Ulta Beauty continued to gain in the first quarter of 2016, posting a 23.7 percent increase in net sales to $1.07 billion, year-over-year.
“If you look at the world today, the influences are converging nicely when it comes to beauty as a category,” said chief executive officer Mary Dillon on the company’s earnings call.
Net income for the quarter increased 37.4 percent from the prior-year period, to $92 million. Net income per diluted share was up 39.4 percent, to $1.45, above the analyst consensus of $1.29.
Sales for the quarter ended April 30 were up from $868.1 million in the prior-year period. Comparable sales grew 15.2 percent, driven by an 11 percent increase in traffic and 4.2 percent growth in average ticket. Salon services increased $14.2 percent, driven blowouts, hair treatments and makeup services, Dillon said.
Urban Decay, IT cosmetics, NYX, Tarte, Clinique, Lancôme, Benefit and the Ulta Beauty Collection were among the best performing brands for the quarter, according to Dillon. “We’ll continue to add new brands,” said David Kimbell, Ulta’s chief merchandising and marketing officer. “While that is a big contributor…we’re really focused on driving growth with our existing brands.”
Ulta’s loyalty program is also growing — up 25 percent year-over-year to 19.4 million members. “Over 80 percent of our sales are driven by the loyalty program members,” Dillon said.
For the second quarter, Ulta expects net sales to come in between $1.04 billion to $1.058 billion, compared with $877 million in net sales for the second quarter of 2015. Comparable sales for the second quarter, including e-commerce, are expected to gain 11 percent to 13 percent, compared to an increase of 10.1 percent, year-over-year. Ulta anticipates income per diluted share will range between $1.32 to $1.37.
The company is raising its guidance for comparable sales growth — it previously provided guidance of 8 percent to 10 percent. Ulta is projecting total sales will grow in the high-teens percentage range for the year, compared with previous guidance of mid to high teens; e-commerce to grow by 40 percent; and earnings per share in the low-20s percent range.
Also within the year, Ulta said it plans to remodel 12 locations, grow square footage by 11 percent by opening 100 net new stores and spend about $390 million, including the $80 million rollout of prestige brand boutiques and enhancements to fragrance fixtures. As the company goes forward, Dillon Ulta will continue to consider smaller-format locations. “Urban is a question we’re asking ourselves,” she said.