Shareholders of Ulta Beauty (ULTA -1.23%) have seen their business' outlook soar over the last nine months. The retailer now expects over $1 billion in higher revenue in 2021 than it originally projected. 

In this video from "Beat & Raise," broadcast on Dec. 3, Fool contributors Jason Hall and Demitri Kalogeropoulos discuss the company's bright growth prospects given the rebound occurring today in the beauty, hair, and skin care niches.

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Demitri Kalogeropoulos: Ulta Beauty, ticker symbol U-L-T-A, this is a retailer, one of the leading U.S. retailers in this space, in the beauty products and services that got salon services. The headline result out of this earnings report is just fantastic news. The company boosted their outlook for the third straight quarter, and it's really across the board. Just way higher sales expectations, way higher profit margins, just really great momentum. Sales for the period through late October were $2 billion, and that's 29% higher year over year. That's compared to 2019, so just give you a better -- kind of smooth out the volatility from the closures in 2020. That was almost 10% points higher than most Wall Street people were expecting.

Earnings per share roughly tripled up 200% to $3.94 a share, and that's again, part of that is it's the powerful combination of highly quickly expanding sales and profit margins. Sales trends are really strong, looking beneath that sales figure. We had 8% higher average spending by shoppers, and 17% higher traffic, that's just fantastic. That's about as good as you want to see as a retailer. The traffic transactions are really high because there's a nice recovery in the makeup and skin care and hair care markets. But you're also getting higher spending, which is suggestive of consumers just feeling in a real good space in terms of spending, and they're buying more premium products, and there's less promotions and all that stuff. It's all good news for the retailer. Profit margin was 14% of sales, well above 13% that they had been hoping to get this year, and well above around 10% is about what Ulta was saying before the pandemic hit, so some really positive news there. As far as the outlook, the company just ratcheted up their outlook for the third straight time, like I said. Now they're thinking they might get as high as $8.6 billion in sales in 2021, and three months ago that number was 8.3, three months before that, number was like 7.6.

Jason Hall: I don't know about you, Demitri, [laughs] but I could use an extra $300 million.

Demitri Kalogeropoulos: Yes. Exactly. Then if you look at just from their initial outlook for 2021 to now, they're looking at more than a million.

Jason Hall: $1 million.

Demitri Kalogeropoulos: Extra, yeah.

Jason Hall: Yeah.

Demitri Kalogeropoulos: Fantastic. Now they're thinking operating margin will jump to around 15% of sales after having boosted that to 14% last quarter, and 13% the quarter before that, so way higher expectations there. All of that, there's no real warning signs that I could see in that call. The question now: Is management going to get perhaps a little bit more aggressive with their expansion strategy? They've slowed down their new-store launches over the last few years with the sales growth was slowing a little bit before the pandemic and because of the pandemic. But now they partnered with Target and have been doing it that way. But now with these numbers looking so good, it's possible Ulta might have a chance to potentially getting back into more-aggressive store launches in 2022.

Jason Hall: Yeah. It's definitely one of those companies that it's clear that this is the retail that people are really interested in going to: health and beauty products particularly, the fact they have salons in a lot of their locations, that drive traffic. People stay, they buy, they could find products they love, they continue to come back. I know they have a pretty popular loyalty programs, too, that seems to make it even more sticky.

Demitri Kalogeropoulos: They do. One of the big differentiators is they call it the "play and experience" aspect of their shopping model, which is great, makes a lot of sense in this niche because you can go and try on different products and see if you like them. The question is: How is that going to play in the new post-pandemic environment where everyone shopping more online and maybe not so much in person? But I think they showed through the pandemic that their e-commerce, thanks to that loyalty program, is great, and they're doing well there.

I guess it's a little surprising that the stock has dropped a bit this past month even though this earnings report was so good. It's part of that like we were talking about just the volatility, it's hard. A lot of growth stocks got hit particularly hard, and I think Ulta is one of those.