March 13--Ulta Beauty's stock soared Thursday afternoon after the company reported strong fourth-quarter sales and earnings that beat Wall Street's expectations.
The share price of the fast-growing Bolingbrook-based chain jumped almost 9 percent in after-hours trading to $157.35, after closing at a record high for the company of $144.82. A year ago, Ulta's stock price was about $95.
Ulta, which sells mass-market and high-end cosmetics as well as hair and skin services at its in-store salons, for the first time reported quarterly sales exceeding $1 billion.
The company also announced that chief merchandising officer Janet Taake, who has been with the company during the past six high-growth years, is retiring. Her position will be absorbed into an integrated marketing and merchandising team led by chief marketing officer David Kimbell, who last year was hired away from U.S. Cellular, previously helmed by Ulta CEO Mary Dillon.
Here's how the quarter and year played out for Ulta, and a bit of what's to come:
Net income: Net income for the quarter ended Jan. 31 increased 23.5 percent to $87.3 million. For the year, net income was up almost 27 percent to $257.1 million.
Earnings per share: Earnings per diluted share increased 24 percent to $1.35 for the fourth quarter, compared with $1.09 a year earlier and beating analysts' average forecast of $1.27. For the year, earnings per diluted share grew 26.3 percent to $3.98. Wall Street had anticipated earnings per share for the year to be in the range of $3.90 to $3.97, according to analysts polled by Yahoo Finance.
Revenue: Sales for the quarter increased 20.7 percent to $1.05 billion, beating Wall Street forecasts that revenue would come in at $1.02 billion. For the year, revenue was up 21.4 percent to $3.24 billion, exceeding analysts' average expectations of $3.21 billion.
Same-store sales: Sales at stores open at least 14 months, an important measure of a retailer's performance because it excludes the impact of new stores, were up 11.1 percent in the fourth quarter, an improvement over the already strong growth of 9.2 percent over the same period a year earlier. For the year, same-store sales grew 9.9 percent, compared with 7.9 percent a year earlier. E-commerce revenues, which are included in the same-store sales figures, grew more than 55 percent for the quarter, though it is still a small slice of the company's overall revenue.
The "why": Ulta, which ended the fiscal year with 774 stores, has been opening about 100 stores per year as it climbs toward a goal of 1,200 stores. But even excluding new stores, people are shopping more and spending more at Ulta. Transactions at stores open at least 14 months were up 7.7 percent and the average ticket was up 3.4 percent. Salon sales grew 20.9 percent for the quarter; not including newly opened stores, salon sales were up 11 percent.
Highlights from the year: To support its growth, the beauty chain has been investing in supply chain improvements, e-commerce capabilities, in-store technology and marketing strategies to reach new customers. Many products previously only available in-store are now available on the website as well. It also is experimenting with small-format stores, about half the size of the typical 10,000-square-foot shop, in two rural markets, and expects to eventually add a couple hundred of the smaller stores.
2015 first-quarter outlook: Ulta expects first-quarter revenue in the range of $833 million to $847 million, up at least 16 percent from last year, and same-store sales growth of 7 to 9 percent. Diluted earnings per share are expected to be in the range of 88 cents to 93 cents, compared with 77 cents over the same period last year.
What's next: Ulta plans to spend $300 million in capital projects this year, up from $249 million last year, some of which will go toward opening a new distribution center in Greenwood, Ind., to handle increased e-commerce volume, which stretched capacity during the recent holidays. It also plans to open another distribution center in the Dallas market in 2016. Another 100 new stores are scheduled to open this year, same as last year, a third of them in new markets. Ulta also plans to roll out more Lancome and Clinique boutiques within its stores and to add more labor hours in select markets to give associates more customer-facing time. In addition, effective March 17, Ulta's board of directors authorized an increase of $100 million to the existing share repurchase program implemented in September.
aelejalderuiz@tribpub.com
