Opinions
Jim Cramer - Mad Money
Ulta Salon Cosmetics and Fragrance Inc.
ULTA-Q
BUY
Mar 10, 2023
Stock price when the opinion was issued
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EPS of $8.08 beat estimates of $7.57. Revenue of $3.55B beat estimates by 6.7%. EBITDA of $579M beat by 5.6%. Conservative guidance worried investors, though. Ulta Beauty's outlook for more operating-margin deterioration in fiscal 2024 is a bit of a concern, given the metric fell more than 100 bps to 15% in 2023 and since big market-cap hardline peers are largely projecting improvement this year. Beauty demand remains robust, as evidenced by strong 4Q results, including a 14.6% operating margin -- up vs. 3Q and above management's guidance. This strength in demand should let discounts remain limited, a tailwind for margin. The company's forecast for $11.7-$11.8 billion in sales for 2024 appears low, implying less than 5% growth at the midpoint, or about half of 2023's almost 10% gain. This might be too drastic a slowdown, even with tough year-over-year comparisons, considering its growing customer base and expanding store fleet. We are comfortable still, but it needs to be watched a bit more closely than usual.
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They just reported an excellent quarter last night, but spiked after hours, plunged, then rebounded today. A yo-yo. Why? How? Up and down then flat. They had a massive earnings and sales beats. Same-store sales were up 15.6% vs. 8.7% expected. And they faced tough comps from last year. RPS and revenue forecast FY 2023 guidance topped expectations. They're opening 25-30 new stores, while Wall Street expected 49. Problem is that expectations were set high, and today saw the SVB crash and a bearish market. Impressive growth areas: skin care, fragrance and ecommerce/in-store pick-up. Rewards program boasts 40.2 million members. American luxury spending will remain healthy, but will moderate. Not perfect, but pretty good.