Ulta Gains On Increased Marketing Spending

David Lopez and Deepica Mutyala on Ulta's "The Beauty Of" podcast

Ulta keeps proving that it’s got what it takes to win with beauty shoppers, posting first-quarter sales gains and healthy traffic trends.

Net revenues climbed to $2.63 billion, up from $2.35 billion in the same period a year ago. Comparable sales rose 9.3%. And net income increased 14% to $347.1 million, compared with $331.4 million in the comparable period of 2022.

The company spent more on marketing for the quarter, focusing on strategies to build brand awareness, drive member acquisition and retention and boost its omni-member penetration. It’s also testing new personalized digital communications.

Like many other retailers, Ulta is keeping financial results at its fledgling retail media network under wraps. But it says UB Media is engaged with more brands, managing digital campaigns and beefing up its ad product portfolio.



“As UB Media continues to scale, we are confident it will add meaningful value to our company over time,” executives said in a conference call discussing the quarterly results.

While the results are subdued compared to the many stellar quarters the retailer has posted in recent years, observers say both sales and earnings met expectations and prove the company’s solidity.

Noting that the beauty industry has to moderate at some point, “Ulta remains a quality business in the durable category,” writes Mark Altschwager, an analyst who follows Ulta for Baird.

He notes that most of Ulta’s categories saw strong growth, including double-digit gains in skincare, fragrance and bath, and high single-digit advances in makeup. Altschwager also says sales of mass products beat prestige brands, which Ulta attributes more to increased innovation in mass brands than customers trading down to save money.

“Slowing category growth and a more promotional backdrop add more risks in the short term,” writes Rupesh Parikh, who follows Ulta for Oppenheimer & Co. “But we believe Ulta remains well-positioned to continue gaining share.”

With sales up 9%, the beauty retailer also says its UB Media network is growing fast and will soon add “meaningful value.”

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