Shares of Ulta Get a Lift on Firming First Quarter Numbers, But Outlook Droops

Andrew Klips  |

Shares of Ulta Salon Cosmetics & Fragrance Inc. (ULTA) rose in extended trading on Tuesday following the beauty products retailer posting better-than-expected first-quarter sales and profits, in spite of declining profit margins and a forecast for the current quarter that was below predictions.

For the quarter ended April 28, Bolingbrook, Illinois-based Ulta reported revenue of $582.7 million, up 22.9 percent from $474.1 million in the year prior quarter. Net income rose 20.0 percent to $41.8 million, or 65 cents per share, versus $34.9 million, or 54 cents per share, in the first quarter of 2012.

The results were above Wall Street expectations of profits of 62 cents per share on revenue of $576 million. In March, Ulta’s forecast of profits in the range of 60 cents to 63 cents on sales in the range of $568 million to $577 million was beneath analyst predictions at that time.

Same-store-sales improved by 6.7 percent, including online sales. In the first quarter last year, same-store-sales topped the year prior quarter by 10.1 percent.

Gross profit fell by 100 basis points to 35.0 percent. Selling, general and administrative expenses as a percentage of net sales dropped 60 basis points to 22.8 percent.

"We are pleased to announce a strong start to fiscal 2013, with better than expected sales and margin performance. We are on track to add 125 stores this year, and continue to drive outstanding new store productivity,” said Dennis Eck, Interim CEO at Ulta Salon.

Ulta, a seller of make-up, perfume, skin care, beauty products and salon servies, has been a favorite of investors in recent years, posting double-digit growth as it expanded rapidly and sales at comparable stores boomed. Like most other companies, Ulta formed a post-crash low in March of 2009. Since the stock produced incredible returns, rising from lows of $4.11 to in excess of $100 per share in 2012 and early 2013.

Looking ahead, Ulta sees second-quarter profits in the range of 64 cents to 67 cents and revenue between $579 million and $589 million.

Much like the original expectations for the last quarter, the outlook is just below Wall Street expectations of 68 cents per share in earnings on revenue of $590 million.

Shares of ULTA have been a weak performer so far in 2013, depreciating by about 14 percent, including a drop of around 3 percent to close at $84.13 in Tuesday trading. Traders apparently shrugged off the somber outlook to focus on the earnings beat in after-hours trading with shares reversing losses to climb back over $92 per share.

Stock price data is provided by IEX Cloud on a 15-minute delayed basis. Chart price data is provided by TradingView on a 15-minute delayed basis.

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