At its analyst and investor conference Thursday, beauty retailer Ulta raised its guidance for the coming quarter and the full year and said it plans to expand to some 1,400 to 1,700 U.S. stores, up from its previous plans for 1,200, at the pace of about 100 new locations each year.
For the third quarter of 2016, Ulta now expects same-store sales (including e-commerce sales) to increase 14% to 15%, compared to previous guidance of 11% to 13%, compared to same-store sales increases of 12.8% in the year-ago quarter. The company says it anticipates Q3 earnings in the range of $1.35 to $1.38, up from its prior guidance of $1.25 to $1.30, surpassing Q3 2015 earnings of $1.11 per diluted share.
For the full year, Ulta forecasts same-store sales growth of 12% to 14%, including e-commerce, compared with its previous guidance of 11% to 13%, and expects earnings per share growth in the mid-twenties percentage range, compared to previous guidance of low to mid-twenties percentage range.
Ulta is in something of a sweet spot in retail, busting through its own expectations for the second time this year. CEO Mary Dillon has acknowledged that the beauty sector is sheltered from the retail storm, enjoying high consumer demand and offering compelling reasons to go into stores, including opportunities for customer service in salons and the ability to sample merchandise. That’s helping Ulta and rival Sephora shrug off competition from Amazon, too.
Like Sephora, Ulta sells beauty products in more accessible store setups compared to the traditional department store approach. But Ulta's lower-cost makeup and beauty products bring in teens and others with less money to spend, too. On Thursday, the company said that its Ultamate Rewards loyalty program now accounts for more than 90% of its sales.
And while Ulta has big plans to expand its brick-and-mortar footprint, e-commerce is growing too: Online sales, which represented just 2.5 % of Ulta's sales in 2012, account for 6% today and should to grow to 10% in 2019, the company said Thursday, according to a Chicago Tribune account of the conference. Ulta is further helping its cause with same-day delivery through a partnership with Google Express that now serves areas in 20 states, and is also working on a mobile application that allows users to try out makeup digitally.
Ulta shares, which have risen 29% so far this year, rose 5% Thursday to $250.96, according to MarketWatch.