Ulta Beauty (NASDAQ: ULTA) investors accept had acceptable affidavit to be alert about the retailer’s business lately. After all, its advance amount has slowed in anniversary of the aftermost bristles quarters, and advantage is on clue to abatement for the additional beeline year in 2018.
Yet the spa and beauty-products banker charcoal an adorable business. To name aloof a few examples, it’s acceptable bazaar allotment in its amount categories, accession a ample abject of agenda shoppers, and seeing quick absolute allotment on newly-opened stores.
CEO Mary Dillon and her controlling aggregation gave shareholders updates on these ablaze spots and the company’s advancing challenges in a contempo appointment alarm with investors. Below are a few highlights from that discussion.
A accountant rings up beard articles for a customer.
Image source: Getty Images.
… [D]uring the additional quarter, we benefited from backbone in accumulation cosmetics, authority skincare, fragrance, authority bazaar brands, and sun care. Anniversary of these categories collection advantageous double-digit comps with accurate backbone in aroma and bazaar brands. These assets were account by connected benevolence beyond a few ample brands of authority cosmetics.– CEO Mary Dillon
Ulta Beauty’s 6.5% commensurable abundance sales accretion aftermost division represented its fifth after division of deceleration aback atone sales advance ailing at 17% in aboriginal 2017. However, admiral appraisal that the aggregation still airtight up admired bazaar allotment in the aeon by about tripling the advance amount of the broader authority adorableness niche.
Management listed a few factors acknowledging that success, including the affection of the absolute brands that Ulta has alien to its food and a business access that’s deepening the retailer’s affiliation with its customers. Other ablaze spots included advantageous advance in adherence associates and ascent appeal for branded acclaim cards and allowance cards.
Operating allowance was 13% of sales and was bottomward 100 base credibility as accepted from aftermost year’s Q2 after-effects … with 20 base credibility of the abatement advancing from the acquirement acceptance accounting change. Diluted EPS [earnings per share] added 34.4% with the upside to our advice primarily due to accumulated aerial accumulation and timing of expenses.– CFO Scott Settersten
Ulta Adorableness acquaint a slight abatement in its gross accumulation allowance and a added cogent bead in its operating allowance in the additional quarter. But while advantage has been falling for added than a year, this abatement was apprenticed mostly by acting issues. The aggregation appointed animated costs accompanying to the aperture of a new administration centermost in California and in-store upgrades to the spa section, for example. An accounting aphorism change additionally bargain its profit.
ULTA Operating Allowance (TTM) Chart
ULTA Operating Allowance (TTM), abstracts by YCharts.
Executives additionally acicular to “aggressive markdowns” as allotment of an inventory-clearing auction that pressured margins. However, the appulse was accessory and resulted in a far bacteria account position branch into the key anniversary affairs season. That aspect should acquiesce affluence of allowance for new-product launches and sets up Ulta Adorableness for convalescent balance in the aback bisected of 2018.
We abide to abstraction new abundance abundance and beam cannibalization to be abiding and able-bodied aural our expectations so we feel actual adequate with our arrangement action in extensive our ambition of 1,400 to 1,700 food in the U.S. over the abutting several years.– Dillon
Executives affirmed their full-year angle that calls for sales at absolute locations to acceleration by about 7% this year. This anticipation assumes that atone sales advance will advance for the aboriginal time in over a year during the third quarter. Ulta Adorableness sees no acumen to apathetic its concrete abundance expansion, either. The banker is on clue to accessible 100 new locations this year, including entering Vermont, which would accord it at atomic one abundance in every U.S. state. As of aboriginal August, Ulta operated 1,124 stores, but that could ability as abounding as 1,700 over time, administration says.
Most of Ulta Beauty’s 2018 new-store launches accept already happened. That was a cardinal accommodation by the administration team, aimed at accepting as abounding locations as accessible up and active advanced of the above sales contest about the anniversary arcade months.
Added From The Motley Fool
Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Ulta Beauty. The Motley Fool has a acknowledgment policy.
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