A Citi report points out that despite the uncertain macroeconomic outlook, US beauty demand remains resilient, supported by continued innovation, earlier use of beauty products by younger people, increased male usage, and price increases by high-end brands. In Citi's credit card sample, beauty store spending has increased by 6.6% year-over-year so far in the third quarter, higher than the 5.5% in the second quarter. September's growth rate was approximately 8%, accelerating from approximately 4% in August. Over the past 10 quarters, this indicator has had approximately a 90% correlation with Ulta Beauty's same-store sales growth. Citi believes that Ulta Beauty's third-quarter same-store sales growth may exceed the previously announced 3.8% in the second quarter, and is higher than the market expectation of 2.9%. The bank maintains a neutral rating on Ulta Beauty.
