Ulta Salon (NASDAQ: ULTA) reported Q4 EPS of $3.89, $0.16 better than the analyst estimate of $3.73. Revenue for the quarter came in at $2.31 billion versus the consensus estimate of $2.32 billion.

For the Fourth Quarter of Fiscal 2019

• Net sales increased 8.5% to $2,305.9 million compared to $2,124.7 million in the fourth quarter of fiscal 2018;
• Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 4.0% compared to an increase of 9.4% in the fourth quarter of fiscal 2018. The 4.0% comparable sales increase was driven by 1.8% transaction growth and 2.2% growth in average ticket;
• Gross profit as a percentage of net sales increased 10 basis points to 35.0% compared to 34.9% in the fourth quarter of fiscal 2018, primarily due to improvement in merchandise margins driven by marketing and merchandising strategies, partially offset by investments in salon services;
• Selling, general and administrative (SG&A) expenses as a percentage of net sales increased 90 basis points to 22.4% compared to 21.5% in the fourth quarter of fiscal 2018, primarily due to investments to support future growth, deleverage in marketing expense, and higher payroll and benefit-related expenses, partially offset by lower incentive compensation expense;
• Pre-opening expenses increased to $3.6 million compared to $2.4 million in the fourth quarter of fiscal 2018. Real estate activity in the fourth quarter of fiscal 2019 included 13 new stores and two relocations, compared to 12 new stores in the fourth quarter of fiscal 2018;
• Operating income increased 2.3% to $287.8 million, or 12.5% of net sales, compared to $281.2 million, or 13.2% of net sales, in the fourth quarter of fiscal 2018;
• Tax rate was 22.7% compared to 24.0% in the fourth quarter of fiscal 2018. The lower effective tax rate is due to federal income tax credits;
• Net income increased 3.7% to $222.7 million compared to $214.7 million in the fourth quarter of fiscal 2018; and
• Diluted earnings per share increased 7.8% to $3.89, which included a $0.06 per share benefit due to an increase in federal income tax credits, compared to $3.61 in the fourth quarter of fiscal 2018.

“The Ulta Beauty team delivered results for the fourth quarter at the high end of our expectations, and I am proud of how our teams worked together to serve our guests this holiday season,” said Mary Dillon, Chief Executive Officer. “Our enhanced omnichannel capabilities, combined with our merchandise exclusives, cross-category marketing events, and great execution by our store teams, enabled us to expand our market share and deliver a successful quarter.”

GUIDANCE:

Ulta Salon sees FY2020 EPS of $12.55-$12.75, versus the consensus of $11.99.

For fiscal 2020, the Company plans to:

• open approximately 75 net new stores, execute approximately 15 remodel or relocation projects, and complete approximately 42 store refreshes;
• increase total sales by approximately 7.0% to 8.0%;
• achieve comparable sales growth of approximately 3.0% to 4.0%;
• deleverage operating income margin rate in the range of 70 to 80 basis points;
• deliver diluted earnings per share in the range of $12.55 to $12.75, including the impact of approximately $1.3 billion in share repurchases and assuming an effective tax rate of between 24% and 24.5%;
• incur capital expenditures between $280 million and $300 million;
• incur depreciation and amortization expense between $310 million and $320 million; and
• incur net interest expense of approximately $9.0 million.

The Company’s guidance does not include assumptions for any impact related to Coronavirus.

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