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Ulta Beauty Q4 earnings miss; to open 100 stores

Ulta Beauty is not backing down in 2018 from its aggressive expansion.

The beauty powerhouse said it will open approximately 100 new stores and execute 17 remodel or relocation projects in fiscal 2018. Ulta ended fiscal 2017 with 1,074 stores.

Ulta also released its quarterly and annual results. For its fourth quarter, ended Feb. 3, Ulta’s net income increased 48.5% to $208.2 million, compared to $140.2 million in the year-ago period. Earnings per share increased 51.8% to $3.40. Adjusted earnings per share were $2.75, which excludes a $0.65 net benefit due to tax reform related items. Analysts had expected $2.77 per share.

Net sales increased 22.6% to $1.93. Excluding the impact of the 53rd week in fiscal 2017, net sales increased 15.7%.

Same-store sales (including e-commerce sales) increased 8.8%, driven by 6.2% transaction growth and 2.6% growth in average ticket. Retail comparable sales increased 4.2%, including salon comparable sales growth of 3.2%.

E-commerce sales increased 60.4% to $248.3 million, including the benefit of the 53rd week, compared to $154.9 million last year. E-commerce comparable sales increased 50.4%.

The company also announced a $625 million stock buyback and a one-time bonus for hourly workers due to tax reform.

For the full year, net sales, including the benefit of the 53rd week, increased 21.2% to $5.88 billion. Same-store sales rose 11%. Net income increased 35.5% to $555.2 million, compared to $409.8 million in fiscal 2016.

“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 Mary Dillon, CEO, Ulta Beauty. “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.”

For its upcoming first quarter, Ulta expects to post revenues between $1.51 billion and $1.52 billion. Current consensus estimate calls for $1.52 billion.
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