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Ulta Beauty beats Street; on track to open 100 stores in 2017


Ulta Beauty turned in another winning quarterly performance, besting analysts' earnings and sales estimates. The beauty powerhouse also raised its fiscal 2017 guidance.

One of the few specialty retailers with an aggressive store opening program, Ulta Beauty said it remains committed to opening 100 new locations in 2017. It will also remodel 11 stores and relocate seven others.

Ulta Beauty earned $114 million, or $1.83 a share, in the second quarter ended July 29, compared with $90 million, or $1.43 a share, in the year-ago period. Analysts had expected earnings of $1.78 a share.

Net sales rose 20.6% to $1.29 billion, from $1.07 billion a year ago, also better than expected. E-commerce sales grew 72.3% to $96.3 million from $55.9 million in the second quarter of fiscal 2016, representing 340 basis points of the total company comparable sales increase of 11.7%.

"We accelerated our market share gains while continuing to reduce promotional intensity and increase personalized offers through our industry leading loyalty program." said Mary Dillon, CEO. "We are also benefitting from continued success of our marketing programs, rapid growth in e-commerce, and solid operational execution across the enterprise."

Ulta Beauty's second quarter same-store sales rose 11.7%, in line with expectations. But the growth was less than the 14.4% increase in the year-ago period, much to the great disappointment of Wall Street.

On the chain's quarterly call, Dillon seemed unfazed. “We exceeded the high end of our guidance for total company sales driven by strong new store productivity," she told analysts. She also said that the company elected to “prioritize earnings growth and margin expansion over comp sales growth.”

Ulta raised its fiscal 2017 guidance and said it now expects comparable sales growth of approximately 10% to 11%, including the impact of the e-commerce business, compared to previous guidance of 9% to 11%.

It expects net sales in the range of $1.33 billion to $1.35 billion for the third quarter, up from $1.13 billion in the prior year period. Same-store sales, including e-commerce sales, are expected to increase 9% to 11%.

As of July 29, 2017, Ulta Beauty operates 1,010 retail stores across 48 states and the District of Columbia.
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