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Ulta Beauty tops first-quarter estimates, raises full-year guidance

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Yahoo Finance Live anchors discuss first-quarter earnings for Ulta Beauty.

Video Transcript

JULIE HYMAN: All right, we got the opening bell here on this Friday morning.

[BELL]

So as we've been talking about on this week, and there you have the opening bell, Hawks Acquisition Corp. Oh, we haven't had a SPAC ringing the opening bell in a while. I assume that's what--

JARED BLIKRE: Yeah.

JULIE HYMAN: --that is, Hawks, HWKZ. We have seen the S&P 500 up 4% on the week. So you and I keep saying, oh, stocks would need to fall quite a lot today in order to erase that gain. So that's why, because we've seen a pretty substantial gain in stocks with that bounce off the bottom, or at least, a near term bottom on the week here. And you see here pretty strong out of the gate this morning. You do tend to usually see a little bit more thin trading on the Friday before a three-day weekend.

JARED BLIKRE: Well, definitely.

JULIE HYMAN: Some people have already gotten out of town--

JARED BLIKRE: It's summer.

JULIE HYMAN: --and away from their desk. It's already-- it's summer, folks.

JARED BLIKRE: Yeah.

JULIE HYMAN: So.

JARED BLIKRE: This kicks off-- so here's another point that is a little bit troubling. This kicks off the season of seasonal illiquidity. You add that to the fact that we have a Federal Reserve that's not only-- they're not just not buying bonds, they're selling bonds, $90 billion, $95 billion a month. There is not the cash in the market. I've been reading some really wonky notes recently, really getting it--

JULIE HYMAN: Without liquidity, yes.

JARED BLIKRE: Without liquidity.

JULIE HYMAN: It's been a very hot topic.

JARED BLIKRE: There's not enough cash to absorb all this Treasury supply. That's contributing to the crunch. And then you have all the big investors having to reorient and reestablish their portfolios with different stocks. There's so much money moving around. But I go back to that analogy from yesterday. It's like trying to-- it's a fire hose into a mouse hole. And there's just not enough room for this. And so, that's why we're seeing these huge swings.

And you're talking about the nascent bottom. And we've also been talking about the Wall Street is expecting a flashy bear market rally. These things happen. They're unpredictable. But so is the next downturn. You don't know how far it's going to go until you get that one negative headline. The direction, the sentiment is down. And anything that contradicts that, if you see a bad report and stocks start going up, well, that's a sign that maybe things are starting to turn around. Haven't seen that yet.

JULIE HYMAN: No, we definitely have not. All right, let's take a look at another mover that we're watching, this another one in the retail space. This one is Ulta Beauty. And this is another one in the plus column here today. The shares are up by 9%. And this after it raises forecasts after numbers beat estimates. It saw strong consumer demand. We've been seeing beauty hold up relatively well. Beauty and personal care holding up relatively well. Look at that earnings per share beat after seeing some of the misses we've been talking about today with the likes of the Gap. That beat is pretty impressive there--

JARED BLIKRE: It's about 50%.

JULIE HYMAN: --with $6.30. Exactly. The CEO-- and this is a new CEO for Ulta-- saying, there's a high level of engagement across all products here. If you look at the sales for this year, it's now looking for $9.35 billion to $9.55 billion. The high end of that previously was $9.15. So it's a pretty substantial increase to that sales forecast.

JARED BLIKRE: Yeah, Jefferies is giving the all clear. Well, actually, they're saying Ultra provided the, quote, "all clear." And that's a signal on makeup. That's what you were just talking about, suggesting demand had returned to pre-pandemic levels, with improving sustained momentum. You were talking about Gap earnings and Old Navy. People aren't wearing fleece anymore. They're going out. Well, what do people do when they go out? They need makeup. They need to look good. And so, this kind of fits that narrative.

And here is-- here's another note from Jefferies. Cost discipline, tight inventory, and rational guidance lowers the company's risk profile. Wells Fargo saying Ulta provided a, quote, "large glimmer of positivity." And that's in a market full of disappointing catalysts. So I think the tone here, too, is, any little bit of good news, any ray of sunshine, people are just glomming on to.

JULIE HYMAN: Yes, they are. They're not getting that ray of sunshine from Gap today. I just wanted to mention--

JARED BLIKRE: No, no.

JULIE HYMAN: --it again as we talk about the retailers, because that is such a case study in how not--

JARED BLIKRE: How to do it wrong.

JULIE HYMAN: --to manage in this environment. Those shares are down about 8%, it looks like, as we get underway this morning. So now seeing a more mixed picture in retail once again, but it seems like the market has now sort of digested it to some extent, whereas Walmart and Target were a real shock.

JARED BLIKRE: That was shock.

JULIE HYMAN: Now, there is a little bit more digestion and nuance in these reports.

JARED BLIKRE: Yeah, and everybody is just kind of waiting for the awe, and not the good kind of awe. That's the consensus.