Ulta Salon Cosmetics & Fragrances Earnings Call Insights: Omni-Channel and Customer Behaviors
Gary Balter – Credit Suisse: You talked — I was going to ask you about what you found in your first few months, but you did a really good job of walking us through that. But one of the comments, you talked about opportunities and supply chain and omni-channel. Could you go into a bit more detail about what the opportunities are or what you see is kind of the weakness is now from where you kind of see that?
Mary Dillon – CEO: Sure. Absolutely. Let me – I will start with omni-channel and then Scott you can jump in on supply chain, we would do that second. I would just say, obviously omni-channel is something that’s important to everybody in retail right now and I think the way I would look at it, it’s about being where the guest wants to learn, wants to explore and of course where they want to shop. It’s about making it easy for the customer as well as really being in the conservations, in social media, as they are discovering brands. So I think about omni-channel through many different lenses. I would say that for us we will always have what I would say is a very unique asset which is our store base, which has the combination of product and service. It’s a great part of our model, but also being everywhere else our guest wants to shop is important as well. I’d say the investments that we are making this year and Jeff talked about some of these in his section are a great step forward as it relates to e-commerce, so being easier to shop in terms of web, tablet and mobile. We are pleased with what that is going to do for our business and our guest experience as well. Now we also have some other projects (in slate) from a systems perspective to help to continue to enhance the guest experience. So whether it’s selling capabilities in store, it were discovery as well as associate selling tools, so all of those are either in process or I think we have made good progress on already. Lastly I would just add that certainly as we think about our longer term supply chain solutions, we are thinking through the evolving guest expectations and how we economically meet those.
Scott Settersten – CFO and Assistant Secretary: I will pick up on the supply chain. Again we are in the midst really of a significant project designing what the future state supply chain looks like for Ulta. I think our honest assessment is we are probably a little bit behind as far as supply chain processes, investment class things are concerned. We’ve sold down the project here just a little bit in recent months and that’s what you’ll see some of the flip in expense going from Q2 to Q3, that’s really one of the primary drivers. As you know, Gary, these are big decisions with far-ranging financial and operational impacts on a business over a long period of time. So we are carefully looking at what we can do to expand current capacity and also taking into consideration what we think guest expectations are going to be in the future. So, we’re still a little away from the finish line, but as we – those particulars are finalized, we’ll be sharing more details with you…
Gary Balter – Credit Suisse: Just one follow-up and I’ll get off. But you have a Clinique and Lancome in less than a 100 stores than let’s say 90, approximately of the 609 that you have. Is there a material difference in the results you get from those stores versus the other ones driven by having these two brands in there?
Scott Settersten – CFO and Assistant Secretary: We’ll have – actually by the end of this year there will be roughly 200 between both brands, so roughly a 100 of each. And we do see that those brands, there is a halo effect on each of the stores that we place those brands in service and it drives customer traffic to the stores. We’ve seen that demonstrated.
Gary Balter – Credit Suisse: Did you quantify that or you won’t?
Scott Settersten – CFO and Assistant Secretary: No, we wouldn’t be able to break that out for you, Gary.
Ike Boruchow – Stern Agee: So, I guess, I’ll focus on the top line right now. There’s clearly a lot of volatility in the retail space today month-to-month. Is there any way you guys could provide any color on the cadence of how the quarter played out and maybe what you’ve been seeing quarter-to-date from your customers and then if there is any changes that you are seeing between traffic and ticket?…
Scott Settersten – CFO and Assistant Secretary: We see the same stories in the financial press and in general press at large same kind of things that you guys see on day-to-day basis. You know it seems like there is a divergence and customer reaction and shopping behaviors and it depends what kind of retail category you are in. We are not going to be able to comment really about what the cadence was within a quarter or what the current kind of business environment is for us. But the guidance that we provided includes our best observations and what current business trends are and all the macroeconomic kind of impacts that we look at as we get ready to discuss that with our Board and come up with our final guidance for the quarter.
Mary Dillon – CEO: Scott let me just add one piece which is one of the things I think that’s great about our business model. Is that we have a pretty diverse customer base and I think few our merchant, marketing and CRM strategies the ability to work across those different customer bases. So we have some folks that are more value oriented and some people who are about discovering newness and less concerned about value. So I think that sets us up well in any economic environment.
Ike Boruchow – Stern Agee: Scott just a quick follow-up on inventory I think you did helpful job explaining way some of the growth you have at the end of the quarter, can you maybe help us think about how inventories plan to end the year and then just kind of how you see the business kind of normalizing as we get to next year from a growth rate or inventory per square foot basis?
Scott Settersten – CFO and Assistant Secretary: What I try to do in the prepared remarks is just try to remind everybody of the significant changes in the business over the course of the last year. So we’ve added a lot of prestige boutiques which represent significant inventory investments the new brands that Janet and her team have been able to bring aboard here, again are skewed more towards the prestige side of the store. They are higher price points kind of item. They are in high demand. So we are making investments to try to stay ahead of the demand curve and try to service our customers the best we can. We would see that continuing in the future. That’s part of our strategy. By year end we would expect, again year-over-year comparisons that the comp – that the inventory growth will be in line with the comp growth for the full year and we would expect that to be the trend as we look out to the future.
A Closer Look: Ulta Salon Cosmetics & Fragrances Earnings Cheat Sheet>>