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Ulta's Big Gun in the Cutthroat Retail Landscape

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Ulta's Big Gun in the Cutthroat Retail Landscape PART 1 OF 6

Why Ulta Beauty Stock Is Doing the Strut

Market reaction

Ulta Beauty (ULTA) stock rose 4.6% to $286.42 on March 10, 2017, in reaction to the company’s impressive results for fiscal 4Q16 (ended January 28, 2017). The leading beauty retailer announced its fiscal 4Q16 and fiscal 2016 results after financial markets closed on March 9.

Notably, the company beat analysts’ sales and earnings estimates for fiscal 4Q16, but the company’s outlook for fiscal 1Q17 lagged behind analysts’ expectations.

Why Ulta Beauty Stock Is Doing the Strut

Why Ulta Beauty Stock Is Doing the Strut

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Superior returns

Ulta Beauty’s stock has risen 12.3% on a YTD (year-to-date) basis as of March 10. The company has outperformed the S&P 500 Index (SPX) (SPY), which has risen 6.0% on a YTD basis. The company’s stock rose by an impressive 37.8% in 2016—way ahead of the S&P 500 Index, which rose 9.5% in 2016.

Ulta Beauty offers over 20,000 beauty products through its 974 stores across 48 states and the District of Columbia. Ulta Beauty competes with several retailers, department stores, mass merchandisers, and online retailers that sell beauty products like Amazon.com (AMZN).

Ulta Beauty has grown in strength, delivering sales growth of 21.4%, 21.1%, and 23.7% in fiscal 2014, fiscal 2015, and fiscal 2016, respectively. Perhaps most significantly, the company has generated double-digit sales growth during a time when established retailers have been struggling amid an uncertain retail environment. The fiscal 2016 sales of Macy’s and JCPenney, for example, rose a mere 4.8% and 0.6%, respectively.

Series overview

This series on Ulta Beauty’s 4Q16 results will focus on the key drivers behind the company’s earnings and sales. We’ll also discuss the company’s margins and sales growth strategy, concluding with a discussion on analyst recommendations for Ulta Beauty stock.

Continue to the next part for a look at the specifics of Ulta’s earnings growth.

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