Retail companies are investing significantly in their digital channels to capture the demand for online shopping and boost their overall sales. TipRanks’ new Website Traffic Screener is an easy and quick way of listing websites of publicly traded companies that have gained or lost website traffic over the past month, quarter, or on year-to-date basis. We used the TipRanks’ new Website Traffic Screener to pick two retail stocks with favorable traffic trends – Ulta Beauty and Lululemon.
The relevance of e-commerce came to light amid the pandemic, especially when social distancing restrictions were implemented. Even after the reopening of physical stores, several retailers continue to see strong momentum in their e-commerce sales.
Amid this scenario, we use the TipRanks’ new Website Traffic Screener to pick two retail stocks with favorable traffic trends. This is an easy and quick way of listing websites of publicly traded companies that have gained or lost website traffic over the past month, quarter, or on year-to-date basis.
Ulta Beauty is the leading beauty retailer in the U.S., which sells mass and prestige cosmetics, fragrances, skin care and hair care products, and also offers salon services.
Ulta Beauty’s fiscal first quarter (ended April 30, 2022) results beat analysts’ expectations. Sales grew 21% to $2.3 billion and comparable sales grew 18%, with the company experiencing robust store sales following easing of restrictions. Overall, higher sales and margin expansion drove a 54% increase in EPS to $6.30.
As expected, e-commerce sales moderated in Q1 FY22 as physical stores reopened, and were in-line with the company’s expectations. However, e-commerce sales as a percentage of overall sales declined 400 basis points on a year-over-year basis.
As per TipRanks’ Website Traffic Tool, visits to ulta.com increased 37.4% in June, compared to May. Also, quarter-to-date (May-June period) traffic for the fiscal second quarter is up 56.88%, compared to Q1 FY22. Further, quarter-to-date traffic has increased 137.72% compared to the prior-year period.
Raymond James analyst Olivia Tong believes that Ulta is one of the most resilient stocks in the market as risks of a recession rise.
Explaining her bullish stance, Tong stated, “In our view, Ulta is one of the best positioned retailers due to the attractiveness of the high-growth/high-margin beauty category, Ulta’s rewards program which has 38M members (and data on their purchasing habits), and the retailer’s wide range of price points, giving it a higher likelihood of retaining its customers even if they begin to seek out lower-priced substitutes.”
In line with her bullish stance, Tong raised her price target to $485 from $475.
Overall, the Street has a Strong Buy consensus rating on Ulta Beauty stock based on 13 Buys and three Holds. The average Ulta Beauty price target of $476.73 implies 24.38% upside potential from current levels. Shares are down 7% year-to-date.
Athletic apparel firm Lululemon delivered impressive results for the first quarter of fiscal 2022 (ended May 1, 2022). Revenue surged 32% to $1.6 billion, with comparable sales up 28%. EPS increased nearly 28% to $1.48 on an adjusted basis, even as the company’s gross margin fell short of expectations due to higher air freight.
Lululemon’s first-quarter performance reflected strong demand for its products despite supply chain problems and inflationary pressures. The company experienced robust traffic in its stores as well as digital channels.
Lululemon raised its full-year guidance as it expects continued momentum in its stores and digital sales. Overall, the company is optimistic about its future prospects with a focus on enhancing digital channels, men’s business, and international sales.
Meanwhile, traffic on lululemon.com increased 36.06% in June compared to May. Also, quarter-to-date (May-June) website visits in Q2 FY22 are trending 39.37% higher from the comparable period in Q1 FY22. What’s more, quarter-to-date website traffic is up 55.92% compared to the prior-year period.
Following the Q1 print, BTIG analyst Camilo Lyon cut his price target for Lululemon stock to $420 from $491 to reflect reduced market multiples, but maintained a Buy rating. Lyon noted that Q1 results were “solid” as the company delivered a top-line beat despite COVID-19 restrictions in China. Lyon feels that the impact from the Beijing and Shanghai lockdowns should improve as these cities reopen.
All in all, the Street is cautiously optimistic on Lululemon stock, with a Moderate Buy consensus rating based on 18 buys, six Holds, and one Sell. The average Lululemon price target of $399.88 implies 41.92% upside potential from current levels.
Conclusion
TipRanks’ Website Traffic Tool reveals encouraging website data for both Ulta Beauty and Lululemon, which bodes well for their fiscal second-quarter sales numbers. However, challenging macro conditions could impact consumer spending and be a drag on the store and online sales of these retailers in the days ahead. Currently, Wall Street analysts are highly bullish on Ulta Beauty stock, while they are cautiously optimistic about Lululemon.
Disclosure
