Ulta to continue 'successful game plan' in 2010

BOLINGBROOK, Ill. Beauty retailer Ulta wrapped up a favorable fiscal 2009 and is upbeat about fiscal 2010 as it continues to expand its store base, reduce expenses and generate free cash flow.

"We are very pleased with our fourth-quarter performance. Our results surpassed the increased guidance we provided in January and included a 6.2% comparable-store sales increase, a 60 basis point improvement in merchandise margin and continued momentum of our cost management initiatives, all of which contributed to a 61.9% increase in diluted earnings per share -- a strong finish to the year," stated Lyn Kirby, Ulta's president and CEO.

Net sales for the fourth quarter rose 16.1% to $396.4 millioQ4 n, compared with $341.4 million in the year-ago period.

Net income for the quarter rose 64.6% to $20.2 million from $12.3 million in the year-ago period.

Kirby noted that for fiscal 2009 it exceeded each of its three goals: growing profitable market share, achieving permanent cost efficiencies and delivering free cash flow. For the year, same-store sales rose 1.4% and store expansion continued with square footage increasing 12%. The company also achieved $19 million in permanent cost reductions and generated free cash flow of $104.7 million for fiscal 2009.

"As we begin fiscal 2010, we continue to build on our successful 2009 game plan. We are particularly optimistic about our opportunities for market share gains through comparable-store sales growth and new store expansion," stated Kirby. "We expect to continue to generate free cash flow in 2010 while we increase our capital investment in support of our long term growth and believe that we will deliver another strong earnings performance in fiscal 2010."

The company, which ended the quarter with 346 stores, plans to open roughly 46 new stores in fiscal 2010, remodel 13 locations and relocate six stores.

Additional plans for fiscal 2010 include:

• Incur capital expenditures of about $100 million, compared with $68.1 million in fiscal 2009
• Reduce inventory by about 5% on an average per store basis by year-end 2010
• Permanently reduce expenses by $5 million
• Generate free cash flow.