Ulta Beauty Announces Second Quarter 2017 Results

Net Sales Increased 20.6%
Comparable Sales Increased 11.7%
Diluted EPS Increased 28.0% to $1.83
Company Raises Guidance for Fiscal Year 2017

Ulta Beauty, Inc. (NASDAQ:ULTA) today announced financial results for the thirteen week period (“Second Quarter”) and twenty-six week period (“First Six Months”) ended July 29, 2017, which compares to the same periods ended July 30, 2016.

“The Ulta Beauty team delivered another quarter of excellent performance with strong top line growth coupled with robust margin expansion,” said Mary Dillon, Chief Executive Officer. “We accelerated our market share gains while continuing to reduce promotional intensity and increase personalized offers through our industry leading loyalty program. Product category strength was broad based, with prestige cosmetics still driving the majority of our growth, and with skincare, fragrance, and haircare all gaining momentum. We are also benefitting from continued success of our marketing programs, rapid growth in e-commerce, and solid operational execution across the enterprise.”

For the Second Quarter
• Net sales increased 20.6% to $1,289.9 million from $1,069.2 million in the second quarter of fiscal 2016;
• Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 11.7% compared to an increase of 14.4% in the second quarter of fiscal 2016. The 11.7% comparable sales increase was driven by 5.5% transaction growth and 6.2% growth in average ticket;
• Retail comparable sales increased 8.3%, including salon comparable sales growth of 7.7%;
• Salon sales increased 15.3% to $68.0 million from $59.0 million in the second quarter of fiscal 2016;
• E-commerce sales grew 72.3% to $96.3 million from $55.9 million in the second quarter of fiscal 2016, representing 340 basis points of the total company comparable sales increase of 11.7%;
• Gross profit as a percentage of net sales increased 40 basis points to 36.4% from 36.0% in the second quarter of fiscal 2016, due to improvements in merchandise margins and leverage in fixed store costs;
• Selling, general and administrative (SG&A) expenses as a percentage of net sales decreased 10 basis points to 22.0%, compared to 22.1% in the second quarter of fiscal 2016, due to leverage in corporate overhead and variable store expenses attributed to cost efficiencies and higher sales volume, partially offset by investments in store labor to support our growth initiatives;
• Pre-opening expenses increased to $6.1 million, compared to $4.7 million in the second quarter of fiscal 2016. Real estate activity in the second quarter of fiscal 2017 included 20 new stores, one relocation and four remodels compared to 24 new stores, one relocation and five remodels in the second quarter of fiscal 2016;
• Operating income increased 25.1% to $179.8 million, or 14.0% of net sales, compared to $143.8 million, or 13.5% of net sales, in the second quarter of fiscal 2016;
• Tax rate decreased to 36.7% compared to 37.5% in the second quarter of fiscal 2016. The decrease was primarily due to the adoption of a new accounting standard at the beginning of this fiscal year for employee share-based payments;
• Net income increased 26.9% to $114.2 million compared to $90.0 million in the second quarter of fiscal 2016; and
• Income per diluted share increased 28.0% to $1.83, including a $0.02 impact due to the adoption of a new accounting standard at the beginning of this fiscal year for employee share-based payments, compared to $1.43 in the second quarter of fiscal 2016.

For the First Six Months
• Net sales increased 21.6% to $2,604.7 million from $2,142.9 million in the first six months of fiscal 2016;
• Comparable sales increased 13.0% compared to an increase of 14.8% in the first six months of fiscal 2016. The 13.0% comparable sales increase was driven by 7.1% transaction growth and 5.9% growth in average ticket;
• Retail comparable sales increased 9.6%, including salon comparable sales growth of 8.8%;
• Salon sales increased 16.0% to $136.8 million from $117.9 million in the first six months of fiscal 2016;
• E-commerce comparable sales grew 71.6% to $200.6 million from $116.9 million in the first six months of fiscal 2016, representing 340 basis points of the total company comparable sales increase of 13.0%;
more detail at:  http://ir.ultabeauty.com/news-releases/news-release-details/2017/Ulta-Beauty-Announces-Second-Quarter-2017-Results/default.aspx

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