should I invest in Ulta Beauty

Ulta Beauty’s Q2 Earnings: What To Expect

Ulta Beauty is set to post earnings for the second quarter, but what’s in store for the cosmetic chain after its impressive Q1 beat?

Investors are expecting big things from Ulta Beauty (NASDAQ: ULTA) after its record-breaking Q1. Thanks to encouraging operating news and a sales spike in the first quarter, Ulta Beauty shares have beaten the market this year, with the stock up almost 12% over the past six months. 

Shareholders are hoping that this momentum will continue when it reports earnings this week for the second quarter and if it does, be prepared for the stock to gain.  

When is Ulta Beauty’s earnings date?

Ulta Beauty will report its Q2 earnings report on Wednesday, 25 August, at 5:00 PM Eastern Time.

How can I listen to Ulta Beauty’s earnings call? 

To listen to the earnings call and to access the transcript, simply visit Ulta Beauty’s Investor Relations page on its website or access the report here.

What to expect from Ulta Beauty’s earnings 

The makeup and beauty industries seemed to be in a good place last quarter despite the ongoing pandemic keeping some events closed. The cosmetics brand came out with record earnings of $4.10 per diluted share on revenue of $1.9 billion, thanks to a 66% comparable sales increase in Q1. Ulta’s sales increased 65% which beat expectations whilst comparable-store sales jumped 7% from the same period two years ago (pre-pandemic).

The company cited consumer confidence, the relaxation of restrictions, and a desire for newness as reasons for the growth, which management expects to see continue into the rest of 2021. In the first quarter, Wall Street was also impressed that the company reported strong profitability in the early stages of the economic reopening. Ulta increased its operating margin by 2% due to the popularity of its premium products, a reduction in promotions which boosted revenue, and higher overall sales. Another strong quarter like this for profitability might just send the stock jumping this week. 

Shoppers using their stimulus checks to buy makeup boosted sales but this trend might have worn off in Q2. For the second quarter, Wall Street expects Ulta Beauty to report sales of $1.72 billion, a slight increase from the $1.7 billion it posted in the same period two years ago and $1.2 billion in 2020. 

Shareholders will be keeping a close eye on the strength of Ulta’s customer traffic in its physical stores and e-commerce websites. Ulta Beauty is one of the largest U.S. cosmetic retailers, making up around 15% of the total market share in the U.S. Investors will want an update to see how the firm is doing compared to its rivals.

Shipping challenges might have represented a hurdle for Ulta in Q2, but if it was able to overcome these logistical obstacles, it should be prepared for a great second half of the year. Autumn and winter seasons usually result in higher makeup sales as people tend to wear less makeup in the summer, warmer months. A return to cosy baths and winter formals should spike Ulta’s cosmetic sales, meaning we could be looking at a very positive forecast for earnings for the rest of the year. 

We can expect to hear questions on Ulta’s expansion plan too. Previously, management has announced their plans to add roughly 40 new stand-alone stores in 2021.

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