Ulta Salon Profit Rises, Shares Gain 7% - Update

(RTTNews) - Ulta Salon, Cosmetics & Fragrance Inc. (ULTA), Thursday reported an increase in fourth-quarter profit, helped largely by a double-digit sales growth. Shares of the beauty products retailer gained seven percent in extended hours after its fourth-quarter earnings and revenues trounced Wall Street estimates.

Bolingbrook, Illinois-based Ulta Salon's fourth-quarter profit rose to $87.3 million or $1.35 per share from $70.7 million or $1.09 per share last year. On average, 18 analysts polled by Thomson Reuters estimated earnings of $1.27 per share for the quarter. Analysts' estimates typically exclude special items.

Ulta Salon's fourth-quarter sales rose 20.7 percent to $1.05 billion from $868.1 million a year ago. Analysts had a consensus revenue estimate of $1.02 billion for the quarter.

Gross margin, the percentage of sales left after deducting sales costs, declined to 33.4 percent from 33.8 percent last year, hurt largely by increased costs associated with the ULTAmate Rewards loyalty program and the impact of a higher mix of e-commerce sales.

Comparable sales, or sales from stores open for at least 14 months increased 11.1 percent during the quarter, compared to an increase of 9.2 percent last year. During the fourth quarter, the company opened 10 stores and ended the quarter with 774 stores.

Chief Executive Mary Dillon said, "Our best comparable sales increase of the year was driven by accelerating traffic growth, continued strength in prestige and mass color cosmetics, a successful holiday selling season, execution of more effective marketing and CRM strategies, a double-digit comp in our salon business, and a 55% comparable sales increase in our e-commerce business."

Looking forward to the first quarter, Ultan Beauty expects earnings of $0.88 to $0.93 per share on revenues of $833 million to $847 million. Comparable sales are expected to increase 7 to 9 percent. Analysts currently expect earnings of $0.91 per share on revenues of $832.10 million for the quarter.

For the full year 2015, the company expects adjusted earnings growth of 15 to 17 percent and total sales growth in the mid-teens percentage range. Analysts currently expect earnings of $4.55 per share on revenue growth of 15.7 percent for 2015.

ULTA closed Thursday's trading at $144.82, up $2.86 or 2.01%, on the Nasdaq. The stock further gained $9.83 or 6.79% in the after-hours trade.