Ulta Beauty announced financial results for the 13-week period (third quarter) and 39-week period (first nine months) ended November 2, 2013, which compares to the same periods ended October 27, 2012.
“The Ulta Beauty team delivered solid top line growth, with particular strength in our online sales, despite a challenging environment,” said Mary Dillon, Ulta CEO. “We also made significant progress on our growth strategies, including opening a record number of new stores, seamlessly rolling out a new e-commerce site while maintaining strong top-line momentum, completing this year’s roll-out of Clinique and Lancôme boutiques, and continuing to launch new and exclusive products and brands.”
For the third quarter, net sales increased 22.4% to $618.8 million from $505.6 million in the third quarter of fiscal 2012; and comparable store sales (sales for stores open at least 14 months) increased 6.8% compared to an increase of 8.9% in the third quarter of fiscal 2012, including the impact of e-commerce sales. Also, operating income increased 18.9% to $72.9 million, or 11.8% of net sales, compared to $61.3 million, or 12.1% of net sales, in the third quarter of fiscal 2012; and net income increased 19.1% to $45.4 million compared to $38.2 million in the third quarter of fiscal 2012. Excluding the severance charge, net income increased 22.1%.
The company added 55 new stores, the most stores opened in a single quarter in the company’s history, as well as added 10 Clinique boutiques to end the third quarter with 100 stores offering Clinique products. The company also added 20 Lancôme boutiques to end the third quarter with 105 stores offering Lancôme products. And Ulta.com successfully launched a completely redesigned website, featuring innovative responsive web design technology, and expanded e-commerce fulfillment capabilities to a second distribution center, in Chambersburg, Pennsylvania. E-commerce sales grew 74.4%, representing 170 basis points of the total company same store sales increase of 6.8%.
For the first nine months, net sales increased 23.3% to $1.802 billion from $1.461 billion in the first nine months of fiscal 2012; and comparable store sales increased 7.3% compared to an increase of 9.7% in the first nine months of fiscal 2012, including the impact of e-commerce sales. Net income increased 22.4% to $132.2 million compared to $108 million in the first nine months of fiscal 2012; and excluding the severance charge, net income increased 23.4%.
For the fourth quarter of fiscal 2013, Ulta Beauty currently expects net sales in the range of $853–867 million, compared to actual net sales of $758.8 million in the fourth quarter of fiscal 2012, which included $40 million of sales for the 53rd week. Income per diluted share for the fourth quarter of fiscal 2013 is estimated to be in the range of $1.07–1.10. This compares to income per diluted share for the fourth quarter of fiscal 2012 of $1.00, which included a $0.05 impact related to the 53rd week.
Based on expected performance for the second half of the year, the company plans to achieve an earnings growth rate in the low 20% range for the full year 2013, adjusted for the 53rd week last year, compared to its previous expectation of approximately 25% growth. The company also plans to achieve full year comparable store sales in the range of 7&nadsh;8%.
On a longer-term basis, the company is currently evaluating its long-range financial and strategic plan, and will share details of the outcome of this analysis and update its long-term targets during the course of 2014.
“Since I joined Ulta Beauty in July, I have been impressed by the strength of our business model and confident in our ability to offer a differentiated experience for our customers now and in the future,” said Dillon. “We have long runway for new store growth, strong potential to develop higher brand awareness, and a significant opportunity to evolve our digital presence both on-line and in-store. In order to support a thriving 1,200 store chain with a successful, growing e-commerce business, we will need to upgrade our capabilities with investments in people, systems and supply chain. We expect to remain a high-performance, high-growth company while building an even stronger foundation for the future.”