Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ: ULTA) reported Q2 EPS of $0.94, $0.11 better than the analyst estimate of $0.83. Revenue for the quarter came in at $734.2 million versus the consensus estimate of $712.63 million. Comps increased 9.6%

“We are delighted to announce excellent second quarter results and our more optimistic view of sales and earnings growth for 2014,” said Mary Dillon, Chief Executive Officer. “A significant improvement in traffic, successful new product and brand launches, and rapid e-commerce growth drove better than expected top line performance. As a result, the Ulta team delivered healthy operating margin expansion in the second quarter. We are raising our outlook for the year and now expect to achieve sales and earnings per share growth in the 20% range, reflecting our confidence in continued strong market share gains.”

Ulta Salon, Cosmetics & Fragrance, Inc. sees Q3 EPS of $0.79-$0.84, versus the consensus of $0.83. Ulta Salon, Cosmetics & Fragrance, Inc. sees Q3 revenue of $724-736 million, versus the consensus of $717.46 million.

The Company is raising its previously announced fiscal 2014 guidance. The Company now plans to:

achieve comparable store sales growth of approximately 7% to 8%, including the impact of the e-commerce business;
expand square footage by approximately 15% with the opening of 100 new stores;
increase total sales in the 20% range;
remodel 12 locations;
deliver earnings per share growth in the 20% range;
incur capital expenditures of approximately $265 million in fiscal 2014, compared to $226 million in fiscal 2013; and
generate free cash flow in excess of $100 million.

Long Range Strategy and Five Year Financial Targets

The Company has completed its long-term strategic plan and has identified six strategic imperatives that it believes will be the foundation for continued strong performance:

1. Acquire new guests and deepen loyalty with existing guests

2. Differentiate by delivering a distinctive and personalized guest experience across all channels

3. Offer relevant, innovative, and often exclusive products that excite our guests

4. Deliver exceptional services in three core areas: hair, skin health, and brows

5. Grow stores and e-commerce to reach and serve more guests

6. Invest in infrastructure to support our guest experience and growth, and capture scale efficiencies

The Company intends to provide more detail on these six strategic imperatives at its upcoming investor conference on October 15, 2014. This event will be webcast live at http://ir.ulta.com and a replay will be available for 90 days.

The Company also announced five year financial targets (which exclude the impact of any share repurchases) supported by these strategic imperatives:

Deliver annual comparable sales growth between 5% and 7%.
Open approximately 100 stores per year.
Grow e-commerce to represent 10% of sales.
Maintain stable operating margin in the near term before progressing towards the Company’s long-term mid-teens target.
Deliver earnings per share growth in the low 20% range, excluding supply chain investments which are expected to reduce 2015 and 2016 earnings growth rates. The estimated impact on the percentage growth rate is in the mid-single digit range.

The Company is not providing specific guidance for 2015 until March of 2015 when it normally provides annual guidance.

“We believe this strategic plan will deliver results that place Ulta Beauty in the top tier of high performing retailers,” said Mary Dillon. “We plan to make significant investments in supply chain and systems, as well as in improving the guest experience, to allow Ulta Beauty to continue its rapid market share gains and deliver strong, sustainable sales and earnings growth.”

For earnings history and earnings-related data on Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) click here.