Ulta Beauty Q3 sales, earnings up; to ‘moderate’ store growth
Ulta Beauty’s winning streak continued in the third quarter as it continues to open stores at a rapid clip.
The beauty powerhouse’s net income increased 25.3% to $131.2 million in the quarter ended Oct. 28. Earnings per share increased 28.2% to $2.18, just beating analysts’ estimates of $2.16 per share.
Net sales increased 16.2% to $1.56 billion, in line with estimates. Total same-store sales increased 7.8%, driven by new store growth along with 5.3% transaction growth and 2.5% growth in average ticket. E-commerce sales spiked 42.5% to $170.7 million, representing nearly 11% of total company revenue.
Ulta kept up its heady expansion during the quarter, opening 42 new stores. It also remodeled four existing locations and relocated one unit. The retailer has opened 105 net new stores to date this year.
On the company’s quarterly call, CEO Mary Dillon gave an update on Ulta’s future store plans.
“With increased confidence in the next several years of store growth, we narrowed our U.S. store target range of 1,500 to 1,700,” she said. “And we’ll slightly moderate new store openings in the next few years, with plans to open 80 stores in 2019, 75 stores in 2020 and 70 stores in 2021.”
Dillon explained that the moderation will be in tandem with a greater focus on portfolio repositioning as the company has a large number of store leases coming up for renewal in the next several years.
Despite a strong third quarter, Ulta disappointed analysts with its fourth-quarter outlook. The retailer said it expects revenue of between $2.08 billion and $2.10 billion and earnings per share of between $3.50 and $3.55 The projections fell short of analysts' estimates of $3.60 in EPS and $2.109 billion in sales.
Ulta ended the quarter with 1,163 stores and square footage of 12,221,878, representing a 9.7% increase in square footage compared to the same period last year.