What's wrong with this picture? Double-digit sales growth, double-digit comparable sales growth against a tough comparison, double-digit earnings per share growth, new store expansion, and increased guidance for the full year. What's wrong is that you just don't hear that from the retailers these days. That's why the first quarter earnings report from Ulta Beauty (ULTA 293.04) sounded so right.
Ulta Beauty delivered all of the above when it reported after Thursday's close.
Net sales increased 22.5% in the first quarter to $1.315 billion, comparable sales, which also include e-commerce sales, surged 14.3% on top of a 15.2% increase in the year-ago period, and its adjusted diluted earnings per share increased 31.7% to $1.91, which was ahead of the company's guidance of $1.75 to $1.80 and analysts' average expectation.
During the period, Ulta Beauty opened 18 new locations and closed two stores, which left it with 990 stores and 12% more square footage at the end of the first quarter versus the same period a year ago.
For good measure, Ulta Beauty also demonstrated that it can connect with its customers through the e-commerce channel without necessarily compromising sales at its own brick-and-mortar locations.
E-commerce sales soared 70.9% to $104.3 million. That represented approximately 340 basis points of the total company comparable sales increase. In other words, if e-commerce sales are excluded, Ulta Beauty's comparable store sales still would have been up double digits.
The best reflection that Ulta Beauty is on point with its merchandising and marketing, however, is that the comparable sales increase for the period was driven by 8.7% transaction growth and 5.6% growth in average ticket, which is to say the company saw more business versus the year-ago period and its customers spending more on average than they did in the year-ago period.
Based on the fiscal 2017 guidance provided by Ulta Beauty, it doesn't sound as if the retailer is expecting that trend to change. Including e-commerce, Ulta Beauty plans to achieve comparable sales growth of approximately 9% to 11% for the full year, compared to previous guidance of 8% to 10%. E-commerce sales, meanwhile, are projected to grow 50%, versus prior guidance of 40%.
It is Ulta Beauty's plan to open approximately 100 net new stores and to deliver earnings per share growth in the mid-twenties percent range, compared to previous guidance of low-twenties percent range.
That outlook includes the impact of a 53rd week this fiscal year and approximately $300 million in share repurchases, as well as second quarter sales in the range of $1.257 billion to $1.278 billion, comparable sales growth between 10% and 12%, and earnings per diluted share of $1.72 to $1.77.
Shares of Ulta Beauty, which are up 14.9% year-to-date and up 37.1% over the last 52 weeks, are trading 3% higher in pre-market action.