Ulta Salon profits up despite retail market slow-down

The company, which markets a range of mainstream cosmetic brands in more than 300 stores nationwide, said that its net income for the third quarter was up 19.3 percent to $5m, on the back of sales rising 22.4 percent to $254.8m, compared to the corresponding quarter in 2007.

Sales still grow, despite economic gloom​

This meant that for the first nine months of the year net income was up 11.1 percent to £13m, while same store sales increased by 23.3 percent to $743.3m, representing an increase of 3.2 percent.

Lyn Kirby, Ulta Salon president and CEO reflected the strong fundamentals of the company and the fact that it had managed to adapt quickly to changing market conditions.

“Despite news of the financial crisis, economic uncertainty and store closures in Houston, Texas due to the hurricane, we delivered a 2 percent comparable store increase, representing our 35th consecutive quarter of comparable store sales gains, and posted a 28.6 percent increase in adjusted earnings per share,"​ she said.

Financial analyst were surprised by the results, which were above market expectations, but the company outlook for the rest of the year has had to be down-graded, due to the current economic situation and its impact on the retail market.

Outlook for sales lowered​

Although the full year earnings are still expected to be greater than the provisional estimates at the beginning of the financial year, the company is now expecting lower same store and net sales.

Consequently it expects 2008 net sales to be in the range of $1.1bn and $1.11bn, down from original estimates of between $1.12bn and $1.13bn. In 2007 the company sales came in at $912.1m.

Likewise, the company expects same store sales for 2008 to grow at between 1.4 and 2.7 percent, compared to same store sales growth of 6.4 percent in 2007 – a result that reflected a far more robust economy.