Ulta Beauty sizzles, plans 100 more stores

No retailer has more momentum right now than Ulta Beauty. The company’s fourth quarter same store sales increased 12.5% on top of a prior year gain of 11.1% and 2016 could be another year of double digits gains.

Ulta Beauty CEO Mary Dillon said the company’s fourth quarter capped an exceptional year and it is easy to see why. The company opened 103 new stores, including 14 in the fourth quarter, to end the year with 874 locations. The 12.5% fourth quarter same store sales increase is stunning, especially considering the company lapped a prior year gain of 11.1% and comes at a time when many retailers have blamed weak results on warm weather, the competitive pressures and the strong dollar.

“We continue to benefit from the powerful combination of strong demand in the beauty category and Ulta Beauty’s highly differentiated offering that propels our business to transcend prevailing trends across the retail landscape,” Dillon said.

That formula translated to sales that increased 21.1% to $1.3 billion and net income increased 23.6% to $107.8 million during the fourth quarter ended Jan. 31. Earnings per share benefitted from share repurchase activity and grew an even faster 25.2% to $1.69 from $1.35.

Full year sales increased 21.1% to $3.9 billion and same store sales increased 11.8% compared to a 9.9% increase the prior year. Profit increased 24.5% to $320 million and earnings per share increased 25.1% to $4.98.

The company’s e-commerce business is on fire too and it actually provides investors with a sales volume figure as opposed to simply a percentage increase figure as is the case with many retailers. For example, Ulta Beauty said it fourth quarter e-commerce sales increased 44.2% to $94.8 million and full year e-commerce sales increased 47.5% to $221.1 million.

To bring its differentiated offering to more customers this year Ulta Beauty plans to open 100 new stores while also pursuing new merchandising initiative to enhance the productivity of existing locations. The addition of selling space combined with same store sales growth in the range of 8% to 10% and 40% e-commerce growth has Ulta Beauty forecasting its total sales will grow in the mid to high teen percentage range.

The 100 store opening are included in a capital expenditure budget which increases to $390 million in 2016 from $299 million last year and also includes funds for a new distribution center in Dallas, the accelerated rollout of prestige brand boutiques and enhancements to the Ulta Beauty Collection and fragrance fixtures in hundreds of stores.