Ulta Beauty looks good as weather no worry

With an 8.7% same store sales increase, the addition of 21 new stores, a burgeoning digital business and surging first quarter profits, Ulta Beauty demonstrated why it is one of the retail industry’s most compelling growth stories.

First quarter sales for the period ended May 3 increased 22.5% to $713.8 million thanks to the addition of 120 new stores since the end of the first quarter of 2013. The company also produced an 8.7 same store sales increase that came on top of a prior year increase of 6.7%. Profits increased 19.4% to $50 million and earnings per share grew 18.5% to 65 cents. The biggest surge came in the e-commerce area where comparable sales grew 72.3%, a figure distorted by growth coming of a small base the prior year.

“Ulta Beauty delivered strong sales and earnings growth in the first quarter,” said Ulta CEO Mary Dillon. “The team’s accomplishments included improving retail transactions which turned positive, driving continued momentum in our online business, successfully rolling out new brands, completing a smooth conversion of our loyalty program members onto one platform, and managing inventory very well.”

While the overall numbers were solid, Ulta did report that gross margins contracted to 34.5% of sales from 35% and the operating margin also contracted to 11.3% of sales from 11.6%. It also forecast second quarter same store sales may increase only 5% to 7% after advancing 8.4% the prior year.