By  on December 4, 2009

Ulta Salon, Cosmetics & Fragrance Inc. posted third-quarter earnings growth of 68.6 percent, a sign that the beauty retailer’s strategy of selling mass and prestige brands under one roof is resonating with value-driven shoppers.

To keep foot traffic robust throughout the holiday season, Ulta’s president and chief executive officer Lyn Kirby said the retailer will launch a TV marketing campaign for the first time.

The hybrid retailer reported net income for the quarter ended Oct. 31 was $8.5 million, or 14 cents a diluted share, compared with $5 million, or 9 cents, in the prior year period. Net sales increased 11.5 percent to $284 million, up from $254.8 million a year earlier, with comparable-store sales ticking up 1.5 percent, compared with an increase of 2 percent the prior year. During an after-market call with analysts Thursday, Kirby said prestige skin care and cosmetics, as well as improved sales of fragrance and hair styling tools, helped drive the sales gains.

In a statement late Thursday afternoon, Kirby said, “Our strong third-quarter performance has helped us deliver over $65 million of free cash flow year to date, which was well ahead of our expectations. In addition, our 2009 new stores continue to perform on model, which helped to drive a double-digit total sales increase.” During the quarter, Ulta opened 12 stores, ending the quarter with 345 doors.

For the nine-month period, net income increased to $19.1 million, or 32 cents a diluted share, up from $13 million, or 22 cents, in the year-earlier period. Sales increased 11.2 percent to $826.4 million, up from $743.3 million, while same-store sales declined 0.8 percent.

Looking to the fourth quarter, Ulta forecasted net sales between $362 million and $376 million, assuming a comparable- store sales decline of 3 percent to an increase of 1 percent.

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