Ulta Beauty Inc (NASDAQ:ULTA) stock fell 12.27% (As on May 26, 11:45:30 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the first quarter of FY 23. Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 9.3% compared to an increase of 18.0% in the first quarter of fiscal 2022, driven by an 11.0% increase in transactions and a 1.5% decrease in average ticket. Gross profit increased 12.1% to $1.1 billion compared to $941.0 million in the first quarter of fiscal 2022. As a percentage of net sales, gross profit decreased to 40.0% compared to 40.1% in the first quarter of fiscal 2022, primarily due to higher inventory shrink, lower merchandise margins, higher supply chain costs, and deleverage of salon expenses, partially offset by strong growth in other revenue and leverage of store fixed costs. Operating income increased 1.0% to $442.1 million, or 16.8% of net sales, compared to $437.7 million, or 18.7% of net sales, in the first quarter of fiscal 2022. Net income increased 4.7% to $347.1 million compared to $331.4 million in the first quarter of fiscal 2022. Cash and cash equivalents at the end of the first quarter of fiscal 2023 totaled $636.4 million.

ULTA in the first quarter of FY 23 has reported the adjusted earnings per share of $6.88, beating the analysts’ estimates for the adjusted earnings per share of $6.82. The company had reported the adjusted revenue growth of 12.3 percent to $2.63 billion in the first quarter of FY 23, beating the analysts’ estimates for revenue of $2.62 billion. The sales growth is driven by increased comparable sales, strong new store performance, and growth in other revenue compared to the first quarter of fiscal 2022. Further, Merchandise inventories, net at the end of first quarter of fiscal 2023 increased to $1.75 billion compared to $1.57 billion at the end of the first quarter of fiscal 2022. The increase is due to inventory to support higher demand, product cost increases, 41 net new stores, new brand launches, and brand expansions.

Additionally, during the first quarter of fiscal 2023, the Company repurchased 541,108 shares of its common stock at a cost of $285.8 million, including excise tax. As of April 29, 2023, $816.5 million remained available under the $2.0 billion share repurchase program announced in March 2022.

Ulta Beauty expects FY 2023 revenue to be in the range of $11.00B-$11.10B versus the analyst consensus of $11.12B.