Ulta Beauty Inc (NASDAQ:ULTA) stock fell 3.34% (As on August 25, 11:47:23 AM UTC-4, Source: Google Finance) after the company  beat expectations for profit and revenue for the second quarter of FY 23. Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 8.0% compared to an increase of 14.4% in the second quarter of fiscal 2022, driven by a 9.0% increase in transactions and a 1.0% decrease in average ticket. Gross profit increased 7.1% to $993.6 million compared to $928.2 million in the second quarter of fiscal 2022. As a percentage of net sales, gross profit decreased to 39.3% compared to 40.4% in the second quarter of fiscal 2022, primarily due to lower merchandise margin, higher inventory shrink, and higher supply chain costs, partially offset by strong growth in other revenue and leverage of store fixed costs. Operating income increased to $391.6 million, or 15.5% of net sales, compared to $391.4 million, or 17.0% of net sales. Net interest income increased to $4.4 million compared to $0.1 million in the second quarter of fiscal 2022, due to higher average interest rates on cash balances.

ULTA in the second quarter of FY 23 has reported the adjusted earnings per share of $6.02, beating the analysts’ estimates for the adjusted earnings per share of $5.83. The company had reported the adjusted revenue growth of 10.1 percent to $2.53 billion in the second quarter of FY 23, beating the analysts’ estimates for revenue of $2.50 billion. Cash and cash equivalents at the end of the second quarter of fiscal 2023 totaled $388.6 million. Merchandise inventories, net at the end of the second quarter of fiscal 2023 increased 9.0% to $1.82 billion compared to $1.67 billion at the end of the second quarter of fiscal 2022. The increase was primarily due to inventory to support higher sales demand, 37 net new stores, product cost increases, and new brand launches.

Additionally, real estate activity in the second quarter of fiscal 2023 included three new stores located in Crestview, FL; Lebanon, TN; and Lynchburg, VA. In addition, the Company relocated two stores and remodeled three stores.

The company forecasts full year profit of $25.10 to $25.60 a share and revenue of $11.05B to $11.15B, both higher than earlier forecasts. It also expects full year comparable sales to rise 4.5% to 5.5%.