Yahoo Finance Live anchors Julie Hyman and Brad Smith discuss third-quarter earnings for Ulta Beauty.

Video Transcript

[AUDIO LOGO]

BRAD SMITH: Ticker symbol ULTA, you're seeing that down right now by about 1.4%, following an earnings beat for the third quarter that saw the cosmetic company beat estimates on the top and bottom lines, as same-store sales grew 14.6% year-over-year. And there, you're taking a look at the actuals versus the estimates there. The revenue about $2.33 billion. The EPS, that came in at $5.34 versus that $4.15 that was expected here.

But for Ulta Beauty and for the broader beauty landscape, we've continued to really try to get a sense of where this little luxury annexation might continue to be a tailwind for them. At least as consumers are looking across their own spending habits and patterns, and trying to just lean into the things that make us feel good. I mean, when I get my makeup for the show it makes me feel good.

JULIE HYMAN: Does it make you feel good?

BRAD SMITH: It makes me feel very good.

JULIE HYMAN: Yeah, you feel like you're ready for the day. You're ready to take on anything.

BRAD SMITH: At least for two hours.

JULIE HYMAN: Yes, at least for two hours. And if you look into some of the internals of this and of the forecast from the company, you see there the growth outlook here for the third quarter. Comparable sales up 14.6%. Pretty impressive there. And the company's forecast for the full year is for sales to rise by up to $10 billion. So that's an increase of the prior forecast there.

Looking at some of the analysts' commentary on this one. Seeing that the company's loyalty program continues to grow. So that's something that is interesting here. 39 million, according to Piper Sandler, is how many loyalty members this company now has. And that Ulta continues to be a name to own in the beauty space. And that it can drive engagement.

One other interesting commentary from Piper Sandler on this is it's not only proven itself to be one of the more resilient names in beauty, but also a name with strong momentum that's likely to persist. So in other words, you have beauty, which to your point, is a category that has been resilient here. And then you have this company within beauty that has been resilient. Perhaps because it is also not viewed as an expensive--

BRAD SMITH: Right.

JULIE HYMAN: --on the-- in the range and the spectrum of beauty names.

BRAD SMITH: Yeah.

JULIE HYMAN: It's not super expensive.

BRAD SMITH: Gross profit, that also jumped 22% in this quarter, too. That's compared to that $789 and 1/2 million that they saw in the third quarter of fiscal 2021. This quarter it was actually $962.8 million. So that really showing some of the strength within the beauty category.

And then it's all about how they're operating right now, too. Operating income, you saw that increase by about 27.3%. So for the company, just showing to investors that they can continue to lock in margins over an extended period of time, even if consumers, at some point, do shift their spending or purchasing habits and are buying less or at least replenishing less of their own makeup. Then that is something that investors perhaps will favor. But here in a down day, we're seeing shares move lower here.