Ulta Salon (ULTA) Misses Q2 EPS by 4c; Lowers Outlook

Ulta Salon (NASDAQ: ULTA) reported Q2 EPS of $2.76, $0.04 worse than the analyst estimate of $2.80. Revenue for the quarter came in at $1.67 billion versus the consensus estimate of $1.68 billion.

Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 6.2% compared to an increase of 6.5% in the second quarter of fiscal 2018. The 6.2% comparable sales increase was driven by 5.4% transaction growth and 0.8% growth in average ticket;R

“The Ulta Beauty team delivered another quarter of solid top-line performance, gross margin expansion, and double-digit earnings growth,” said Mary Dillon, Chief Executive Officer. “Looking forward, we have updated our fiscal 2019 outlook to reflect the headwinds we are currently seeing in the US cosmetics market. We remain confident that our guest-centric, differentiated business model will drive continued market share gains and strong returns for our shareholders over the long term.”

Sees FY EPS of $11.86 to $12.06 (previously $12.83 to $13.03) versus the consensus of $12.97.

FY GUIDANCE:

• open approximately 80 new stores, execute approximately 20 remodel or relocation projects and complete approximately 270 store refreshes;
• increase total sales between 9% and 12% (previously low double-digit growth);
• achieve comparable sales growth of approximately 4% to 6% (previously 6% to 7%), including e-commerce growth of 20% to 30%;
• deleverage operating profit margin rate in the range of 60 to 70 basis points (previously leverage in the range of 10 to 20 basis points);
• deliver diluted earnings per share in the range of $11.86 to $12.06 (previously $12.83 to $13.03), including the impact of approximately $700 million in share repurchases and assuming a 23% effective tax rate (previously 24%);
• incur capital expenditures of $340 million to $350 million (previously $380 million to $400 million); and
• incur depreciation and amortization expense of approximately $300 million (previously $315 million).

For earnings history and earnings-related data on Ulta Salon (ULTA) click here.

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