Ulta Beauty (ULTA
263.90, +19.49, +7.97%) was down premarket, as
cautious guidance outweighs better than expected quarterly earnings. The stock
is now up after the open.
The beauty store chain reported better than expected second quarter earnings of $2.46 per share on a 15.4% year/year increase in revenue to $1.49 bln, which matched estimates.
However, the company issued below-consensus earnings guidance for the upcoming quarter, expecting third quarter earnings between $2.11 per share and $2.16 per share on revenue between $1.55 bln and $1.56 bln. The company's revenue guidance range is slightly ahead of market expectations.
Comparable sales are expected to increase between 7.0% and 8.0% during the third quarter after rising 10.3% one year ago.
Ulta reaffirmed its guidance for full year comparable sales between 6.0% and 8.0% while e-commerce sales are expected to grow about 40.0%. Capital expenditures are expected to total $375 mln for the fiscal year, down from $441 mln spent during fiscal 2017.
Returning to second quarter results, comparable sales grew 6.5% after jumping 11.7% one year ago. The number of transactions increased 3.1% while the average ticket size grew 3.4%. Retail comparable sales grew 4.0% while salon comparable sales increased 1.7%. E-commerce sales jumped 37.9% to $132.80 mln.
E-commerce sales accounted for 250 basis points of the comparable sales growth rate (6.5%).
Gross margin weakened to 36.0% from 36.4% due to category and channel mix shifts and capital investments in the company's salon and supply chain operations.
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