To The Moon

$ulta beauty(ULTA)$ is expected to post its quarterly results for Q4 2024 on 13 March 2025 after the market close.

The consensus estimate for revenue for Q4 2024 is expected at $3.46 billion, which represent a 2.8% decrease from the same period one year ago. The consensus estimate for fiscal 2024 top line is pegged at $11.26 billion, which indicates an increase of 0.5% from one year ago.

The consensus estimate for quarterly earnings has been expected at $7.13 per share, indicating a 12.8% dip from the same period one year ago. The consensus estimate for fiscal 2024 earnings is estimated at $23.93 per share, implying a decline of 8.1% from the prior year’s reported figure. ULTA delivered a trailing four-quarter earnings surprise of 6.2%, on average.

Ulta Beauty (ULTA) Last Neutral Earnings Call Saw Decline Of 12.77%

Ulta Beauty delivered strong financial results with notable achievements in sales growth, loyalty program expansion, and digital transformation. However, challenges in prestige makeup and hair categories, increased promotional activity, and higher inventory shrink posed headwinds. Overall, the company remains confident in its strategic initiatives and long-term growth outlook.

Ulta Beauty (ULTA) Guidance On Stronger Sales Growth

During the third quarter 2024 earnings call for Ulta Beauty, the company provided guidance indicating robust performance with net sales rising by 1.7% to $2.53 billion compared to $2.49 billion, primarily due to new store contribution, partially offset by a decline in other revenue and comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 0.6% compared to an increase of 4.5%, driven by a 0.5% increase in transactions and a 0.1% increase in average ticket.

The operating profit stood at 13.1% of sales, and diluted EPS was reported at $5.14 per share. Ulta Beauty's loyalty program achieved a record high of 42.2 million active members, reflecting an 8% increase. While skincare emerged as the fastest-growing category with double-digit growth, the makeup category remained flat, and hair care saw a low single-digit decline. Ulta Beauty is emphasizing strategic priorities to drive profitable growth, including enhancing the customer experience and focusing on omnichannel shopping, digital engagement, and loyalty programs. 

The company also highlighted a strong services business with high single-digit comp growth driven by core services and new offerings.

For fiscal 2024, Ulta Beauty's guidance remains at net sales of $11.0 to $11.2 billion, with comparable sales growth expected to be flat or show a slight decline (-2% to 0%), and a focus on strategies for long-term growth and enhanced customer experience. 

Here Are Some Key Metrics That I Will Evaluate

Revenue Growth: Compare actual revenue against analyst expectations. Look for growth driven by holiday sales (Q4 typically includes critical holiday spending). Check if growth is fueled by new store openings, e-commerce, or same-store sales.

Same-Store Sales (Comps): A metric of organic growth. Ulta’s Q3 2023 comps grew 4.5%, but slower than previous quarters. Q4 performance will indicate resilience amid economic pressures.

Margins

Gross Margin: Monitor impacts of discounts/promotions during holidays and supply chain costs.

Operating Margin: Watch for labor costs (wage inflation) and SG&A expenses.

E-commerce vs. In-Store: Online sales growth vs. brick-and-mortar trends. Ulta’s omnichannel strategy (e.g., BOPIS—Buy Online, Pick Up In Store) could be a driver.

Inventory Management: Excess inventory could lead to markdowns, hurting margins. Q3 2023 saw a 9% inventory increase; Q4 should reflect holiday sell-through efficiency. Inventory shrink continued to be a headwind, despite efforts to stabilize the impact.

Guidance & Commentary: Forward-looking statements on consumer demand, macroeconomic challenges, and strategic priorities (e.g., skincare expansion, loyalty program updates).

Industry & Strategic Factors:

Beauty Sector Trends: Skincare and premium fragrances are growing segments. Ulta’s partnerships (e.g., Olaplex, Fenty Beauty) and private-label offerings (e.g., ULTA Beauty Collection) may drive differentiation. Sales in the makeup category were flat, with mid-single-digit growth in mass makeup offsetting a modest decline in prestige makeup. Hair care category comps decreased in the low single-digit range.

Competition: Pressure from Sephora, Amazon, and DTC brands. Ulta’s loyalty program (40M+ members) remains a key asset. Promotional activity increased this quarter, although overall levels remained below 2019 levels.

Macro Environment: Inflation’s impact on discretionary spending. The “lipstick effect” (recession-resistant demand) could cushion downturns. Higher supply chain costs and SG&A spend increased 10.8%, driven by higher corporate overhead and store expenses.

Ulta Beauty (ULTA) Price Target

Based on 19 Wall Street analysts offering 12 month price targets for Ulta Beauty in the last 3 months. The average price target is $468.58 with a high forecast of $538.00 and a low forecast of $360.00. The average price target represents a 36.72% change from the last price of $342.72.

if we looked at the past week trading, we are seeing ULTA losing more in the recent selloff, so the expectation for ULTA sales performance might be higher.

So this could what could move the share price.

Beat Expectations: Strong comps, margin resilience, and upbeat guidance could boost stock sentiment.

Miss Expectations: Weak holiday sales, margin contraction, or cautious guidance might lead to a sell-off.

Technical Analysis - Exponential Moving Average (EMA)

If we looked at the technicals, ULTA is trading in a pretty weak momentum, with RSI going towards oversold region, I think more selling is expected.

The share is currently below the critical level for short-term (12-EMA and 26-EMA), this could mean that we might not see ULTA moving close to last week’s high of 360 obtained on 06 March.

I would be monitoring how investors would perceive this stock today (12 Mar) ahead of its earnings.

Summary

Looking at the previous quarter same period, Q4 2023, similar analysis applies, with particular attention to holiday performance and management’s 2024 outlook.

Here are some of the risks that I will consider for this earnings :

• Consumer Sentiment: Weakening spending could hurt comps.

• Overreliance on U.S. Market: Limited international diversification compared to competitors.

• Supply Chain/Inflation: Persistent cost pressures affecting margins.

Appreciate if you could share your thoughts in the comment section whether you think ULTA would be able to avoid the tariffs risks and improve its net sales growth.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.