Ulta Salon, Cosmetics & Fragrance Inc. posted robust second-quarter earnings growth of 55.9 percent, as the hybrid beauty retailer continued to opened more doors.

This story first appeared in the September 4, 2009 issue of WWD. Subscribe Today.

Net income for the quarter ended Aug. 1 surged to $5.8 million, or 10 cents a diluted share, compared with $3.7 million, or 6 cents a share, in the prior-year period. Quarterly net sales gained 9.8 percent to $273.5 million, while comparable-store sales dipped 1.7 percent, compared with an increase of 3.7 percent in the year-ago period.

“We continued to execute on our strategies of dynamic marketing, strong value proposition, new store growth and new brand introductions to drive traffic and market share gains,” stated Lyn Kirby, Ulta’s president and chief executive officer. “These strategies delivered a 2.2 percent comparable-store traffic increase for the quarter in an ongoing difficult consumer spending environment without incremental investment in marketing.”

For the first half, net income gained $10.7 million, or 18 cents a diluted share, compared with $8 million, or 13 cents a share, in the same period last year, on sales that increased 11 percent to $542.4 million, from $488.4 million. Same-store sales for the first six months decreased 2 percent, compared with an increase of 3.8 percent in the year-earlier period.

During the 13-week period, the retailer — which sells mass market and prestige beauty brands under the same roof — opened 13 doors, and ended the quarter with 333 stores and square footage of 3.5 million, an increase of 18 percent over the prior-year period.

While many prestige brands have linked arms with Ulta — including recent additions of Benefit Cosmetics, which rolled out chainwide in July; Cargo cosmetics; Perricone MD skin care, and Phyto hair care — the big three department store brands, namely Estée Lauder, Clinique and Lancôme, continued to elude the retailer. However, Ulta recently began testing the Clinique brand in one store, potentially paving the way for a broader rollout.

During the call, Kirby told analysts that Ulta has partnered with hairstylist Rodney Cutler, formerly of the TV series “What Not to Wear.” Each fall and spring season, Cutler will look to the fashion week runways to create three signature haircuts, which Ulta associates will be trained to do.

Looking to the third quarter, the company forecast net sales in the range of $270 million to $278 million, assuming a comparable stores sales decline of 1 to 4 percent. The company continues to work to reduce expenses by $18 million across the supply chain, store and other operating costs. It plans to open 35 new stores this year.

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