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Ulta Beauty announced financial results for the fourteen-week period (fourth quarter) and fifty-three week period (fiscal year) ended February 2, 2013, which compares to the thirteen and fifty-two week periods ended January 28, 2012.
For the fourth quarter, net sales, including the benefit of the 14th week in the quarter, increased 30.3% to $758.8 million from $582.5 million in the fourth quarter of fiscal 2011; while comparable store sales increased 8% compared to an increase of 11.5% in the fourth quarter of fiscal 2011. Operating income increased 41.7% to $103.8 million, or 13.7% of net sales, compared to $73.2 million, or 12.6% of net sales, in the fourth quarter of fiscal 2011; and net income increased 39.4% to $64.5 million compared to $46.3 million in the fourth quarter of fiscal 2011.
Dennis Eck, Ulta’s interim CEO, stated, “The Ulta team achieved strong fourth quarter results to complete an exceptional year in 2012. Excellent execution of our multi-year growth strategy was evident in the milestones achieved during the year: we increased square footage by 23% with the addition of 101 net new stores, we greatly enhanced our offering with newness across the board, we implemented a new customer relationship management platform, broadened our marketing reach and brand awareness, and improved our digital capabilities including rapid growth in our e-commerce business.”
“We believe that Ulta will continue to drive rapid sales and earnings growth, while continuing to invest in the infrastructure needed to sustain the growth of our retail and digital businesses,” Eck continued. “We are on track to open 125 stores this year, and continue to see a strong pipeline of new brands, products and services to enhance our offering. We are excited to announce that we will be continuing the expansion of Clinique boutiques this year, in addition to the 43 boutiques rolled out at the end of 2012. To provide a solid foundation for Ulta’s growth in the years ahead, we plan to invest in several areas of the business. This will include upgrading our warehouse management systems, preparing for an additional distribution center in 2014, redesigning our e-commerce site, and building the additional Clinique boutiques as well as investing in labor to support the growth of our prestige categories. We are confident that Ulta will continue to gain market share and grow its position as a beauty and trend authority. We have a strong, tenured team in place to drive outstanding results in the quarters and years to come.”
For the fiscal year 2012, Ulta recorded a net sales, including the benefit of the 53rd week, increase of 25% to $2,220.3 million from $1,776.2 million in fiscal 2011. Comparable store sales increased 8.8% compared to an increase of 10.9% in fiscal 2011; and operating income increased 42.7% to $280 million, or 12.6% of net sales, compared to $196.2 million, or 11.0% of net sales, in fiscal 2011.
During the fourth quarter, the company opened 13 stores located in Maine, California, Florida, Texas, Missouri, Virginia, Louisiana, Connecticut, New Hampshire, New York and Virginia. Ulta ended the fourth quarter with 550 stores and square footage of 5,847,393, which represents a 23% increase in square footage compared to the fourth quarter of fiscal 2011.
For the first quarter of fiscal 2013, the company currently expects net sales in the range of $568–577 million, compared to actual net sales of $474.1 million in the first quarter of fiscal 2012. Starting in the first quarter of 2013, comparable store sales will be reported including the company’s e-commerce business. This is expected to have a positive impact of less than 100 basis points on the reported comparable store sales increase. Comparable store sales for the first quarter of 2013 are expected to increase 4–6%. The company reported a comparable store sales increase of 10.1% in the first quarter of 2012.
For fiscal 2013, the company plans to achieve comparable store sales growth of approximately 4–6%, including the impact of the e-commerce business; expand square footage by 22% with the opening of 125 net new stores; remodel seven locations; deliver earnings per share growth, on a 52-week adjusted basis, at the low end of the company’s long term target of 25–30%, including the impact of approximately $0.13 of income per diluted share in incremental investments associated with the planned new store program, supply chain, warehouse systems, and e-commerce site investments, the expansion of prestige brand boutiques, and investments in store labor to support rapid growth in the prestige cosmetics and skin care categories; incur capital expenditures of approximately $225 million in fiscal 2013, compared to $189 million in fiscal 2012; and continue to generate free cash flow.