Ulta Beauty, Inc. (NASDAQ: ULTA) The stock closed more than 5% on Friday after the beauty retailer posted a pace and increase in the first quarter, with $ 1.9 billion in net sales – up 65.2% from $ 1.2 billion a year earlier and beating Street’s estimate of $ 1.64 billion. .
Ulta’s first quarter net income was $ 230.3 million, compared to a net loss of $ 78.5 million in the first quarter of fiscal 2020.
Its diluted earnings per share was $ 4.10, including a 3-cent benefit due to the recognition of income taxes for stock-based compensation, down from $ 1.39 in the first quarter of 2020.
“We came out of 2020 with strong momentum in our sales trends, market share gains and consumer sentiment,” Ulta President Dave Kimbell said in a statement.
Two analysts from Ulta reacted to the retailer’s first-quarter performance, highlighting its rebound from the worst of the pandemic while highlighting a few lingering issues that could slow its financial progress.
Raymond James on Ulta: Joseph Altobello, equity research analyst at Raymond James, maintained a Market Perform rating on Ulta. Ulta released “very impressive first quarter results that not only showed substantial growth over a depressed base period affected by COVID, but perhaps more importantly in the first quarter of 2019, as well as sales. , margins and profits, “said the analyst.
Altobello has increased its guidance for fiscal 2021 and 2022 Adjusted EPS from $ 9.15 to $ 11.95 and from $ 10.15 to $ 13.25, respectively.
He also echoed Ulta’s recognition in its results report that much of its success was due to the decline of the COVID-19 pandemic and the injection of federal stimulus funds into the wallets of the consumers.
While Ultamate Rewards membership was down 2% from a year earlier, it was also up 5% from the previous quarter, “reflecting a strong recovery amidst store reactivations,” said Altobello said, despite social distancing requirements still in place throughout the quarter.
The analyst warned that Ulta’s physical operations gave him reason to worry about his progress.
“Given the uncertainty and fluidity around the sustainability of future in-store traffic, we continue to suggest investors wait for a more attractive entry point in this high-quality name, especially given the positive development of the spare parts market. ”
Telsey on Ulta: Dana Telsey, CEO and Research Director at Telsey Advisory Group, maintained an outperformance on Ulta and raised the price target from $ 375 to $ 400.
Telsey praised the “performance above company expectations in all areas”, with a gross margin that “increased 1,300 basis points to 38.9% (up 190 basis points from 1Q19) , attributable to the leverage of fixed costs on better revenue performance as well as improved merchandise margins, lower salon costs and a favorable channel change.
The analyst highlighted Ulta’s forecast of delivering an operating margin of around 11% for the full year, “which compares favorably to the consensus of 9.7% and the 5.7% recorded in the year. during fiscal year 20, although slightly below the 12.2% reported in fiscal year 19 ”.
In addition, Telsey also made a remark on the CEO’s turnover, stating that the strong first quarter performance will facilitate an easier transfer, and she expressed confidence in the upcoming partnership between Ulta and Target (NYSE: TGT), with the first wave of Ulta stores opening within Target this summer.
Still, Tesley acknowledged that there might be a few issues that would disrupt an otherwise copacific image.
“Ulta continues to expect to open 40 new stores but is now aiming to renovate 19 stores, up from 21 previously,” she wrote. “Labor, wages, fuel and transportation costs are expected to continue to weigh on margins in the second half of the year, and advertising in the second half is expected to be slightly above initial expectations. “
(Photo by Michael Rivera / Wikimedia Commons.)
Final ratings for ULTA
|May 2021||German Bank||Maintains||Buy|
|May 2021||Wells fargo||Maintains||Overweight|
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