Ulta Magnificence (NASDAQ: ULTA) experienced a great deal of excellent information for traders in its newest earnings update. Income and earnings each exceeded the rate established by management’s complete-yr forecast many thanks to a sharp website traffic rebound at its outlets.

The outcomes looked great compared to the 12 months-in the past time period when COVID-19 experienced devastated the business. But Ulta’s most recent metrics also set new records for the business in key places like profits, putting it in placement to completely rebound in 2021.

Image supply: Getty Images.

Surprise growth

The massive surprise was progress. Heading into the announcement, Wall Street analysts had been hunting for income to expand 40% year above yr to $1.6 billion. That strengthen would have marked a strong rebound more than very last yr even though keeping Ulta’s company under its 2019 levels.

Alternatively, earnings jumped 65% to $1.94 billion, conveniently sailing earlier the $1.74 billion the organization reported in fiscal 2019, its very last pre-COVID to start with-quarter general performance. The firm obtained help from a booming e-commerce section, but the major aspect was a 53% spike in shopper site visitors.

Comparable-store sales grew 7% in contrast to 2019, management said. “We have emerged from 2020 with robust momentum in our income trends, sector share gains, and buyer sentiment,” organization president Dave Kimbell claimed in a push release.

Greater shopper paying

The earnings haul benefited from a handful of positive elements, which include soaring normal paying out, higher charges, and a tilt in need towards premium items in the makeup, hair care, and skin treatment niches. Gross gain landed at 38.9% of profits compared to 37.% two decades in the past. Working margin was in the same way solid at 15.8% as opposed to 13.6%. General, internet money surged to $230 million, reversing the prior year’s $79 million decline.

Hard cash move was potent, and Ulta ended the period of time in a flexible stock placement thanks to the spiking need. “The workforce shipped an exceptional start off to the calendar year,” CEO Mary Dillon stated, “with product sales and earnings exceeding fiscal 2020 and fiscal 2019 very first-quarter ranges.”

A big up grade to the outlook

Ulta’s new outlook for fiscal 2021 is significantly much better than the 1 administration issued just a few months back. Executives now see comparable-retailer income growing involving 23% and 25% in contrast to the prior forecast of 15% to 17%. That improve indicates the chain will extra than entirely rebound from the pandemic this 12 months, instead than following yr.

The earnings forecast obtained a big up grade too with running margin expected to attain 11%, up from 9%. While that’s still reduce than the 12.1% Ulta documented in 2019, the trend suggests it will never be very long just before Ulta can get started increasing its profitability.

All that superior news offers the company adaptability to pursue new store openings via its partnership with Concentrate on. That initiative provides a valuable development avenue, but Ulta’s surging client visitors also exhibits its retailer foundation has room to increase over and above the recent 1,300 places.

Buyers were worried that this store footprint was destined to slowly but surely inch better in excess of the subsequent few a long time. But if Ulta can keep placing new website traffic data, management can target quicker shop launches in addition to its other growth designs.

10 shares we like improved than Ulta Natural beauty
When investing geniuses David and Tom Gardner have a stock idea, it can pay out to listen. Following all, the e-newsletter they have operate for above a ten years, Motley Idiot Inventory Advisor, has tripled the current market.*

David and Tom just disclosed what they believe that are the 10 ideal shares for buyers to buy proper now… and Ulta Magnificence wasn’t 1 of them! That is right — they consider these 10 shares are even superior buys.

See the 10 stocks

*Stock Advisor returns as of May 11, 2021

Demitri Kalogeropoulos has no position in any of the shares mentioned. The Motley Fool owns shares of and recommends Ulta Natural beauty. The Motley Idiot has a disclosure policy.

The views and views expressed herein are the sights and opinions of the writer and do not essentially reflect people of Nasdaq, Inc.