Ulta Beauty raises annual sales, profit forecasts on strong beauty demand

Aug. 27 (Reuters) - Cosmetics retailer Ulta Beauty ULTA.O raised its annual sales and profit forecasts on Thursday, betting that marketing and product assortment investments would drive demand even as macroeconomic uncertainty looms.

Shares of the company, which also reported a quarterly results beat, were up about 2% in extended trading.

Higher-income consumers and young shoppers continue to splurge on trendy and higher-margin fragrance and makeup brands despite sticky inflation, bolstering sales for companies such as Ulta Beauty.

The Bolingbrook, Illinois-based company has also been gaining from an uptick in demand for affordable cosmetics brands such as Elf Beauty ELF.N.

The company, which is in the midst of a turnaround under CEO Kecia Steelman, has relied on celebrity-owned brands such as Selena Gomez's Rare Beauty and Beyonce's Cecred to attract young and affluent shoppers.

"Shaky consumer confidence may even be working in Ulta Beauty's favor by reinforcing the 'lipstick effect' – the tendency for consumers to continue spending on smaller, affordable luxuries like beauty products while pulling back on bigger-ticket discretionary purchases," research firm Placer.ai said.

The company expects full-year sales to grow between 6.7% and 7.2%, up from its prior forecast of 6% to 7%.

It now expects fiscal 2026 comparable sales to grow in the range of 3.2% to 3.7%, compared with a prior forecast of a 2.5% to 3.5% rise.

Ulta expects annual earnings per share in the range of $28.70 to $29, compared with its prior forecast of $28.36 to $28.80 per share.

The company posted a quarterly sales rise of 8.9% to $3.04 billion, compared with analysts' average estimate of $2.96 billion, according to data compiled by LSEG.

Ulta's quarterly earnings per share of $6.55 topped estimates of $6.19.