, who follows the company for Morningstar.

Besides "soaring" past expectations for the third quarter, the company also forecasts a 6% to 8% same-store sales growth in the fourth quarter, well above Morningstar's 3% estimate.

Swartz is especially impressed that much of Ulta's gains came not just from higher prices, up 3.5%, but from increased transactions, which rose 10.7% in the quarter.

Mark R. Altschwager, an analyst who follows the company for Baird, remarked on Ulta's 9% increase in loyalty members and double-digit sales gain in every category. And both the prestige and mass categories also had double-digit gains, although lower-priced products did sell better.

"Ulta is not immune to a macro slowdown," he writes in his note on the results. "But it has the team and tools in place to navigate a choppier backdrop."