ULTA Earnings Cheat Sheet: Net Income Climbs

Ulta Salon Cosmetics & Fragrance Inc. (NASDAQ:ULTA) reported net income above Wall Street’s expectations for the third quarter. Ulta Salon, Cosmetics & Fragrances is a beauty retailer that provides one-stop shopping for salon products and salon services in the United States.

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Ulta Salon Cosmetics & Fragrance Earnings Cheat Sheet for the Third Quarter

Results: Net income for Ulta Salon Cosmetics & Fragrance Inc. rose to $26.8 million (42 cents per share) vs. $14.2 million (23 cents per share) in the same quarter a year earlier. This marks a rise of 88.5% from the year earlier quarter.

Revenue: Rose 21.8% to $413.1 million from the year earlier quarter.

Actual vs. Wall St. Expectations: ULTA beat the mean analyst estimate of 38 cents per share. Analysts were expecting revenue of $406.1 million.

Quoting Management: “Our outstanding third quarter results were highlighted by a 21.8% increase in total net sales, a 350 basis point increase in operating margin to 10.7% and an 88.5% increase in net income with diluted earnings per share of $0.42, exceeding the high-end of our guidance by $0.04 per share,” stated Chuck Rubin, President and Chief Executive Officer of Ulta Beauty. “During the quarter, we gained market share, driven by a 9.6% increase in comparable store sales following a 12.2% comparable store sales gain in the third quarter last year. Ulta continues to increase its leadership position in beauty as we offer the broadest selection of products and services, all focused on compelling trend and value statements.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 20.8%, with the biggest boost coming in the second quarter when revenue rose 22.6% from the year earlier quarter.

Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 1.1 percentage points to 36.1% from the year earlier quarter. Over that span, margins have grown on average two percentage points per quarter on a year-over-year basis.

The company has now seen net income rise in three straight quarters. In the second quarter, net income rose 83% and in the first quarter, the figure rose 70.5%.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 6 cents in the second quarter, by 6 cents in the first quarter, and by 5 cents in the fourth quarter of the last fiscal year.

Looking Forward: For next quarter, analysts have a more positive outlook about the company’s expected results. The average estimate for the fourth quarter is 60 cents per share, up from 59 cents ninety days ago. Over the past three months, the average estimate for the fiscal year has climbed from $1.63 per to share to $1.74.

Competitors to Watch: Sally Beauty Hldgs., Inc. (NYSE:SBH), Perfumania Holdings, Inc. (NASDAQ:PERF), Avon Products, Inc. (NYSE:AVP), Alberto-Culver Company (NYSE:ACV), Revlon, Inc. (NYSE:REV), Elizabeth Arden, Inc. (NASDAQ:RDEN), Inter Parfums, Inc. (NASDAQ:IPAR), Nu Skin Enterprises, Inc. (NYSE:NUS), The Procter & Gamble Co. (NYSE:PG), Parlux Fragrances, Inc. (NASDAQ:PARL), Physicians Formula Hldgs., Inc. (NASDAQ:FACE), Estee Lauder (NYSE:EL) and Johnson & Johnson (NYSE:JNJ).

Stock Performance: Shares of ULTA were down 1.6% from the previous close.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)