A major cosmetics retailer announced an improved annual profit outlook this week, anticipating that reduced inventory losses and continued strong demand for premium products will offset increased expenses from store growth and advertising efforts.
The beauty chain bucked trends in the struggling luxury market, reporting robust sales performance across its locations as wealthy and younger customers continued purchasing trendy, high-margin fragrance and skincare products. Company stock prices surged 7% during after-hours trading following the announcement.
“From a market-share perspective, we gained share in prestige beauty, and we were roughly flat in mass beauty,” CEO Kecia Steelman said on the post-earnings call.
Sales at comparable locations increased 5.3% during the quarter that concluded May 2, surpassing the 2.9% growth recorded in the same period last year. Wall Street analysts had projected a 4.5% sales increase, according to LSEG data.
The retailer has expanded its appeal by adding celebrity-backed product lines including Rihanna’s Fenty Beauty, Selena Gomez’s Rare Beauty and Beyonce’s Cecred to better connect with shoppers.
“The company continues to outperform other beauty retailers, such as department stores,” said David Swartz, analyst at Morningstar.
The beauty chain now projects annual earnings per share between $28.36 and $28.80, up from its previous guidance of $28.05 to $28.55.
First-quarter earnings reached $7.74 per share, exceeding analyst expectations of $6.86.
