Ulta Salon Profit Tops Estimate; Stock Up 6%

(RTTNews) - Ulta Salon, Cosmetics & Fragrance Inc (ULTA) Thursday reported a better-than-expected rise in third-quarter profit, led by a near 21 percent rise in revenues.

The beauty products retailer detailed its outlook for the fourth quarter, the midpoint of which is indicated to miss Wall Street estimates. Ulta Salon also lifted the comparable sales estimate for the full year.

Following the announcement, Ulta Salon shares gained about 6 percent in after-hours trade on the Nasdaq.

CEO Mary Dillon said that during the recent quarter, Ulta Salon benefited from strong same store sales. Sustained growth was seen in prestige and mass color cosmetics, online sales picked up, and the company introduced new products and brands to boost growth, Dillon said.

Ulta Salon, based in Bolingbrook, Illinois, reported fourth-quarter net earnings of $59 million or $0.91 per share, compared with $45.4 million or $0.70 per share last year.

On average, 17 analysts polled by Thomson Reuters expected earnings of $0.84 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the fourth quarter climbed 20.5 percent to $745.7 million from $618.8 million in the prior year. Fifteen analysts had a consensus revenue estimate of $734 million for the quarter.

Comparable sales for the quarter climbed 9.5 percent, while E-commerce comparable sales surged 46.7 percent.

Salon sales increased 20.5 percent, while comparable salon sales grew 10.1 percent.

Gross margin for the quarter rose 40 basis points from a year ago to 37.8 percent, and operating margin climbed to 12.6 percent from 11.8 percent.

During the quarter, Ulta Salon opened 50 stores and ended the period with 765 stores.

For the fourth quarter, Ulta Salon expects earnings of $1.21 to $1.26 per share, revenues of $997 million to $1.01 billion, and comparable sales growth of 6 to 8 percent. Analysts currently expect earnings of $1.27 per share for the quarter, on revenues of $1.01 billion.

For the full year, the company now expect earnings per share growth in the low 20s percentage range, revenue growth in the 20 percent range, and comparable sales growth of 8 to 9 percent. Ulta Salon had earlier expected earnings and sales growth in the 20 percent range and comparable sales growth of 7 percent to 8 percent.

Analysts currently expect sales growth of 19.6 percent for the year.

ULTA closed Thursday at $125.74, up $1.06 or 0.85%, on a volume of 1.6 million shares on the Nasdaq. In after hours, the stock gained $7.26 or 5.77% at $133.00.