For the fourth quarter, net sales gained 24.6 percent to $1.58 billion, from $1.27 billion in the prior-year period. Net income was up 30 percent, to $140.2 million compared to $107.8 million year-over-year. Diluted earnings per share was $2.24, compared with $1.69 in the prior-year period. Retail comparable sales were up 12.8 percent, salon sales were up 15.2 percent to $62.9 million and e-commerce sales gained 63.4 percent to $154.9 million.
The business saw strong sales from Urban Decay, It Cosmetics, NYX, Redken, Too Faced, Tarte, Anastasia Beverly Hills, Clinique, Lancôme, Benefit and the Ulta Beauty brand, chief executive officer Mary Dillon said on the company’s earnings call Thursday. Ulta Beauty’s label makes up between 3 percent and 4 percent of sales, Dillon said.
While many of the analyst questions on Thursday’s call were geared toward the prestige side, Ulta’s executives noted that the mix of mass and prestige is what is really driving the business. In addition to NYX, L’Oréal and Maybelline have been doing well on the mass side, according to chief marketing and merchandising officer Dave Kimbell. “We’ve enhanced their in-store presentation in many of our stores,” he said. “They’re bringing very strong innovation across all parts of the makeup space.” Kimbell also noted Neutrogena and No7 as sales drivers in skin care.
E.l.f., which reported its own 20 percent increase in annual sales on Wednesday evening and is already sold online at Ulta, will be moving into some Ulta retail locations, Kimbell said. “We are looking to partner with them to expand into some stores in the first half of the year,” he said, adding that the brand would not be added to all locations.
“The Ulta Beauty team delivered outstanding fourth-quarter results, capping an exceptional year of sales and earnings growth while investing to drive market share gains and create sustainable long-term shareholder value,” Dillon said. “We are confident in our outlook for continued success in 2017 as we execute our strategy….Our new brand pipeline is very healthy and we are particularly excited to announce the addition of the Estée Lauder Companies’ MAC brand, which will launch on ulta.com and begin to roll out to stores this spring.”
For Ulta’s full year, ended Jan. 28, net income increased 28 percent to $409.8 million compared with $320 million for 2015. Diluted EPS gained 30.9 percent to $6.52 from $4.98 in the prior year. Net sales were up 23.7 percent to $4.85 billion from $3.9 billion. Retail comparable sales were up 13.4 percent; salon sales gained 15.2 percent to $241.1 million; e-commerce comparable sales were up 56.2 percent to $345.3 million.
Ulta said it expects to open 100 net new stores for fiscal 2017, as well as grow sales between 8 to 10 percent, including a 40 percent projected gain in e-commerce revenues. The company also expects to spend $460 million for the year (up from $374 million for fiscal 2016) on capital projects, in part because of $80 million planned to fund prestige brand expansions. That figure includes 700 expansions for Clinique, Lancôme, Benefit and MAC, according to Ulta chief financial officer Scott Settersten, who noted that brand additions “are expected to deliver incremental sales and margin dollars.”
The business is also planning to launch a gift card business in national grocery store chains, and has signed a lease for a distribution center in Fresno, Calif., that should allow it to fulfill West Coast orders more efficiently.
For the first quarter of fiscal 2017, Ulta anticipates sales between $1.24 billion and $1.27 billion, an increase of between 9 percent and 11 percent. EPS is projected to be in the range of $1.75 to $1.80.