Ulta Beauty shines after annual forecast hike on steady demand, UK expansion

Audio By Carbonatix

Enlarge

(Reuters) -Ulta Beauty raised its annual sales and profit forecast after topping quarterly sales estimates on Thursday, banking on steady demand for makeup and skincare brands at its stores as well as lower inventory losses.

Shares of the company were up 6% in trading after the bell.

The company saw stronger store sales, fueled by younger shoppers drawn to trendy and affordable brands such as Elf Beauty.

The cosmetics retailer also expanded internationally with its July acquisition of UK high street chain Space NK.

Ulta has been adding celebrity-owned labels, such as Rihanna’s Fenty Beauty, to its shelves and ramping up digital and marketing investments to deepen shopper engagement.

Second-quarter sales came in at $2.79 billion, beating estimates of $2.67 billion, as per data compiled by LSEG.

It now expects annual net sales to be in the range of $12 billion to $12.1 billion, compared with its prior forecast of $11.5 billion to $11.7 billion.

The forecast upgrade comes amid global trade uncertainty, with executives warning that shifting U.S. policies have weighed on consumer and business sentiment.

Luxury cosmetic maker Estee Lauder last week flagged a $100 million tariff hit and said it would trim inventory and promotions to curb rising costs.

“Our outlook for the remainder of the year reflects both the strength of our year-to-date performance and our caution around how consumer demand may evolve in the second half of the year. While near-term uncertainty persists, we’re staying focused on what we can control,” said Ulta CEO Kecia Steelman.

Lower e-commerce shipping costs and reduced inventory losses also helped Ulta offset supply chain pressures.

Quarterly gross profit rose 11.6% to $1.10 billion. The company now expects annual earnings of $23.85 to $24.30 per share, up from $22.65 to $23.20 apiece.

(Reporting by Aatrayee Chatterjee in Bengaluru; Editing by Alan Barona)