Strong mass make-up sales and e-commerce boost aid strong Q3 for Ulta Beauty

Net sales for the period, ending November 1, 2014, increased 20.5% to $745.7 million, while net income increased 30.1% to $59.1 million compared to $45.4 million in the third quarter of fiscal 2013.

“We are pleased to announce excellent sales and earnings growth in the third quarter,”​ says Mary Dillon, CEO, who took the helm of the company in July last year.

“Continued strength in prestige and mass color cosmetics, the successful introduction of new products and brands, double digit comps in our salon business, a more effective and well executed marketing strategy, and rapid growth in e-commerce all contributed to our performance.”​

Good news​

Sales for stores open at least 14 months and e-commerce sales increased 9.5% compared to an increase of 6.8% in the third quarter of fiscal 2013.

Also a 9.5% same store sales increase, which Dillon also pointed to as a third quarter success story, was driven by 5.4% growth in transactions and 4.1% growth in average ticket.

The e-commerce business was perhaps one of the biggest highlights for the retailer and shows the power of online is still in the ascendency as the segment’s comparable sales grew 46.7%.

“E-commerce is expected to represent about 5% of total sales this year, on our way to our goal of growing to 10% of our business in the next five years,”​ Dillon said in a conference call.

“We're now anniversarying the significant improvements to the new website that we launched just over a year ago, so we expect the top line to moderate over time, but we continue to add more content and enhance the site performance, and we also expect to see improved fulfillment capabilities as we execute our supply chain project.”​

Store expansion​

The Bolingbrook, Illinois-based company was also very active on the physical front, opening 50 stores across the country during the quarter, ending the third quarter with 765 stores.

It also remodeled five stores in the third quarter and relocated two; and an additional 10 stores are due to open early in the fourth quarter, according to Ulta’s boss.

“And after closing one later in Q4, we expect to end the year with 774 open stores. This represents an increase in square footage of just under 15% for the year,”​ she added.