Ulta Beauty Q3 Earnings & Sales Beat Estimates, FY25 View Raised

Core Insights - Ulta Beauty, Inc. reported strong third-quarter fiscal 2025 results, with both revenue and earnings exceeding expectations, leading to an upward revision of guidance for the fiscal year [1][11] Financial Performance - Earnings per share for the third quarter were $5.14, surpassing the Zacks Consensus Estimate of $4.56, remaining flat compared to the previous year [1] - Net sales increased by 12.9% year over year to $2,857.6 million, exceeding the Zacks Consensus Estimate of $2,723 million, driven by higher comparable sales, the acquisition of Space NK, and new store contributions [2][11] - Comparable sales rose by 6.3%, supported by a 3.8% increase in average ticket and a 2.4% rise in transactions, outperforming the expected growth of 2.5% [3] Profitability Metrics - Gross profit reached $1,155.7 million, up 14.9% from $1,005.6 million, with gross profit as a percentage of net sales expanding to 40.4% from 39.7% [4] - Selling, general and administrative (SG&A) expenses increased by 23.3% to $840.9 million, rising as a percentage of net sales to 29.4% from 27% due to higher compensation and store-related expenses [5] - Operating income was $309.4 million, down from $318.5 million in the prior year, with operating margin decreasing to 10.8% from 12.6% [6] Financial Health and Shareholder Returns - The company ended the quarter with cash and cash equivalents of $204.9 million and net merchandise inventories of $2,743.6 million [7] - Ulta Beauty repurchased 426,914 shares for $224.7 million during the quarter, with total repurchases for the first nine months of fiscal 2025 amounting to 1.7 million shares at a cost of $693 million [8] Store Expansion and Future Outlook - In the reported quarter, Ulta opened 28 new stores, remodeled 15, and closed one, ending with 1,500 stores across the U.S. [9] - For fiscal 2025, the company expects to open nearly 63 net new stores and undertake 43-48 remodeling projects [9] - Ulta has raised its fiscal 2025 net sales outlook to approximately $12.3 billion, up from a previous estimate of $12-$12.1 billion, with comparable sales now expected to grow by 4.4% to 4.7% [12] - The operating margin forecast for fiscal 2025 has been increased to between 12.3% and 12.4%, and earnings per share are now projected to be in the range of $25.20 to $25.50 [13]