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Beauty is in the eye of the beholder—and the same might go for interpreting a given beauty company’s earnings report.
As consumers pull back on spending amid high inflation and credit costs, beauty has often stayed resilient, giving some informal heft to the enduring concept of the “lipstick index.”
That makes the beauty industry a unique economic barometer—in boom times and in bust—which is why we’re turning our attention today to the Q4 2023 results of beauty behemoth Ulta Beauty.
The company posted largely solid results, but softened some of its guidance, hinting at potential future cracks in the usually resilient beauty category, which is becoming more competitive, per Ulta’s CEO.
Ulta reported net income of $394.4 million, up from $340.8 million a year ago, a 15.7% jump.
Net sales also jumped to $3.6 billion from $3.2 billion, a 10.2% leap attributable “to increased comparable sales, strong new store performance, strong growth in other revenue, and the benefit of an extra week of sales in fiscal 2023,” per the company’s earnings report.
Ulta anticipates earnings per share between $26.20 and $27 this year, a slight miss from FactSet estimates of $27.03.
In the company’s earnings call, CEO Dave Kimbell said Ulta was “optimistic about the strength and resiliency of the beauty category,” noting that the beauty industry “has experienced unprecedented growth” in recent years. But caution crept into his outlook as well.
“In 2024 we expect the category will remain healthy, but the growth will moderate to the mid-single digit range, barring a major economic event,” he noted. “Beauty is an attractive category, and competitive intensity continues to increase as channels blur and distribution expands.”
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