Beauty retailer Ulta realized a healthy fourth quarter and fiscal year, posting double-digit sales increases for both time periods.
Net sales for the fourth quarter increased 19.5 percent to $473.7 million, citing “strong performance from our new stores and continued growth in e-commerce,” said chief executive officer Chuck Rubin. Comparable store sales increased 10.4 percent, compared with an increase of 6.2 percent in the fourth quarter of fiscal 2009. Gross profit increased 110 basis points to 33.1 percent; selling, general and administrative expense as a percentage of net sales decreased 60 basis points, excluding the planned non-recurring compensation charge, compared with fiscal 2009. Operating income increased 43 percent to $49 million, or 10.3 percent of net sales, as “we delivered on our operating margin expansion strategies.” Net income increased 48.8 percent to $30.1 million for the quarter.
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During the three-month period, Ulta opened five stores. Store expansion plans will accelerate in 2011, Rubin said, with approximately 61 new stores planned.
The focus will be on new products, services and brands. To point, Boots skin care is slated to enter stores in endcaps in April.
Throughout the call Rubin noted how its social media marketing efforts would be expanded, namely through Facebook, Twitter and e-mail campaigns, and that its online editorial content would grow as well.
For the fiscal year 2010, net sales increased 19 percent to $1.45 billion. Comparable store sales increased 11 percent. Gross profit increased 250 basis points to 33.3 percent. SG&A expense as a percentage of net sales decreased 40 basis points, excluding the non-recurring compensation charge. Operating income increased 74.4 percent to $118.9 million, or 8.2 percent of net sales. Net income increased 80.5 percent to $71 million.
For the first quarter of fiscal 2011, Ulta expects net sales in the range of $364 million to $370 million, up from net sales of $320.2 million in the first quarter of fiscal 2010. Ulta opened 47 stores throughout the year for a total of 389 Ulta locations at year end.
Rubin called out several brands as key growth drivers for the year, including Philosophy skin care, Bliss, Urban Decay, OPI and Tarte. “We gained market share in all categories,” especially in nail and fragrance, as well as in prestige color and skin care, he said. Salon service sales grew, he added, although it trailed the product side part of the business.