Ulta Lifts Guidance as Sales Continue to Climb
BY Dow Jones & Company, Inc.— 5:28 PM ET 08/25/2016
Ulta Salon Cosmetics & Fragrance Inc. (ULTA) logged its seventh straight quarter of double-digit sales growth as the company continues to buck the broader trend of falling sales and foot traffic across many American retailers.
The Bolingbrook, Ill., chain lifted its view for the year, signaling it would continue to reap the benefits of e-commerce investments and demand for its wide array of beauty products and services.
Still, shares declined 2% in after-hours trading Thursday as investors locked in some of the stock's 77% gain over the past 12 months.
Ulta stores, mostly found in strip malls, have stood out in a struggling retail sector, which has hurt by shoppers' increasing tendency to opt to shop on Amazon.com and stay out of traditional malls. The company, which offers a range of products across price points, from $200 hair tools and prestige brands like Lancôme to bargain brands such as Maybelline, has been expanding its store base as others are shutting stores and reporting sliding sales. Earlier this month, Macy's Inc. said it would shut 100 department stores, or about 15% of its physical footprint, while Nordstrom Inc. posted its first quarterly sales decline in seven years.
At the same time, Ulta Chief Executive Mary Dillon has prioritized investment in e-commerce. In the company's latest quarter, sales at stores open at least a year climbed 14.8%, helped by a 55% surge in online sales. The same- store sales results topped the 12.9% clip that analysts expected and extended the company's streak of gains to nearly seven years, though the rate cooled slightly from a 15.2% rate in the first quarter.
For the year, Ulta said it now expects earnings per share to grow in the low 20s percentage range, up from earlier guidance of 18% to 20% growth. It expects sales to rise in the high teens percentage range on same-store sales growth of 10% to 12%, up from an earlier range of 8% to 10%, as e-commerce sales rise 40%.
In all for the second quarter, Ulta reported a profit of $90 million, or $1.43 a share, up from a year-earlier profit of $74.2 million, or $1.15 a share, a year earlier. Revenue climbed 22% to $1.07 billion.
Analysts projected $1.39 a share on $1.06 billion in revenue, according to Thomson Reuters.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
