Ulta Beauty completes another year of strong sales

By

Jennifer Braun

Published
Mar 16, 2018

It’s not a bad time to be a beauty retailer! Despite a slowing momentum, American beauty specialty retailer Ulta Beauty reported on Thursday another positive quarter that included a net income increase of 48.5 percent to $208.2 million, leading to a strong sales year.

 
The company, which has seen some slowdown in its core makeup category, reported net sales of $5,884.5 million, up 21.2 percent, for the full year of fiscal 2017 ended February 3, 2018. Comparable sales increased 11 percent compared to an increase of 15.8 percent in fiscal 2016, while e-commerce sales impressed the most, growing 64.7 percent to $568.7 million.
 
Meanwhile, retail comparable sales increased 7.1 percent, including salon comparable sales growth of 6.1 percent.

“The Ulta Beauty team delivered excellent results in 2017, achieving 11 percent comparable sales growth and 25 percent adjusted earnings growth,” said Mary Dillon, Chief Executive Officer, in a news statement. “We also achieved strong sales and earnings growth in Q4 while continuing to gain market share and make significant progress on our strategic imperatives, despite continued moderation in the growth rate of makeup, our largest category.”
 
In the fourth quarter, net sales increased 22.6 percent to $1,937.6 million. Comparable sales including e-commerce sales increased 8.8 percent, missing analyst predictions. That compared to an increase of 16.6 percent seen in the fourth quarter of fiscal 2016.
 
Retail comparable sales jumped 4.2 percent, including salon comparable sales growth of 3.2 percent.
 
For the first quarter of fiscal 2018, the company expects net sales in the range of $1,506 million to $1,519 million, compared to actual net sales of $1,314.9 million in the first quarter of fiscal 2017. Comparable sales for the first quarter of fiscal 2018, including e-commerce sales, are expected to increase 6 to 7 percent. 
 
For fiscal 2018, the company expects to achieve comparable sales growth of approximately 6 to 8 percent, including the impact of its e-commerce business.
 
The company also plans to open approximately 100 new stores and execute 17 remodel or relocation projects.
 
“Looking ahead to 2018, we are deploying a portion of the tax reform benefits to invest in our people and accelerate investments to drive growth and innovation,” said Dillon.
 
“We also recognize operating margin headwinds from various cost pressures facing all retailers, our higher than expected mix of e-commerce, and the new revenue recognition accounting standard. To help offset these pressures, we are implementing a cost optimization program to deliver benefits in the areas of indirect procurement, end-to-end operational efficiency, real estate costs, and merchandise margin improvement.”