Ulta Beauty Sees Steady Comps: Is Broad-Based Growth Enough?

Core Insights - Ulta Beauty, Inc. (ULTA) reported a 2.9% increase in comparable sales for the first quarter of fiscal 2025, driven by higher average ticket values and slight growth in transactions [1][7] - The growth was primarily supported by strong performance in fragrance and wellness categories, with double-digit growth in fragrance and high-single-digit gains in body care and sun care [1][7] - However, the haircare segment remained flat overall, with declines in mass hair and tools, while the makeup category experienced slightly negative comparable sales due to weakness in mass makeup [1][7] Sales Performance - Both digital and store channels contributed to the comparable sales growth, with e-commerce sales rising approximately 10% and comparable store sales increasing in the low single digits [2] - The average ticket value grew by 2.3%, mainly due to higher average selling prices, although this was partially offset by a decline in units per transaction [2] - Promotional activities were more disciplined, with the elimination of overlapping offers and targeted member data usage enhancing operational execution [2] Future Outlook - Ulta Beauty anticipates comparable sales growth for fiscal 2025 to range from flat to up 1.5%, with the second half projected to vary from down low-single digits to modest growth [3] - Leadership emphasized a cautious approach to guidance, highlighting the need for strength in select categories and channels to broaden for steady comparable sales performance [3] Stock Performance - Ulta Beauty's shares have risen 39.3% over the past three months, outperforming the industry growth of 28.7% and the broader Retail and Wholesale sector and S&P 500 index growth of 18% and 23.3%, respectively [4] - The stock closed at $477.79, trading 2.9% below its 52-week high of $491.98, with technical indicators showing strong performance above its 50 and 200-day simple moving averages [8][12] Valuation Metrics - Ulta Beauty currently trades at a forward 12-month P/E ratio of 19.57, which is above the industry average of 17.94, indicating a premium valuation relative to peers [9] Earnings Estimates - The Zacks Consensus Estimate for EPS has seen downward revisions, with current quarter estimates declining by 4 cents to $4.87 and fiscal year estimates down by 16 cents to $23.39 per share [11]