Ulta Initiatives Pay Off In Q3

For the 13-week period ended October 27, Ulta Beauty announced that net income increased 42.5% to $38.2 million versus the fiscal 2011 period, while income per diluted share increased to 59 cents compared to 42 cents in third quarter last year. Comparable store sales gained 8.4% versus last year’s third quarter.

Analysts polled by FactSet estimated earnings per diluted share would come in at 56 cents.

Net sales increased 22.4% to $505.6 million in the third quarter of fiscal 2011. Operating income advanced 38.6% to $61.3 million versus the period last year.

Chuck Rubin, president and CEO, stated, “Ulta drove better than expected sales growth and operating margin improvement to deliver outstanding performance in the third quarter. We gained market share across all of our major product categories through our disciplined focus on the five components of our multi-year growth strategy: accelerating store growth, introducing new products, services and brands, enhancing our loyalty program, broadening our marketing reach, and increasing our digital focus including Ulta.com. Ulta’s third quarter underscores our team’s strength in execution. We opened 49 stores, increasing Ulta’s store base by 10% during a single quarter, and we completed most of the previously announced prestige brand boutiques. We ended the quarter with Lancôme boutiques in 79 of our stores and Clinique boutiques in 42 stores. Looking ahead to next year, based on the high quality of available real estate and our team’s proven ability to execute, we expect to exceed our long-term plans for 15% to 20% annual store growth and currently plan to open approximately 125 stores in 2013, representing 22% square footage growth. We are confident that Ulta will continue to grow its position as a beauty and trend authority and drive strong sales and profit growth in the quarters and years to come.”

In comments on recent trends with the company, particularly incorporating Lancôme and Clinique shops as well as services such as hair styling, Motley Fool analyst Jessica Alling stated, “It’s clear that Ulta has created a shopping experience with the customer in mind.”