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Ulta Beauty (ULTA) is trading sharply higher after reporting its Q3 (Oct) results last night, reaching a new all-time high. The beauty retail giant comfortably beat expectations on the top and bottom line, continuing its streak of large double digit EPS upside, while revenue increased 12.9% to $2.86 bln, its strongest growth in nearly three years. It also raised its full-year guide for EPS and revenue above expectations to $25.20-25.50 and about $12.3 bln, respectively, as well as comp sales to +4.4-4.7%.

• Comp sales increased +6.3% (+2.9% in Q1; +6.7% in Q2), split between a 3.8% increase in average ticket and 2.4% increase in transactions, driven by positive comps across all categories and channels, with e-commerce delivering standout double-digit growth.
• By category, fragrance continued to lead with double-digit comp growth, while skincare was the second-fastest-growing category with high-single-digit comps. Makeup, haircare, and services all delivered mid-single-digit comp growth.
• Management noted that despite a softening of consumer confidence in Q3, beauty engagement remained healthy, with both mass and prestige beauty markets delivering mid-single-digit growth.
• ULTA is also building momentum in its growth initiatives, including international expansion, with several new Ulta stores opened in Mexico and its first in the Middle East, and Space NK continuing to perform well in the UK.
• Holiday commentary was constructive but cautious. Management said Black Friday and Cyber Monday were strong and support the higher outlook, but noted the biggest weeks are still ahead and beauty budgets remain tight, with guests focused on value, gift sets, and deals.

Briefing.com Analyst Insight

This report from ULTA underscores the resilience of the beauty category, with both mass and prestige growing at a mid-single-digit pace. ULTA also continues to lean into what it does well, meeting consumer needs and staying close to its Ulta Beauty Unleashed plan, which emphasizes better in-store execution, more effective promotions, and stronger digital and loyalty engagement. Comps remained healthy, and the raised guidance points to continued momentum as it heads into the all-important holiday season. Management acknowledged that consumers remain cautious, but recent performance and the raised guidance suggest ULTA is entering the holidays in a solid position, with guests still prioritizing beauty even as budgets stay tight. Additionally, its international expansion adds another leg of growth optionality, and combined with the strong results, has helped push shares to new all-time highs.