E-commerce drives strong sales gains at Ulta in Q4

Bolingbrook, Illinois-based cosmetics retailer Ulta Beauty, Inc. beat out Wall Street estimates on Thursday to report net sales of $2.12 billion in the fourth quarter ended February 2, 2019, with progress driven by impressive growth in the company’s digital channels.


E-commerce continued to drive sales growth at Ulta in the fourth quarter of 2018 - Instagram: @ultabeauty

The retailer’s latest quarterly sales represented a 9.7% increase compared to the $1.94 billion in net sales reported by Ulta in the fourth quarter of fiscal 2017.
 
Comparable sales were also up 9.4%, driven by 7.1% transaction growth and 2.3% growth in average ticket.
 
By channel, retail comparable sales increased 7.0%, a figure which includes 6.2% growth in salon comparable sales. Overall, salon sales rose 4.7% to $77.2 million, compared to $73.7 million in the prior-year period.
 
Comparable sales in the company’s e-commerce channel, however, continued to streak ahead, increasing 25.1%.
 
Ulta’s quarterly net income rose 3.1% from $208.2 million to $214.7 million, while diluted earnings per share (EPS) jumped 6.2% to $3.61, compared to $3.40 in the equivalent period in the previous year.
 
“The Ulta Beauty team delivered excellent results in the fourth quarter,” commented Ulta Beauty CEO Mary Dillon in a release. “We continued to gain significant share across all major categories, particularly with digitally native brands where Ulta Beauty is often the only point of distribution in brick and mortar. Solid execution by our merchandising, store operations, e-commerce, marketing, supply chain and systems teams drove healthy sales growth and a differentiated guest experience throughout the important holiday season.”
 
For the full fiscal year 2018, Ulta reported a net sales increase of 14.1% to $6.72 billion, up from $5.88 billion in the previous year. Comparable sales rose 8.1%.
 
Once again, e-commerce led growth with a comparable sales increase of 35.4%, while retail comparable sales rose 5.1%. Salon sales increased 8.5% to $300.9 million.
 
This strong progress in the company’s revenues helped Ulta to achieve impressive 18.6% growth in its annual net income, which totaled $658.6 million, compared to $555.2 million in fiscal 2017. Diluted EPS increased 22.1% to $10.94, compared to $8.96.
 
Having opened 12 new stores in the fourth quarter, the company currently operates 1,174 locations across 50 US states and has plans to open 80 new stores in fiscal 2019.

Looking forward to the coming year, the retailer expects its total annual sales to increase in the low double digits percentage range, with comparable sales rising between 6% and 7%, a prediction which includes e-commerce growth in the range of 20% to 30%.
 
Diluted earnings per share are expected to be between $12.65 and $12.85 in fiscal 2019.
 
In November of last year, Ulta revealed changes to its long-term strategic plan, which now involves increased investments in digital innovation and customer engagement. The company also announced that it had acquired QM Scientific and GlamST, tech start-ups specialized in artificial intelligence and augmented reality which, it is hoped, will support Ulta’s efforts to offer customers a more differentiated and personalized experience.
 
Following the publication of its results and outlook, shares in Ulta rose 4% in extended trading on Thursday.

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