Ulta Beauty beats Q1 estimates, raises EPS outlook on fragrance strength

Ulta Beauty Inc. reported fiscal first-quarter results that topped Wall Street expectations and lifted its full-year earnings forecast, driven by broad-based growth across categories and a strong performance in fragrance.

"Our results demonstrate the strengths of our model, focused execution of our talented associates and the effectiveness of our strategy in an uncertain macroeconomic landscape," Chief Executive Officer Kecia Steelman said in a statement.

The beauty retailer posted earnings per share of $7.74 for the three months ended May 2, compared with the $6.86 average analyst estimate compiled by LSEG. Revenue rose 11.1% from a year earlier to $3.16 billion, exceeding the $3.10 billion consensus. Comparable sales increased 5.3%, beating the 4.6% expected by StreetAccount, driven by a 3.7% rise in average ticket and a 1.6% increase in transactions.

Fragrance was the standout category, delivering high-teen comparable growth and expanding from 11% to 12% of total revenue. Growth was fueled by newness from luxury brands including YSL, Carolina Herrera and Valentino, as well as innovation from exclusive brand NOYZ. The haircare category posted high single-digit comparable growth, while makeup and skincare each recorded low single-digit increases.

Gross margin expanded 100 basis points to 40.1% of sales, driven by lower inventory shrink and higher merchandise margin. Operating income rose 11.6% to $448.3 million. The company returned $555 million to shareholders through share repurchases during the quarter and raised its full-year buyback target to $1.5 billion from $1 billion.

Ulta maintained its full-year comparable sales growth forecast of 2.5% to 3.5% and revenue growth of 6% to 7%. It raised its diluted EPS guidance to a range of $28.36 to $28.80, up from $28.05 to $28.55, representing growth of 10.6% to 12.3% from fiscal 2025.

Shares rose as much as 7% in extended trading following the release before paring gains. The stock had declined roughly 6% during the regular session on Tuesday ahead of the report.

The guidance raise signals management expects the momentum in fragrance and prestige beauty to continue, even as consumers face pressure from elevated fuel prices and inflation. Investors will watch the company's second-quarter earnings call on Aug. 27 for updates on category trends and the performance of new initiatives including its TikTok Shop launch and the planned Times Square flagship store expected to open in late 2027.

This article is for informational purposes only and does not constitute investment advice.