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Ulta raises outlook, plans to open more stores


BOLINGBROOK, Ill. -- Red-hot retailer Ulta Beauty raised its guidance Thursday ahead of planned remarks at an investor conference in Chicago, where the company also discussed plans to accelerate store expansion.

Ulta Beauty raised its financial guidance for the third quarter and full year 2016, and provided an update on its long term strategy: The company now says it has plans to double its market share over the next several years through new store expansion, e-commerce growing to become a billion dollar business, higher store productivity, and gaining greater share of wallet.

“We are confident that executing against our strategic imperatives will continue to drive excellent financial results and create sustainable, long term shareholder value," said Mary Dillon, CEO. 

For the third quarter of fiscal 2016, the company now expects comparable sales, including e-commerce sales, to increase 14% to 15%, compared to previous guidance of 11% to 13%. The company reported a comparable sales increase of 12.8% in the third quarter of fiscal 2015.

Income per diluted share for the third quarter of fiscal 2016 is estimated to be in the range of $1.35 to $1.38, compared to prior guidance of $1.25 to $1.30. The company reported income per diluted share for the third quarter of fiscal 2015 of $1.11.

As a result of the better than expected performance in the third quarter to date, the company is also raising its previously announced fiscal 2016 guidance. For the full year, the company plans to achieve comparable sales growth of approximately 12% to 14%, including the impact of the e-commerce business, compared to previous guidance of 11% to 13%. The company expects to deliver earnings per share growth in the mid-twenties percentage range, compared to previous guidance of low to mid-twenties percentage range, including the impact of the new Dallas distribution center, the rollout of prestige brand boutiques, the accelerated share repurchase program, and continued open market share repurchases.

The company also released key details about its long-term strategy:

  • The company’s updated consumer segmentation study reveals a larger opportunity to target beauty enthusiasts who represent 77% of spending in the beauty products market.

  • The Ultamate Rewards loyalty program, currently representing more than 90% of company sales, can grow share of wallet of existing members from a one third share today, reflecting significant market share opportunity.

  • The company is in the throes of brand launches including Origins, Dior, Estee Lauder, proactiv, and Shiseido in the skincare and cosmetics categories; Stash SJP fragrance; Honest Beauty haircare products; and Dyson hair dryers.

  • A real estate analysis shows incremental new store potential in the U.S. and highlights key expansion opportunities, leading to a raised outlook for store expansion to a range of 1,400 to 1,700 in the U.S.

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