Ulta Beauty Announces First Quarter 2014 Results

Ulta Beauty today announced financial results for the thirteen week period ended May 3, 2014 (“First Quarter”), which compares to the same period ended May 4, 2013.

“Ulta Beauty delivered strong sales and earnings growth in the first quarter,” said Mary Dillon, Chief Executive Officer. “The team’s accomplishments included improving retail transactions which turned positive, driving continued momentum in our online business, successfully rolling out new brands, completing a smooth conversion of our loyalty program members onto one platform, and managing inventory very well.”

Net sales increased 22.5% to $713.8 million from $582.7 million in the first quarter of fiscal 2013. Comparable store sales (sales for stores open at least 14 months and e-commerce sales) increased 8.7%, compared to an increase of 6.7% in the first quarter of fiscal 2013.

E-commerce comparable sales grew 72.3%, representing 190 basis points of the total company comparable sales increase of 8.7%. Gross profit decreased 50 basis points to 34.5% from 35.0% in the first quarter of fiscal 2013, primarily driven by product and channel mix shifts, converting the remaining 50% of the loyalty program members to the ULTAmate Rewards program, and deleverage of fixed store costs resulting from a large number of new stores in the portfolio.

Selling, general and administrative (SG&A) expense as a percentage of net sales was equal to first quarter of fiscal 2013 at 22.8%. Preopening expenses decreased to $2.6 million, compared to $3.2 million in the first quarter of fiscal 2013. Real estate activity in the first quarter included 21 new stores compared to 28 new stores in the first quarter of fiscal 2013.

Operating income increased 19.5% to $80.9 million, or 11.3% of net sales, compared to $67.7 million, or 11.6% of net sales, in the first quarter of fiscal 2013. Net income increased 19.4% to $50.0 million compared to $41.8 million in the first quarter of fiscal 2013. Income per diluted share increased 18.5% to $0.77 compared to $0.65 in the first quarter of fiscal 2013. During the first quarter, the Company opened 21 stores.

For the second quarter of fiscal 2014, the Company currently expects net sales in the range of $706 million to $717 million, compared to actual net sales of $601.0 million in the second quarter of fiscal 2013. Comparable store sales for the second quarter of 2014 are expected to increase 5% to 7%. The Company reported a comparable store sales increase of 8.4% in the second quarter of 2013.