Ulta Beauty Announces Third Quarter Fiscal 2019 Results

Ulta Beauty, Inc. (NASDAQ: ULTA) today announced financial results for the thirteen-week period (“Third Quarter”) and thirty-nine week period (“First Nine Months”) ended November 2, 2019 compared to the same periods ended November 3, 2018.

“Our differentiated model is winning in the marketplace,” said Mary Dillon, Chief Executive Officer. “The Ulta Beauty team delivered another quarter of solid top-line performance, gross margin expansion, and EPS growth, despite the current challenges facing the U.S. cosmetics category. We continue to gain market share across all major beauty categories, and we are extending our leadership position by creating stronger connections with our guests and engaging with them in better and more exciting ways.”

For the Third Quarter of Fiscal 2019
• Net sales increased 7.9% to $1,682.5 million compared to $1,560.0 million in the third quarter of fiscal 2018;
• Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 3.2% compared to an increase of 7.8% in the third quarter of fiscal 2018. The 3.2% comparable sales increase was driven by 2.3% transaction growth and 0.9% growth in average ticket;
• Gross profit as a percentage of net sales increased 40 basis points to 37.1% compared to 36.7% in the third quarter of fiscal 2018, primarily due to improvement in merchandise margins driven by marketing and merchandising strategies and leverage of fixed store costs, partially offset by investments in salon services;
• Selling, general and administrative (SG&A) expenses as a percentage of net sales increased 140 basis points to 26.7% compared to 25.3% in the third quarter of fiscal 2018, primarily due to deleverage of corporate overhead related to investments in growth initiatives and store labor, partially offset by lower incentive compensation expense and leverage in marketing expense;
• Pre-opening expenses decreased to $6.5 million compared to $7.6 million in the third quarter of fiscal 2018. Real estate activity in the third quarter of fiscal 2019 included 31 new stores, three remodels, and two relocations, compared to 42 new stores, four remodels, and one relocation in the third quarter of fiscal 2018;
• Operating income was $167.8 million, or 10.0% of net sales, compared to $169.2 million, or 10.8% of net sales, in the third quarter of fiscal 2018;
• Tax rate was 23.1%, flat as compared to the third quarter of fiscal 2018;
• Net income was $129.7 million compared to $131.2 million in the third quarter of fiscal 2018; and
• Diluted earnings per share increased 3.2% to $2.25, which included a $0.02 per share benefit primarily due to an increase in federal income tax credits, compared to $2.18 in the third quarter of fiscal 2018, which included a $0.02 per share benefit due to income tax accounting for share-based compensation.

For the First Nine Months of Fiscal 2019
• Net sales increased 10.9% to $5,092.2 million compared to $4,591.9 million in the first nine months of fiscal 2018;
• Comparable sales increased 5.4%, compared to an increase of 7.5% in the first nine months of fiscal 2018. The 5.4% comparable sales increase was driven by 4.0% transaction growth and 1.4% growth in average ticket;
• Gross profit as a percentage of net sales increased 50 basis points to 36.8% compared to 36.3% in the first nine months of fiscal 2018, primarily due to improvement in merchandise margins driven by marketing and merchandising strategies and leverage of fixed store costs, partially offset by investments in salon services and supply chain operations;
• SG&A expenses as a percentage of net sales increased 100 basis points to 24.5% compared to 23.5% in the first nine months of fiscal 2018, primarily due to deleverage of corporate overhead related to investments in growth initiatives and store labor, partially offset by leverage in marketing expense;
• Pre-opening expenses decreased to $15.7 million compared to $17.4 million in the first nine months of fiscal 2018. Real estate activity in first nine months of fiscal 2019 included 73 new stores, 12 remodels, and six relocations, compared to 95 new stores, 13 remodels, and two relocations in the first nine months of fiscal 2018;
• Operating income increased to $613.3 million, or 12.0% of net sales, compared to $572.9 million, or 12.5% of net sales, in the first nine months of fiscal 2018;
• Tax rate decreased to 21.8% compared to 23.0% in the first nine months of fiscal 2018. The lower effective tax rate is primarily due to income tax accounting for share-based compensation and federal income tax credits;
• Net income increased to $483.2 million compared to $443.9 million in the first nine months of fiscal 2018; and
• Diluted earnings per share increased 12.5% to $8.27, which included a $0.24 per share benefit primarily due to income tax accounting for share-based compensation, compared to $7.35 in the first nine months of fiscal 2018, which included a $0.09 per share benefit due to income tax accounting for share-based compensation
more detail at: http://ir.ultabeauty.com/news-releases/news-release-details/2019/Ulta-Beauty-Announces-Third-Quarter-Fiscal-2019-Results/default.aspx

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