Cosmetics Giant Looks Like A Beauty For Investors

An earlier year national survey of American teens provided valuable insights to investors.

Piper Sandler published last week’s data from its 40th semi-annual survey. Teens seem to be more concerned with core beauty and wellness, with winners in big tech and apparel enshrined.

Investors should think about buying Ulta Beauty at 0.0% (ULTA).

These are the prominent trends that haven’t changed.

Consumerism is alive. Retail spending is still surprisingly strong. Teens lead the cultural shift towards convenience, leisure, and health consciousness.

The average spending of teens surveyed increased by 4% to $23,367. The most significant growth was seen in females, who saw a 9% increase year-over-year. The “core beauty wallet,” which includes cosmetics, skincare, and fragrance, grew to $264 per year, increasing by $10. Teenage girls reported that they are more likely than ever to read labels on beauty products and pay more for healthy products.

Ulta shares have increased by 4,810% from 2009

Athleisure is a combination of leisure and athletic apparel. It’s more popular than ever. Nike -9.9% (NKE) is the most popular footwear and apparel company. Mindshare among teens increased by 4%. Lululemon grew by 4% Overall. Athletic brands now account for 44% of teens’ preferred apparel brands, rising 3% over 2021.

Netflix -2.6% (NFLX). and YouTube, both owned by Alphabet(GOOGL), each accounted for 30% of teens’ daily video consumption. Social media platforms TikTok (SNAP) , Meta Platforms (FB) Instagram accounted for 33%, 31% and 22% respectively.

Due to Apple, cashless payments are increasing. An astounding 87% of American teens own an iPhone and use ApplePay to pay. Apple’s vast ecosystem lures users into its network of services and products. The ubiquitous wireless earbuds are claimed by seventy percent (70%) of teens.

Piper Sandler survey can be a powerful tool to discover these critical trends.

This semi-annual project gathers input from 7,100 teenagers across the United States. The mode age of the respondents was 16.2 years. The survey aims to identify discretionary spending and fashion trends, brand, and media preferences. Piper estimates that more than 218,900 teens have been surveyed since 2001, and 54.8 million data points have been collected.

The survey revealed two important stories. The dominance of big brands in their niches is growing and gaining more power. The second lesson is that beauty and health are becoming more popular.

It is rapidly growing.

Ulta Beauty is the ideal combination.

Bolingbrook, Ill.’s largest beauty retailer, is at the top of Piper Sandler’s list, with 48% mindshare. The company’s large-box retail stores sell cosmetics, perfumes, hair care products, and bath and body products at all price points.

Mary Dillon, the chief executive officer, came to Ulta when there were only 450 stores. Pepsico (PEP), McDonald’s (MCD), and U.S. Dillon, a veteran of U.S. Cellular (USM), Pepsico (PEP), McDonald’s (MCD), and U.S. Ulta, owned 1,308 stores by 2021.

Also, the operational side of the business has been steadily growing. The company’s sales grew from $5.9 million in 2017 to $8.6 miliarde by 2021.

Ulta boasts 30 million loyal customers, which account for 90% of all sales. This business is a subscription model due to the perishable nature of cosmetics, fragrances, haircare, and haircare products. The exception was 2020 when the pandemic lockdown led to a recession.

The current stock market is influenced by economic anxiety. Investors are concerned that hiking interest rates could cause a slowdown in the economy and reduce consumer spending.

Ulta is located in a great spot. Ulta’s stores cater to all economic segments. The company is small enough that it has plenty of growth potential. The business is still America’s number one beauty brand.

The forward earnings of shares are only 19.7x and sales are only 2.6x. In 2021, gross margins were 39% and operating margin was 15%.

Optimistic investors may consider purchasing shares in any near-term weakness.

- Advertisement -
Robert Scoble
Robert is the assistant managing editor for HC News, overseeing coverage of markets, companies, strategy and business leaders. Originally from Boston, Scoble began his journalism career in 1997 & now resides outside New York.

Latest articles

Related articles