Expansion boosts Ulta Salon's first quarter
Despite the serious economic crisis that is hitting the US, the Illinois-based retailer said that net sales for the period increased by 12.3 percent to $268.8m, up from $239.3m in the corresponding period last year.
The company, which markets a range of mainstream cosmetic brands in stores nationwide, said that the results reflected a 2 percent increase in market share, together with comparable store sales that were at the top end of guidance that was given at the end of 2008.
Store expansion drives results
This has been driven by an aggressive store expansion program that saw the company open a further 9 stores in States that included Colorado, Michigan, New Jersey and California – bringing total stores in the nation to 320.
However, the underlying results were not so strong, with comparable store sales for premises that have been open for 14 months or more actually down by 2.3 percent, compared to an increase of 3.9 percent during the same period in 2008.
The expansion of the business helped to edge operating income up by 10.8 percent to $9.0m, while net income increased by just under 14 percent to $4.9m.
Looking ahead to the next quarter, the company expects sales of $264m - $272m, compared to net sales of $249.1m last year, while simultaneously underlining that it anticipates comparable store sales to decrease by 2 – 5 percent, compared to an increase of 3.7 percent in the second quarter last year.
Class action lawsuit settlement
Meanwhile, the company has also announced a preliminary settlement of its class action lawsuit filed in December 2007, in which its CEO and CFO were both named as defendants.
The lawsuit, filed at the district court of Illinois was taken out on behalf of all investors who purchased the common stocks, claiming that directors of Ulta did not comply with federal securities laws.
It is claimed that, contrary to regulations, the IPO did not disclose any material information relating to the company's third quarter financial results, despite the fact that the quarter was to end nine days before the filing of the registration statement.
The company announced its third quarter results on December 11, 2007, showing that it had an extra $15m of seasonal inventory on its books and that its expenses had increased by 36 percent to $55.6m, due largely to increased expenditure on advertising.
