• by Sarah Mahoney  @mahoney_sarah, March 15, 2024

Ulta’s fourth-quarter financial results hit all the high notes observers have come to expect from the retailer, with both sales and profits ahead of forecast. However, a relatively downbeat prediction for the year ahead left some investors worried Ulta’s long hot streak is cooling.

Ulta’s sales climbed 10.2% to $3.6 billion for the fourth quarter of the fiscal year, up from $3.2 billion in the fourth quarter of 2022. Sales rose 2.5% on a comparable basis. And net income jumped 15.7% to $394.4 million compared to $340.8 million.

For the full year, sales rose to $11.2 billion from $10.2 billion in fiscal 2022, a 9.8% rise.

The Bolingbrook, Illinois-based company attributes its strong performance to exceptional advertising. “Our marketing strategies, media investments, and brand-building efforts resulted in record-level unaided awareness, brand love, and loyalty,” says Dave Kimball, chief executive officer, in a call webcast for investors.

He also credits launching the Joy Project, a multiyear brand equity initiative to make beauty and the world a more joyful place, and sticky social media. The brand topped 1 million TikTok followers.

“We expanded our social media engagement across multiple platforms with new trendsetting series and compelling content, which drove strong engagement, positive social sentiment, and share of voice,” he says.

Membership in Ulta’ loyalty program gained 8%, reaching 43 million members.

Kimball declined to answer questions about how many brands are advertising on UB Media or how much money Ulta is making on the new retail media network. “I will say we're pleased with progress that we've made in 2023 and are confident that we will continue to grow this part of the business.”

All that sounds good. For the coming fiscal year, however, it anticipates a much smaller increase, expecting sales in the range of $11.7 to $11.8 billion, somewhat lower than analysts expected.

That looks conservative to Mark Altschwager, an analyst who follows Ulta for Baird. He continues to expect Ulta to outperform retail peers,

At Oppenheimer & Co., analyst Rupesh Parikh also expects Ulta to outperform. “Beauty is a clear, bright spot in a difficult CPG backdrop,” he writes. “Recent data points suggest continued healthy momentum in key beauty subcategories, including makeup, skincare, and fragrances (which should more than offset likely depressed demand for hair tools), even as the category continues to normalize.”