Ulta Beauty looking good in second quarter

Ulta Beauty CEO Mary Dillon outlined some of the key priorities for her first 100 days at the helm of the beauty retailer, following a 24.8% boost in second quarter net sales.

Dillon, a former PepsiCo executive, joined the company as CEO on July 1. She succeeded Chuck Rubin, who left the company to become CEO at Michaels Stores. Serving as interim CEO following Rubin’s departure was Dennis Eck.

“Our second quarter performance highlights many of the reasons I decided to join Ulta. We operate in an industry that's growing and important to our guests. Ulta has a differentiated format that resonates with customers. We have a solid long-term growth strategy and a strong team that's executing that strategy very well,” Dillon told analysts during Thursday’s conference call.

Dillon said that she doesn’t plan to make any “radical changes” to the company’s growth strategy, but rather plans to “expand and build upon” the foundation.

She noted that the beauty category is expected to continue to grow 3% to 4% over the long term, and she is optimistic that Ulta Beauty can continue to capture market share.

“I expect that share gains will come through new store growth, healthy same-store sales growth, driven by new customer acquisition and more frequent visits of existing customers who are attracted by newness in our offering and the strength of our marketing and loyalty programs,” Dillon said.

Outlining her key priorities for her first 100 days on the job, Dillon told analysts, “First and foremost, I plan to work with the team to deliver the 2013 financial performance that we've planned. Another top priority is supporting our store growth plans. At the same time, I'll be focused on addressing business needs in the area of supply chain and our digital omni-channel approach. I'll also be assessing the organization's talent, capabilities and culture needs as we continue to aggressively grow the business. I'll also spend time getting to know key vendor partners, and of course, analysts and investors.”

During the quarter ended Aug. 3, the beauty retailer posted net sales of $601 million, up 24.8% compared with the year-ago period. Same-store sales rose 8.4%.

Net income rose 28.3% to $44.9 million compared with $35 million in the year-ago period. Income per diluted share was 70 cents per share compared with 54 cents per share in the year-ago period, an increase of 29.6%.

During the quarter, the retailer expanded its new products and brands with such recent launches as IT Cosmetics, Jane Cosmetics, Mally Girl and Meaningful Beauty.

In addition, its loyalty program membership grew to 12 million active members, up 19% compared with the year-ago period.

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