Ulta Beauty continued making gains for its third fiscal quarter.
“Cosmetics, both mass and prestige, continues to lead our growth,” said Ulta chief executive officer Mary Dillon on a call with analysts Thursday evening.
She and chief merchandising and marketing officer Dave Kimbell called out Urban Decay, IT Cosmetics, NYX, Anastasia Beverly Hills, Too Faced, Tarte, Clinique, Lancôme, Benefit, Real Techniques, Ardell, Makeup Revloultion, Tony Moly, No 7, DevaCurl, Living Proof as growth drivers.
E-commerce and mobile sales were also up, and remain an area of focus for the business. “[Mobile] is becoming more important to us than ever in terms of driving sales and traffic, and it’s fast-growing,” Dillon said. Ulta’s third quarter e-commerce sales increased 59.1 percent to $73.6 million from $46.2 million year-over-year.
“Every month, every quarter, it becomes a bigger and bigger part of our traffic and our sales online,” Kimbell said. “It’s just how our guest is choosing to engage with us, so we’ll continue to innovate in the mobile space.
Mobile will remain the core of Ulta’s e-commerce efforts, Kimbell said, both in terms of commerce and content. “It really is the core of our innovation efforts in making our mobile both easy and intuitive commerce applications so she can find what she’s looking for and transact very easily, but also importantly content – from things as simple to finding a local store and seeing if the product she’s looking for is available – to new trends, to trying on new products in our new GlamLab application.”
And while some of the brand additions Ulta has made recently, including NARS, Estée Lauder and the Dyson hair dryer have heightened the retailer’s prestige offerings, Kimbell insisted mass-market brands remain just as much of a focus. “With the brands we’ve had for a while continuing to grow and expand … and we’re adding new brands … Makeup Revolution is an example of that.”
The company reported net income of $87.6 million in net income for the quarter, a 7.7 percent increase from the prior year period. Net sales were up 24.2 percent from $910 million to $1.1 billion for the quarter. Earnings per share were $1.40, up 26.1 percent from $1.11 in the prior-year quarter. Ulta opened 42 stores in the quarter, a 10 percent square-footage increase from the prior-year period.
For the quarter, retail comparable sales were up 14.3 percent, including salon comparable sales growth of 10.3 percent. Salon sales were up 16.7 percent to $60.4 million from $51.7 million in the prior-year period.
For the nine months of the year, Ulta reported net income of $269.5 million, up from $212.2 million in the prior-year period. Net sales were $3.3 billion for the three quarters, up from $2.7 billion in the prior-year period. Comparable sales were up 15.4 percent, driven by an increase in both transactions and average ticket size. Salon sales were up 15.2 percent to $178.2 million from $154.7 million in the prior-year period.
“Ulta Beauty’s top line accelerated in the third quarter, driving record sales and earnings performance,” said Dillon. “Our associates continue to execute against our growth strategies, resulting in success across several areas: new brand acquisition, increased Ulta Beauty brand awareness, rapid growth in our loyalty program, improving supply chain performance and robust e-commerce growth.”
Looking forward to the fourth quarter, Ulta expects net sales of between $1.516 billion and $1.541 billion, a 12 percent to 14 percent increase. Income per diluted share is expected to be in the range of $2.08 to $2.13. Ulta raised its full-year guidance, projected comparable sales growth of between 13 percent to 15 percent, an increase in total sales in the low-20s and about a 40 percent increase in e-commerce sales. Store square footage is projected to increase by 11 percent because of 100 net new stores. Ulta anticipates about $390 million in total capital expenditures, in part because of the accelerated rollout of prestige beauty brand boutiques.