ULTA Beauty Announces Second Quarter 2015 Results

ULTA Beauty (NASDAQ:ULTA) today announced financial results for the thirteen week period (“Second Quarter”) and twenty-six week period (“First Six Months”) ended August 1, 2015, which compares to the same periods ended August 2, 2014.

“The Ulta Beauty team achieved outstanding results in the second quarter, with top line momentum delivering better than expected earnings growth,” said Mary Dillon, Chief Executive Officer. “Strong traffic growth drove healthy comparable sales increases across stores, salon and e-commerce, while average ticket growth also contributed. An exciting pipeline of new products, combined with increasing effectiveness of our marketing strategies, drove market share gains across all categories. In light of the excellent performance of the business in the first half of the year, we are raising our outlook for the full year and now expect to achieve earnings per share growth in the high teens.”

For the Second Quarter
• Net sales increased 19.4% to $877.0 million from $734.2 million in the second quarter of fiscal 2014;
• Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 10.1% compared to an increase of 9.6% in the second quarter of fiscal 2014. The 10.1% comparable sales increase was driven by 7.0% growth in transactions and 3.1% growth in average ticket;
• Retail comparable sales increased 8.9%, including salon comparable sales growth of 10.1%;
• Salon sales increased 19.7% to $51.6 million from $43.1 million in the second quarter of fiscal 2014;
• E-commerce sales grew 43.4% to $36.1 million from $25.2 million in the second quarter of fiscal 2014, representing 120 basis points of the total company comparable sales increase of 10.1%;
• Gross profit decreased 40 basis points to 34.9% from 35.3% in the second quarter of fiscal 2014 primarily due to supply chain initiatives including the new Greenwood, Indiana distribution center;
• Selling, general and administrative (SG&A) expense as a percentage of net sales decreased 50 basis points to 21.0% compared to 21.5% in the second quarter of fiscal 2014 primarily due to marketing efficiencies;
• Pre-opening expenses increased to $4.1 million, compared to $3.6 million in the second quarter of fiscal 2014. Real estate activity in the second quarter of fiscal 2015 included 20 new stores, one relocation and two remodels compared to 19 new stores and four remodels in the second quarter of fiscal 2014;
• Operating income increased 20.9% to $118.5 million, or 13.5% of net sales, compared to $98.0 million, or 13.3% of net sales, in the second quarter of fiscal 2014;
• Net income increased 22.0% to $74.2 million compared to $60.8 million in the second quarter of fiscal 2014; and

For the First Six Months
• Net sales increased 20.5% to $1,745.1 million from $1,448.0 million in the first six months of fiscal 2014;
• Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 10.8% compared to an increase of 9.2% in the first six months of fiscal 2014. The 10.8% comparable sales increase was driven by 7.2% growth in transactions and 3.6% growth in average ticket;
• Retail comparable sales increased 9.3%, including salon comparable sales growth of 10.2%;
• Salon sales increased 20.1% to $102.9 million from $85.7 million in the first six months of fiscal 2014;
• E-commerce comparable sales grew 46.8% to $80.1 million from $54.5 million in the first six months of fiscal 2014, representing 150 basis points of the total company comparable sales increase of 10.8%;
• Gross profit as a percentage of net sales was equal to the first six months of fiscal 2014 at 34.9%;
• SG&A expense as a percentage of net sales decreased 50 basis points to 21.6% compared to 22.1% in the first six months in fiscal 2014;
• Pre-opening expense increased to $7.2 million compared to $6.2 million in the first six months of fiscal 2014. Real estate activity in the first six months of 2015 included 44 new stores, two relocations and two remodels compared to 40 new stores and four remodels in the first six months of fiscal 2014;
• Operating income increased 26.4% to $226.0 million, or 13.0% of net sales, compared to $178.9 million, or 12.4% of net sales, in the first six months of fiscal 2014;
• Net income increased 27.4% to $141.1 million compared to $110.7 million in the first six months of fiscal 2014; and

Merchandise inventories at the end of the second quarter of fiscal 2015 totaled $705.7 million, compared to $541.5 million at the end of the second quarter of fiscal 2014, representing an increase of $164.2 million. This increase was driven by 102 net new stores, the opening of the Company’s fourth distribution center in Greenwood, Indiana, as well as new brand additions. Average inventory per store increased 14%, compared to the second quarter of fiscal 2014. This increase was primarily driven by the new Greenwood, Indiana distribution center, investments in inventory to ensure high in-stock levels to support strong sales growth and incremental inventory for new brands and in-store prestige brand boutiques. Average inventory per store, excluding the investment in the new Greenwood, Indiana distribution center, increased 10.9%.
http://ir.ulta.com/phoenix.zhtml?c=213869&p=irol-newsArticle&ID=2082769

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