Strength within the skincare class and rising e-commerce gross sales have saved Ulta Beauty, Inc. ULTA on a powerful footing. Markedly, such upsides fueled first-quarter fiscal 2021 outcomes, whereby the highest and backside traces grew 12 months over 12 months and crushed the Zacks Consensus Estimate. Robust gross sales and cost-containment efforts drove the underside line within the first quarter, whereas gross sales gained on authorities stimulus, higher client confidence and rest of pandemic-related curbs. Also, the will for newness has been an upside. Certainly, this magnificence merchandise retailer’s focus on its six key methods has been yielding outcomes.Encouragingly, administration raised its fiscal view. Well, the Zacks Consensus Estimate for fiscal 2021 has elevated 25.2% to $12.02 per share over the previous 30 days. Also, the Zacks Rank #1 (Strong Buy) inventory has rallied 24.9% prior to now six months, simply crushing the business’s development of 9.1%. Notably, this Bolingbrook, IL-based firm additionally comfortably outpaced the S&P 500’s rise of 16.9%. Meanwhile, the Zacks Retail-Wholesale sector declined 2.5% in the identical timeframe. Let’s take a more in-depth look.
Ulta Beauty Inc. Price, Consensus and EPS Surprise
Ulta Beauty Inc. price-consensus-eps-surprise-chart | Ulta Beauty Inc. Quote
Impressive Q1 Results & Outlook
Net gross sales surged 65.2% 12 months over 12 months to $1,938.5 million and simply beat the Zacks Consensus Estimate of $1,673 million within the first quarter. The rise in gross sales might be attributable to optimistic impacts within the United States from authorities stimulus funds, higher client confidence and rest of pandemic-related curbs. Also, the will for newness is driving client spending within the magnificence area. Comparable gross sales or comps soared 65.9%. This stable development was broad-based, with better-than-expected efficiency throughout classes, areas and channels, particularly shops (with shoppers changing into extraordinarily comfy with in-store purchasing).Ulta Beauty stays effectively positioned for restoration within the magnificence area, because of its differentiated mannequin and endeavors to construct necessary visitor connections. Impressively, the corporate raised its gross sales, comps, working margin and earnings steering for fiscal 2021. Management now expects web gross sales of $7.7-$7.8 billion, up from $7.2-$7.3 billion anticipated earlier than. Comps development is now anticipated within the vary of 23-25% in contrast with the prior band of 15-17%. Further, administration expects working margin to be round 11% now, up from 9% projected earlier than. Growth in working margin is prone to be pushed by an growth in gross margin. Earnings are actually envisioned within the vary of $11.5-$11.95 per share, as compared with $8.85-$9.30 forecasted earlier.
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Skincare Category a Major Driver
Ulta Beauty has been seeing market share beneficial properties in main magnificence classes for some time now, with skincare standing out. The pattern continued within the first quarter of fiscal 2021, whereby skincare noticed sturdy gross sales development. As a proportion of gross sales, skincare expanded 200 foundation factors to 19% within the first quarter. Consumers have been displaying rising curiosity in new manufacturers like Keys Soulcare, LOLI Beauty, and Urban Skin Pro, in addition to new merchandise underneath Tula, Pacifica, and Central Bay. Apart from these, the corporate additionally noticed power within the perfume and hair care classes, with the latter gaining on the DIY developments, hair colour, colour care and hair styling instruments. Consumers’ elevated focus on skincare and hair amid greater at-home grooming is prone to hold aiding these classes.
Omnichannel Development Aids
Ulta Beauty is thought for its technique of putting the suitable steadiness between on-line and bodily shops. E-commerce delivered a stable efficiency within the first quarter, rising within the mid-teens vary on the again of sturdy visitors and elevated common order. Markedly, purchase on-line, choose up in-store or BOPIS penetration elevated to roughly 16% of whole e-commerce gross sales within the first quarter, up from 4% in the identical interval final 12 months. Apart from these, the corporate’s shops and ship-to-home channels drove e-commerce gross sales. Additionally, the corporate’s initiatives to spice up on-line promotions and buyer engagement have been supporting on-line gross sales development. With shoppers rising enthusiasm towards on-line gross sales, administration stays on observe with increasing capability at success facilities, growth of ship from retailer capabilities in addition to curbside pickups. The firm can be benefiting from its cell app and digital try-on capabilities.
Focus on 6 Key Priorities
The firm has been targeted on its six strategic priorities. The firm’s foremost precedence is to strengthen its omnichannel enterprise and discover the potential of each bodily and digital sides. The pandemic has, in truth, sped up this course of for the corporate, given shoppers’ elevated on-line engagement. Next, the corporate is enterprise numerous instruments to boost expertise of friends, like providing a digital try-on instrument and in-store schooling, and reimagining fixtures, amongst others. Thirdly, the corporate concentrates on providing prospects a curated and unique vary of magnificence merchandise by innovation. Fourthly, the corporate is concentrated on deepening buyer engagement by boosting rewards and loyalty applications. Fifthly, administration is dedicated to optimizing its price construction. Apart from these, the corporate strives to spice up organizational expertise and strengthen its tradition.All stated, we count on Ulta Beauty to maintain its splendid present going, particularly with the relief of pandemic-led curbs and the corporate’s incessant efforts to drive development.
3 Other Solid Retail Stocks
Hibbett Sports HIBB has a long-term earnings development fee of 8.5% and presently, a Zacks Rank #1. You can see the whole record of in the present day’s Zacks #1 Rank shares right here.DICK’S Sporting DKS boasts a long-term earnings development fee of seven.1% and presently, a Zacks Rank #1.Sally Beauty SBH, additionally a Zacks Rank #1 inventory, has a trailing four-quarter common earnings shock of 37.8%.
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