Ulta Beauty enjoys 'excellent' growth in Q3

BOLINGBROOK, Ill. — Beauty retailer Ulta Beauty posted strong double-digit gains in sales and net income for the third quarter and raised its fiscal 2014 sales and earnings guidance.



“We are pleased to announce excellent sales and earnings growth in the third quarter,” stated Mary Dillon, CEO. “Strong same-store sales were driven by a healthy balance of transaction and ticket growth. Continued strength in prestige and mass color cosmetics, the successful introduction of new products and brands, double digit comps in our salon business, a more effective and well executed marketing strategy, and rapid growth in e-commerce all contributed to our performance.”

During the quarter, net sales increased 20.5% to $745.7 million from $618.8 million in the third quarter of fiscal 2013. Same-store sales increased 9.5%, compared with an increase of 6.8% in the year-ago period. The 9.5% same-store sales increase was driven by 5.4% growth in transactions and 4.1% growth in average ticket.



E-commerce comparable sales grew 46.7%, representing 130 basis points of the total company comparable sales increase of 9.5%, the company noted.



Net income increased 30.1% to $59.1 million, compared with $45.4 million in the third quarter of fiscal 2013; excluding the 2013 severance charge, net income increased 26.9%. Income per diluted share increased 30% to 91 cents, compared with 70 cents in the third quarter of fiscal 2013, including 2 cents per diluted share related to the 2013 severance charge. Excluding the 2013 severance charge, income per diluted share increased 26.4%.



For the fourth quarter, the company currently expects net sales in the range of $997 million to $1.01 billion, compared with actual net sales of $868.1 million in the fourth quarter of fiscal 2013. Comparable sales for the fourth quarter of 2014 are expected to increase 6% to 8%. The company reported a comparable sales increase of 9.2% in the fourth quarter of 2013.



Income per diluted share for the fourth quarter of fiscal 2014 is estimated to be in the range of $1.21 to $1.26. This compares with income per diluted share for the fourth quarter of fiscal 2013 of $1.09. The company is raising its previously announced fiscal 2014 sales and earnings guidance.

The company now plans to:

•    achieve comparable sales growth of approximately 8% to 9%, including the impact of the e-commerce business;

•    expand square footage by approximately 15% with the opening of 100 new stores;

•    increase total sales in the 20% range;

•    remodel 12 locations;

•    deliver earnings per share growth in the low 20s percentage range;

•    incur capital expenditures of approximately $265 million in fiscal 2014, compared to $226 million in fiscal 2013; and

•    generate free cash flow in excess of $100 million.