Consumer Discretionary
ULTA’s Q4 update reinforces JJK’s outlook for a strong holiday season for the beauty sector, driven by newness and to a lesser extent increased value vs. LY. They expect ULTA’s prestige makeup category continued to improve in Q4 and its mass category to generate +LSD revenue gains. JJK’s Q4 EPS estimate increases to $7.30, nicely above $6.87 consensus. This raised projection brings their FY24 EPS forecast to $24.20. Kecia Steelman has been announced as the company's new CEO; she has proved to be a strong executor and team builder with well-developed operations and supply chain experience. JJK looks for ULTA’s planned investments in FY25 to fortify the company’s positioning and deliver a return to growth and market share.
Edition: 202
- 10 January, 2025
Consumer Discretionary
ULTA's bet that big Jan / Feb launches would help regain prestige beauty share losses from 2023 may be at risk. While Sol de Janeiro and Charlotte Tilbury are the most highly anticipated launches in ULTA's history, foot and web traffic were down in Jan (-4.3% & -0.5% respectively per Placer & Similarweb) and a sudden downtrend in the mass beauty segment (-3% YTD Y/Y per Neilsen) threatens to offset this newness. Momentum in exclusive Sephora brands and stagnation of legacy brands (EL) dampen the outlook even further.
Edition: 180
- 23 February, 2024
Consumer Discretionary
Better high growth stores, convenience and popular deals boost Nov comps. Verbatim's latest channel checks reveal high-end luxury brands including The Ordinary, e.l.f. Cosmetics, Benefit Cosmetics and Tarte Cosmetics have been the top sellers. Inventory levels are just right, however one of Verbatim’s sample respondents reported shortages in brands such as Lancome, Murad and COSRX. Prices across their sample are rising at an average of $2 and mostly on fragrances. Hiring new employees is easier due to the increasing wages and applicant interest. Labour hours are consistent Y/Y. Online ordering is increasingly popular as stores fulfil 20 orders a day on average. Verbatim’s Nov Comp Estimate is +5.3% vs. 3Q23 (Aug-Oct) Actual Comp of +4.5%.
Edition: 176
- 22 December, 2023
Consumer Staples
North American sales trends are increasingly disconnected from the US Beauty market. As inventory mounts in TJX & Costco and once forbidden discounts ramp up on DTC sites and department stores, the prospect of a meaningful turnaround in the medium term is in question. Distribution expansion at Ulta Beauty, Ulta @ Target and Sephora @ Kohl's, has not slowed the share bleed and a new generation of prestige brands has traction in the market. The outlook for this once dominant portfolio of legacy brands in the US is murky at best as the critical Holiday '23 season approaches.
Edition: 169
- 15 September, 2023
Consumer Discretionary
Beauty bubble? Consumers may turn to “shopping” their beauty closets in 2023 - The Retail Tracker discusses increasing promotions, less customer loyalty, and how new partnerships may disrupt the space in this week’s edition of their Insights & Intelligence report. The growing de-influencing trend on TikTok, its current “hot” brands, and how celebrity brands are feeling saturated, and tired, are also covered. ULTA’s share price is up ~35% over the last year. This is not a good time to build a position, and investors should look to take profits. A less than perfect earnings call and forward guidance presents real risk.
Edition: 155
- 03 March, 2023
Consumer: The recovery engine is reigniting as Covid threats once again wane
Consumer Discretionary
JJK looks for the consumer’s appetite to renew normal living to support upside across PVH, Victoria's Secret, TJX and Ulta Beauty. Demand driven by a return to work, social activities and travel should fuel continued demand strength for apparel, accessories and beauty. With strong evidence from the luxury players including LVMH and Capri Holdings, JJK expects the consumer’s strong demand for these categories to be sustained, with little resistance to elevated pricing.
Edition: 128
- 04 February, 2022
Ulta Beauty (ULTA)
Consumer Discretionary
ULTA is enjoying a rapid recovery, driven by improvement in store productivity and strong replenishment trends across all categories. An emerging uptick in spending on makeup (40% of revenues) is now unfolding reflecting not only replenishment, but also a positive response to new product innovation. For example, Lancôme recently pushed up a new lipstick launch to meet higher demand. As a result, ULTA plans a strong host of prestige makeup brand introductions this month. This new trend is embedded in JJK’s +43% 2Q revenue and $2.37 EPS outlook, above +39%/$2.31 consensus and $12.50 F21 EPS forecast vs. $12.10 consensus.
Edition: 114
- 09 July, 2021