News

What Happened?

Shares of beauty, cosmetics, and personal care retailer Ulta Beauty (NASDAQ:ULTA) jumped 12.6% in the afternoon session after the company reported impressive fourth-quarter 2024 results, which beat analysts' same-store sales, revenue, gross margin, and EPS estimates. The company recorded a modest increase in comparable sales, which was driven by a higher average ticket size despite a slight decline in transactions.

Looking ahead, its full-year revenue and EPS guidance missed. However, given the recent concerns about the health of the American consumer, with companies such as DG remarking that families are just getting by these days, the results were likely a relief. Overall, this a solid quarter featuring some areas of strength in the face of a seemingly worsening macro backdrop for consumer spending.

The shares closed the day at $357.30, up 13.8% from previous close.

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What The Market Is Telling Us

Ulta’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. Moves this big are rare for Ulta and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 7 months ago when the stock gained 15.1% on the news that Warren Buffett's Berkshire Hathaway revealed a stake of 690K shares of Ulta valued at ~$266 million in its Q2 2024 13-F filing. Given the legendary investor's reputation for identifying quality opportunities in the stock market, the market likely read the information positively for the company's prospects.

The sentiment was also supported by Walmart's strong earnings outperformance and sales outlook for the rest of the year, which indicated a healthy spending pattern for the U.S. consumer.

Ulta is down 17% since the beginning of the year, and at $356 per share, it is trading 37% below its 52-week high of $565.44 from March 2024. Investors who bought $1,000 worth of Ulta’s shares 5 years ago would now be looking at an investment worth $2,204.

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