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Ulta Beauty Stock Slides on Weak Guidance Despite Strong Holiday Earnings

Madeleine Johnson

Ulta Beauty Inc. ULTA just released its fourth quarter fiscal 2016 earnings results, posting earnings of $2.24 per share and revenues of $1.58 billion. Currently, ULTA is a #3 (Hold) on the Zacks Rank, and is down 4.3% to $262.00 per share in trading shortly after its earnings report was released.

Beat earnings estimates. The company reported diluted earnings of $2.24 per share, surpassing the Zacks Consensus Estimate of $2.13 per share and gaining 32.5% year-over-year.

Beat revenue estimates. The company saw revenue estimates of $1.58 billion, also beating our consensus estimate of $1.543 billion and increasing 24.6% year-over-year.

Total comparable sales increased 16.6% in the fourth quarter thanks to 10.9% growth in transactions and 5.7% growth in average ticket. Retail comps grew 12.8%, while salon sales increased 15.2% to $62.9 million.

E-commerce sales grew 63.4% to $154.9 million, representing 380 basis points of Ulta's total comparable sales.

Looking ahead, Ulta expects comparable sales growth of roughly 8% to 10%, including the impact of e-commerce business, for fiscal 2017. The beauty retailer also hopes to grow its online sales in the 40% range and open approximately 100 net new stores.

“The Ulta Beauty team delivered outstanding fourth quarter results, capping an exceptional year of sales and earnings growth while investing to drive market share gains and create sustainable long term shareholder value,” said Mary Dillon, Chief Executive Officer.

“We are confident in our outlook for continued success in 2017 as we execute our strategy to be a destination for All Things Beauty, All in One Place™. Our new brand pipeline is very healthy and we are particularly excited to announce the addition of the Estée Lauder Companies’ MAC brand, which will launch on Ulta.com and begin to roll out to stores this spring,” she continued.

Here’s a graph that looks at Ulta’s price, consensus, and EPS surprise:

Ulta Salon, Cosmetics & Fragrance, Inc. Price, Consensus and EPS Surprise

Ulta Salon, Cosmetics & Fragrance, Inc. Price, Consensus and EPS Surprise | Ulta Salon, Cosmetics & Fragrance, Inc. Quote

Ulta Beauty, Inc. is a beauty retailer primarily in the United States and the premier beauty destination for cosmetics, fragrance, skin, hair care products and salon services. Ulta Beauty, Inc., formerly known as Ulta Salon, Cosmetics & Fragrance Inc., is based in Bolingbrook, Illinois.

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