Ulta Salon Profit Rises, But Misses Street; Shares Plunge On Weak Outlook

(RTTNews) - Ulta Salon, Cosmetics & Fragrance Inc. (ULTA) plunged 17 percent in extended hours on Thursday after its third-quarter earnings and revenues fell short of Wall Street expectations and fourth-quarter outlook missed current view.

Meanwhile, the company's third-quarter profit improved, owed largely to double-digit sales growth and stronger gross margins.

Illinois-based Ulta Salon's profit for the third quarter rose to $45.4 million or $0.70 per share from $38.2 million or $0.59 per share in the same period last year.

Excluding items, adjusted earnings for the quarter were $0.72 per share. On average, 14 analysts polled by Thomson Reuters expected earnings of $0.74 per share. Analysts' estimates typically exclude special items.

Ulta Salon's third-quarter sales grew 22.4 percent to $618.8 million from $505.6 million last year. Analysts expected revenues of $622.03 million. Third-quarter comparable store sales, or sales in stores open for at least a year, increased 6.8 percent over last year.

Gross margin, the percentage of sales left after deducting sales costs, improved 70 basis points to 37.4 percent from a year ago.

Commenting on the results, Chief Executive Mary Dillon said, "The Ulta Beauty team delivered solid top line growth, with particular strength in our on-line sales, despite a challenging environment."

The beauty products retailer was able to increase its top line as beauty conscious people were attracted to its new products and the discounts provided. The company opened 55 new stores during the quarter. However, the company warned that soft retail sales trends and the high promotional costs during the holiday season are expected to impact its results for the fourth quarter.

Looking forward to the fourth quarter, Ulta Salon expects earnings of $1.07 to $1.10 per share, with revenues between $853 million and $867 million. Analysts currently expect earnings of $1.24 per share on revenues of $894.82 million.

ULTA closed Thursday's trading at $118.00, down $5.48 or 4.44%, on the Nasdaq. The stock, however, dropped $18.09 or 15.33%, in the after hours trade.