No signs of any slowdown at Ulta Beauty

BOLINGBROOK, Ill. -- Loyalty program membership and same-store sales continue to fuel growth at Ulta Beauty, which posted blockbuster earnings in the second quarter.

The beauty retailer said that same store sales rose 14.4% for the second quarter ended July 30. The 14.4% same store sales increase was driven by 9.7% growth in transactions and 4.7% growth in average ticket. Retail comparable sales increased 12.6%, including salon comparable sales growth of 8%. Salon sales increased 14.3% to $59.0 million from $51.6 million in the second quarter of fiscal 2015.

“The Ulta Beauty team achieved another quarter of excellent top and bottom line performance, while making significant progress on many elements of our growth strategy,” said Mary Dillon, Chief Executive Officer. “Our second quarter results reflect a strong pipeline of newness and innovation in merchandising, progress in growing our brand awareness, major milestones related to our loyalty program, continued rapid growth in our e-commerce business, and successful execution of our supply chain investments.”

E-commerce sales grew 54.9% to $55.9 million from $36.1 million in the second quarter of fiscal 2015, representing 180 basis points of the total company comparable sales increase of 14.4%. Net income increased 21.3% to $90 million compared to $74.2 million in the second quarter of fiscal 2015. And income per diluted share increased 24.3% to $1.43 compared to $1.15 in the second quarter of fiscal 2015.

During the second quarter, the company opened 24 stores. The company ended the second quarter with 907 stores and square footage of 9,555,192, representing an 11% increase in square footage compared to the second quarter of fiscal 2015.

For the third quarter of fiscal 2016, the company currently expects net sales in the range of $1,072 million to $1,090 million, compared to actual net sales of $910.7 million in the third quarter of fiscal 2015. Comparable sales for the third quarter of 2016, including e-commerce sales, are expected to increase 11% to 13%. 

According to analysts, Ulta's appeal among consumers is driven by several factors, including an increased interest in beauty products (as part of a rising focus on health and wellness) and only one major rival in the specialty beauty retail space. Also, the prestige products sold at Ulta are proving to be popular, outpacing the mass or drug store brands by sales growth in 2015.