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As people return to socializing and in-store shopping, with most of the U.S. population now having been at least partly vaccinated for COVID-19, beauty retailers are experiencing a significant increase in-store sales. Also, increased demand for personal care and elevated consumer awareness about organic skincare products are expected to boost the industry’s growth prospects further. So, we think beauty retailer stocks Ulta Beauty (NASDAQ:ULTA) and Sally Beauty (NYSE:SBH) could be great bets now.A return to normalcy, driven by solid progress on the COVID-19 vaccination front and increasing consumer spending, is increasing cosmetic industry sales. In addition, a surge in demand for skincare products and organic cosmetic products is driving the growth of the global beauty product market. The global cosmetics industry is expected to reach $463.5 billion by 2027, growing at a 5.3% CAGR.
As at least 150 million Americans have now had one shot of a vaccine against COVID-19, the job market is improving, and peoples’ discretionary spending is expected to continue rising in the coming months. In fact, in the 12-months through May, the personal consumption expenditures (PCE) price index rose 3.4%, its biggest gain since April 1992. With more beauty brands enhancing their digital capabilities and scaling up their operations, they are expected to see significant growth in sales. Also, as brick-and-mortar stores reopen, beauty product retailers’ continued investment in promotions and marketing should help them reclaim substantial customer foot traffic.
Changing consumer buying habits owing to growing consciousness regarding wellness, and rising demand for differentiated beauty products, should help beauty companies Ulta Beauty Inc. (ULTA) and Sally Beauty Holdings Inc . (SBH) maintain strong momentum in their sales. So, we think their stocks could be solid bets now.