Ulta's (NASDAQ:ULTA) Q1 Earnings Results: Revenue In Line With Expectations

Jabin Bastian /
2024/05/30 4:13 pm EDT

Beauty, cosmetics, and personal care retailer Ulta Beauty (NASDAQ:ULTA) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 3.5% year on year to $2.73 billion. On the other hand, the company's full-year revenue guidance of $11.55 billion at the midpoint came in 1.4% below analysts' estimates. It made a GAAP profit of $6.47 per share, down from its profit of $6.88 per share in the same quarter last year.

Is now the time to buy Ulta? Find out by accessing our full research report, it's free.

Ulta (ULTA) Q1 CY2024 Highlights:

  • Revenue$2.73 billion vs analyst estimates of $2.73 billion (small miss)
  • EPS: $6.47 vs analyst estimates of $6.28 (3% beat)
  • The company dropped its revenue guidance for the full year from $11.75 billion to $11.55 billion at the midpoint, a 1.7% decrease
  • Gross Margin (GAAP): 39.2%, down from 40% in the same quarter last year
  • Free Cash Flow of $68.32 million, down 65% from the same quarter last year
  • Locations: 1,395 at quarter end, up from 1,359 in the same quarter last year
  • Same-Store Sales rose 1.6% year on year
  • (9.3% in the same quarter last year)
  • Market Capitalization: $18.13 billion

“The Ulta Beauty team delivered net sales growth of 3.5% and comparable sales growth of 1.6% in a dynamic operating environment. I am proud of how our teams continued to execute our transformational agenda, adapt to a rapidly evolving marketplace, and thoughtfully manage expenses across the enterprise,” said Dave Kimbell, Chief Executive Officer.

Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty (NASDAQ:ULTA) is an American retailer that sells makeup, skincare, haircare, and fragrance products.

Beauty and Cosmetics Retailer

Beauty and cosmetics retailers understand that beauty is in the eye of the beholder, but a little lipstick, nail polish, and glowing skin also help the cause. These stores—which mostly cater to consumers but can also garner the attention of salon pros—aim to be a one-stop personal care and beauty products shop with many brands across many categories. E-commerce is changing how consumers buy cosmetics, so these retailers are constantly evolving to meet the customer where and how they want to shop.

Sales Growth

Ulta is larger than most consumer retail companies and benefits from economies of scale, giving it an edge over its competitors.

As you can see below, the company's annualized revenue growth rate of 10.3% over the last five years was decent as it opened new stores and grew sales at existing, established stores.

Ulta Total Revenue

This quarter, Ulta's revenue grew 3.5% year on year to $2.73 billion, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 5% over the next 12 months, an acceleration from this quarter.

When a company has more cash than it knows what to do with, buying back its own shares can make a lot of sense–as long as the price is right. Luckily, we’ve found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Special Free Report on a fallen angel growth story that is already recovering from a setback.

Same-Store Sales

Ulta's demand within its existing stores has generally risen over the last two years but lagged behind the broader consumer retail sector. On average, the company's same-store sales have grown by 8.8% year on year. With positive same-store sales growth amid an increasing physical footprint of stores, Ulta is reaching more customers and growing sales.

Ulta Year On Year Same Store Sales Growth

In the latest quarter, Ulta's same-store sales rose 1.6% year on year. By the company's standards, this growth was a meaningful deceleration from the 9.3% year-on-year increase it posted 12 months ago. We'll be watching Ulta closely to see if it can reaccelerate growth.

Key Takeaways from Ulta's Q1 Results

We struggled to find many strong positives in these results. Although its EPS beat analysts' estimates thanks to its better-than-expected same-store sales growth (1.6% vs estimates of 1.5%), its full-year revenue and earnings guidance missed Wall Street's projections.

However, this weaker outlook was already baked into the stock price given CEO Dave Kimbell's bearish comments during the middle of the quarter, where he stated the company is seeing a slight pullback in consumer spending. Peer company elf Beauty also posted a bad quarter earlier this month, so investors anticipated Ulta's results. The company is down 1.6% after reporting and currently trades at $379.48 per share.

Ulta may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.