Earnings Highlights and Review: Ulta Beauty’s Quarterly Sales Surged 22.5%; GAAP EPS Soared 41.4%

Research Desk Line-up: Cencosud Post Earnings Coverage

LONDON, UK / ACCESSWIRE / June 16, 2017 / Pro-Trader Daily publishes post-earnings coverage on Ulta Beauty, Inc. (NASDAQ: ULTA) following the Company’s reporting of its first quarter fiscal 2017 financial results on May 25, 2017. The beauty products retailer reported better than estimated sales and earnings results, while it also raised fiscal 2017 guidance. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at:

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Earnings Reviewed

For the thirteen week period ended April 29, 2017, Ulta’s net sales jumped 22.5% to $1.31 billion compared to net sales of $1.07 billion in Q1 2016. The Company’s reported numbers came in ahead of analysts’ estimates of $1.28 billion.

During Q1 2017, the Company’s comparable sales (sales for stores open at least 14 months and e-commerce sales) rose 14.3% in the reported quarter compared to an increase of 15.2% in the prior year’s corresponding quarter, driven by 8.7% transaction growth and 5.6% growth in average ticket. Ulta’s retail comparable sales increased 10.9%, including salon comparable sales growth of 9.9%.

For Q1 2017, Ulta’s salon segment’s sales advanced 16.7% to $68.7 million from $58.9 million in Q1 2016. The Company’s e-commerce division sales soared 70.9% to $104.3 million versus sales of $61.0 million in the prior year’s comparable quarter, representing 340 basis points of Ulta’s total comparable sales growth of 14.3%;

Ulta’s gross profit as a percentage of net sales fell 20 basis points to 36.2% in Q1 2017 from 36.4% in Q1 2016, principally due to planned supply chain investments and a higher mix of e-commerce sales, partly offset by leverage in fixed store costs. The Company’s selling, general, and administrative expense as a percentage of net sales decreased 80 basis points to 21.6% compared to 22.4% in the year ago same period, due to leverage of advertising and corporate overhead expenses attributed to higher sales volume.

For Q1 2017, Ulta’s operating income surged 28.0% to $188.4 million, or 14.3% of net sales, compared to operating income of $147.2 million, or 13.7% of net sales, in Q1 2016.

Ulta’s net income climbed 39.4% to $128.2 million in Q1 2017 compared to $92.0 million in Q1 2016. The Company’s earnings per diluted share surged 41.4% to $2.05, including $0.14 per diluted share primarily due to the adoption of a new accounting standard for employee share-based payments, compared to $1.45 in the prior year quarter. Excluding the $0.14 per diluted share tax rate benefit, Ulta’s earnings rose 31.7% to $1.91 per diluted share and ahead of Wall Street’s expectations of $1.79 per share.

Balance Sheet

Ulta’s merchandise inventories at the end of Q1 2017 totaled $1.05 billion compared to $843.5 million at the end of Q1 2016. The Company’s average inventory per store increased 11.2% on a y-o-y basis, driven by 104 net new stores, the scaling up of the Greenwood, Indiana and the opening of the Dallas, Texas distribution centers, investments in inventory to ensure high in-stock levels to support sales growth, and incremental inventory for new brands and the expansion of certain prestige brands.

As of April 29, 2017, Ulta had $471.73 million in cash and short-term investments compared to cash and short-term investments worth $26925 million as on April 30, 2016.

During Q1 2017, Ulta repurchased 184,667 shares of its stock at a cost of $51.6 million. As of April 29, 2017, the Company had approximately $394.5 million available under its $425 million share repurchase program announced in March 2017.

Store Expansion

During Q1 2017, Ulta’s real estate activity included opening 18 stores, 2 relocations, and one remodel compared to 13 new stores in Q1 2016. The Company ended the reported quarter with 990 stores and square footage of 10,433,185, which represents a 12% increase in square footage on a y-o-y basis.

Outlook

For Q2 2017, Ulta is expecting net sales in the range of $1.26 billion to $1.28 billion. Comparable sales for the upcoming quarter, including e-commerce sales, are expected to increase 10% to 12%. Ulta is projecting income per diluted share for Q2 2017 in the band of $1.72 to $1.77.

For fiscal 2017, Ulta is projecting to achieve comparable sales growth of approximately 9% to 11% compared to previous guidance of 8% to 10%. The Company expects to deliver earnings per share growth in the mid-twenties percent range compared to previous guidance of low twenties percent range. Ulta is estimated to incur capital expenditures in the $460 million range in FY17. The planned increase in capital expenditures includes approximately $80 million to fund prestige brand expansions.

Stock Performance

At the closing bell, on Thursday, June 15, 2017, Ulta Beauty’s stock was slightly down 0.69%, ending the trading session at $300.13. A total volume of 386.83 thousand shares have exchanged hands. The Company’s stock price surged 4.82% in the last three months, 17.69% in the past six months, and 25.98% in the previous twelve months. Moreover, the stock rallied 17.73% since the start of the year. The stock is trading at a PE ratio of 42.16 and currently has a market cap of $18.66 billion.

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