ULTA - Ulta Beauty

[kab60]

Alliance Data Systems, of which Ulta is a major client, with fine Q2 results. They note that Beauty (and home decor) are strong categories despite c19. I have a position in Ulta and will buy more. I think they are uniquely positioned to come stronger out of this. Lower rent, better locations, departement stores hurting and JCP troubles a possible hit to Sephora. Clean balance sheet so a combination of high ROIC, SSS and new unit growth as well as buybacks can be a very powerful combination. And then international expension as a joker/option.

[kab60]

Bullish take on Ulta: https://www.barrons.com/articles/why-ulta-beauty-shares-can-gain-55-portfolio-manager-51595612327

I suppose the bear case is that retail is dead, they mostly saturated the market with stores, membership growth slowing and if SSS starts trending in the wrong direction they're in for a lot of hurt. But this thing used to trade at plus 40xEPS, now at 16x2019.

Also a story on how cosmetics retailers are remaking the sample experience in a world without touching: https://www.cnbc.com/2020/07/30/how-cosmetics-are-remaking-sample-experience-in-contactless-world.html

[kab60]

Boom, smashed it. Not sure why market is so positive on the release, but comments look good - SSS only down a 'lil bit in August and actually made money in the Q.