Ulta profits soar 30% fueled by stellar e-commerce sales

By

Robin Driver

Published
Aug 31, 2018

Bolingbrook, Illinois-based cosmetics and selfcare retailer Ulta Beauty, Inc. reported strong income and revenue growth in the second quarter and first half of fiscal 2018 on Thursday, with e-commerce leading sales increases across the skincare, fragrance and mass cosmetics categories.
 

Net income for the second quarter ended August 4, 2018 totaled $148.3 million, a 29.9% increase compared to the $114.2 million reported by the company in the same period in the previous year.
 
This growth was pushed by rises in net sales which continued to show solid progress, increasing 15.4% to $1.5 billion in the quarter, compared to $1.3 billion in Q2 2017. Comparable sales for the period rose 6.5%.

By channel, e-commerce sales shot up 37.9% to $132.8 million, compared to $96.3 million in the prior-year period, accounting for 250 basis points of Ulta’s total comparable sales increase in the quarter. Salon sales also increased 8.8% to $74.0 million, compared to Q2 2017’s $68.0 million.

“The Ulta Beauty team delivered a strong performance in the second quarter, reflecting rapid growth in prestige boutique brands, mass cosmetics, skin care and fragrance, offset by continued moderation in the growth rates of a few of our large color cosmetics brands,” said Ulta Beauty CEO Mary Dillon in a release. “Our flexible business model continues to support healthy retail comps, excellent new store productivity, and high growth for Ulta.com, resulting in significant market share gains across categories.”
 
In the first half of the fiscal year, net sales came to $3 billion, up 16.4% from $2.6 billion in the first six months of 2017, while comps increased 7.3%.
 
E-commerce sales rose 43.2% to $287.2 million, compared to $200.6 million in the prior year period, with revenues from salon sales growing 9.4% to $149.7 million, compared to $136.8 million.
 
Net income for the six-month period increased 29.0% to $312.7 million, compared to the $242.4 million recorded in the first half of fiscal 2017.

In the third quarter, Ulta expects to see net sales of between $1.55 billion and $1.56 billion, compared to $1.34 billion in Q3 2017, while comps are expected to rise between 7% and 8%.
 
The retailer currently estimates that full-year sales will show increases in the low-teens percentage range, while comps will rise between 6% and 8%. E-commerce sales are expected to continue to perform particularly well, increasing approximately 40%.
 
Ulta Beauty opened 19 stores over the course of the second quarter and closed two, meaning that the chain now operates 1,124 locations in the US. The cosmetics retailer plans to open a total of 100 new stores in fiscal 2018.