Despite demand fears, Ulta Beauty surpassed earnings expectations as a retailer.

• Wall Street's revenue and sales expectations for the fiscal third quarter were exceeded by Ulta Beauty.
• The retailer countered concerns about intensified competition from rivals and declining demand for cosmetics and personal care products.
• The company hiked its full-year outlook slightly to reflect better-than-anticipated results.

Wall Street's fiscal third-quarter expectations were beaten by on Thursday, alleviating concerns about intensified competition and declining demand for cosmetics and skincare products.

The retailer slightly improved its full-year outlook due to better-than-expected results. For the fiscal year, it now anticipates net sales to be between $11.1 billion and $11.2 billion, compared to its previous projection of $11 billion to $11.2 billion.

The company now anticipates full-year earnings per share to fall between $23.20 and $23.75, an increase from the previous range of $22.60 to $23.50.

In a news release, CEO Dave Kimbell expressed his pride in the company's progress and optimism about the early signs that their efforts to strengthen their market position and enhance performance are gaining momentum.

According to a survey of analysts by LSEG, the beauty retailer's three-month performance for the period ended Nov. 2 did not meet Wall Street's expectations.

• Earnings per share: $5.14 vs. $4.54 expected
• Revenue: $2.53 billion vs. $2.50 billion expected

Ulta shares rose roughly 10% in after-hours trading.

Despite inflation and economic uncertainty, the beauty category has remained a strong performer for retailers, prompting companies such as L'Oreal, Estee Lauder, Maybelline, and Cover FX to increase their offerings of makeup and skincare products.

In April, Ulta hinted at potential issues with Kimbell warning of decreasing beauty demand at an investor conference.

In recent quarters, Ulta's results have shown that discerning shoppers and heightened competition have affected the company. In August, Ulta missed its earnings results and cut its full-year outlook after a decline in same-store sales. This was the first time in about four years that the retailer failed to meet Wall Street's expectations.

The stock of Ulta Beauty has decreased by 19% as of Thursday's close, while the S&P 500 has gained approximately 28% during the same period.

In the third quarter of the fiscal year, the retailer's net income was $242.2 million, or $5.14 per share, which was lower than the $249.5 million, or $5.07 per share, earned in the previous quarter.

Revenue rose from $2.49 billion in the year-ago period.

The retailer's comparable sales, which include sales from Ulta stores open for at least 14 months and online sales, rose by 0.6% year over year, despite a slight increase in traffic and average ticket.

The company experienced a 0.5% increase in customer transactions across its website and stores annually, while the average ticket amount spent by shoppers during those visits also increased by 0.1% year over year.

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