Ulta Beauty Stays On Growth Track In Q4, Fiscal Year

Ulta Beauty continued its growth trajectory in the fourth quarter and fiscal year, reporting an increase in net sales, income and comps.

In the fourth quarter, net sales increased 22.6% to $1.9 billion compared to $1.5 billion in the fourth quarter of 2016. Net income increased to $208.2 million compared to $140.2 million in the previous fourth quarter.

Comparable sales for the fourth quarter increased 8.8%, driven by 6.2% transaction growth and 2.6% growth in average ticket. Retail comparable sales increased 4.2%, including salon comparable sales growth of 3.2%. Salon sales increased 17.2% to $73.7 million compared to $62.9 million while e-commerce sales increased 60.4% to $248.3 million, compared to $154.9 million in the fourth quarter of fiscal 2016.

Net sales for fiscal year 2017, including the benefit of the 53rd week, increased 21.2% to $5.8 billion from $4.8 billion in fiscal 2016. Net income increased to $555.2 million compared to $409.8 million in fiscal 2016.

Comparable sales in the fiscal year increased 11%, driven by 6.7% transaction growth and 4.3% growth in average ticket. Retail comparable sales increased 7.1%, including salon comparable sales growth of 6.1%. Salon sales increased 15% to $277.4 million compared to $241.1 million in fiscal 2016.

E-commerce sales increased 64.7% to $568.7 million compared to $345.3 million in fiscal 2016. E-commerce comparable sales increased 59.9%, representing 390 basis points of the total company comparable sales increase of 11%.

Mary Dillon, CEO, Ulta, said, “Looking ahead to 2018, we are deploying a portion of the tax reform benefits to invest in our people and accelerate investments to drive growth and innovation. We also recognize operating margin headwinds from various cost pressures facing all retailers, our higher than expected mix of e-commerce, and the new revenue recognition accounting standard. To help offset these pressures, we are implementing a cost optimization program to deliver benefits in the areas of indirect procurement, end-to-end operational efficiency, real estate costs and merchandise margin improvement. We plan to increase operating profit margin rate over the long term, but this measure is expected to decline modestly in 2018. Going forward, rather than guiding to a precise operating margin target or timeline, we will instead ask our stakeholders to focus on how we create value through our very healthy earnings per share and margin dollar growth.”