Ulta Beauty Q1 Earnings Preview: Positive Foot Traffic Data May Offset Concerns Over Same-Store Sales

Zinger Key Points
  • Foot traffic shows Ulta outperforming the overall beauty and wellness retail space.
  • Bearish commentary from the company at an April conference may have spooked investors ahead of Q1 results.

Beauty retailer Ulta Beauty, Inc. ULTA will report first-quarter financial results after market close Thursday, May 30, 2024.

Here are the earnings estimates, what analysts are saying and key items to watch.

Earnings Estimates: Analysts expect Ulta to report first-quarter revenue of $2.72 billion, according to data from Benzinga Pro.

The company reported revenue of $3.23 billion in last year's first quarter. Ulta has beaten analysts' revenue estimates in 10 straight quarters.

Analysts expect the company to report first-quarter earnings per share of $6.23 compared to $6.88 in last year's first quarter. The company has beaten analysts' earnings per share estimates in 10 straight quarters.

The company is guiding for fiscal 2024 revenue to be in a range of $11.7 billion to $11.8 billion and earnings per share to be in a range of $26.20 to $27.00.

"While we are mindful the near-term macro environment remains dynamic, we are optimistic about the resiliency of the beauty category, energized by the growth opportunities ahead of us, and confident in our ability to deliver for our guests and our shareholders," Ulta CEO David Kimbell said after Q4 results.

What Analysts Are Saying: Nielsen data could point to a flat quarter for Ulta Beauty, JPMorgan analyst Christopher Horvers said in a recent note.

The data showed total beauty products in the food, drug and mass channels were up 1.2% for the four weeks ending May 18 and up 1.7% for the four weeks prior to that.

"That said, Ulta's same-store sales have a 63% correlation with NielsenIQ cosmetics trends and nearly 50% with beauty," Horvers said.

The analyst has a Buy rating on Ulta and lowered the price target from $600 to $530.

"Looking at the full period, the data continue to imply a flattish comp for 1Q24, consistent with expectations that we previewed with moderation since the company commentary at our conference in early April.”

The analyst said the one-year and five-year trends are largely accelerated, led by the fragrance category.

Categories like cosmetics, facial skin care and hand/body/lotion all saw lower growth than in the previous month in the latest Nielsen data, with the fragrance category outperforming at +17.5% compared to +12.8% in the prior month.

Other analysts have been lowering their price targets on Ulta stock ahead of earnings. Here are recent analyst ratings on Ulta Beauty and their price targets.

  • Canaccord Genuity: Buy rating, lowered price target from $575 to $522
  • Baird: Outperform rating, lowered price target from $625 to $525
  • Bank of America: Neutral rating, lowered price target from $575 to $425
  • Citigroup: Neutral rating, lowered price target from $485 to $400
  • Jefferies: Hold rating, lowered price target from $438 to $412
  • Telsey: Outperform rating, lowered price target from $600 to $500
  • Piper Sandler: Overweight rating, lowered price target from $595 to $505
  • Goldman Sachs: Neutral rating, lowered price target from $605 to $476

Related Link: Ulta Beauty Faces Headwinds From Slowing Trends, Notes Analyst

Key Items to Watch: In April, Ulta presented at a JPMorgan conference and said that it wouldn't be able to generate 15%+ margins on more moderated comp sales of 3% to 4%. The company also said its first-quarter same store sales would come in the lower end of low single-digit growth guidance.

A recent report on foot traffic from Placer.ai shows that Ulta is seeing strong year-over-year visit growth, which is outpacing other retailers in the Beauty and Wellness category.

The report said visits between January and April 2024 for Ulta were higher than the previous year and ahead of the sector.

Placer.ai showed Ulta visits up 3.1% in April, up 12.1% in March and up 9.0% in February on a year-over-year basis. The overall beauty and wellness segment had year-over-year growth of 0.5% in April, 8.2% in March and 6.7% in February, according to the report.

"Ulta continues to experience visit growth, highlighting Beauty's enduring appeal," the report said.

Investors and analysts will be closely watching the report to see if the strong foot traffic can help the company again beat revenue and earnings per share estimates.

ULTA Price Action: Ulta shares trade at $379.97 versus a 52-week trading range of $368.02 to $574.76. Ulta stock is down 7.9% over the last year and down 22.5% year-to-date in 2024.

Read Next: Ulta’s Strategic Moves And Market Share Poise Spark Optimism, Analysts Elevate Forecasts Post-Q4 Triumph

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