Ulta Beauty Q3 Beats Estimate As It Adjusts To Pandemic

The COVID-19 pandemic hit Ulta Beauty’s financial results for the third quarter ended October 31, but CEO Mary Dillon said the company is coping with new realities.

Net income was $74.8 million, or  $1.32 per diluted share, versus $129.7 million, or $2.25 per diluted share, in the 2019 quarter. Adjusted for one time events, net income was $92.5 million versus $128.6 million, and adjusted diluted earnings per share were $1.64 versus $2.23 in the period a year previous. Ulta topped an analyst consensus adjusted diluted earnings per share estimate of $1.49 published by MarketBeat.

Comparable sales, including locations temporarily closed due to the pandemic and e-commerce sales, decreased 8.9% year over year in the quarter. Transactions declined 15.4% but average ticket increased 7.6% versus the quarter a year before.

Net sales slipped 7.8% to $1.55 billion in the quarter. Operating income decreased to $101.3 million from $167.8 million while adjusted operating income slid to $124.9 million from $167.8 million, in the year-past period.

“Today, we reported financial results that exceeded our expectations as we continue to navigate a year of uncertainties with agility and strength,” said Dillon. “We know guests are changing how they shop beauty, but importantly, their engagement with the category remains strong. As a well-loved brand curating all things beauty, all in one place, we take great pride in our responsibility to lead the industry and redefine beauty experiences for guests, inclusive of safety measures. As the prevalence of COVID-19 increases across the country, we will continue to monitor closely and adjust operations as needed to ensure the safe delivery of beauty essentials.”

In early November, Target and Ulta announced that they had formed a strategic partnership. Together, the two companies plan to transform the beauty category at Target with a new shop-in-shop concept stocked with established and emerging prestige brands online and in select Target locations nationwide beginning next year.