Insight into Ulta Beauty’s Fiscal 2Q17 Sales Numbers
Sales ahead of estimates
Ulta Beauty (ULTA) delivered sales of $1.3 billion in fiscal 2Q17,1 beating the consensus analysts’ sales estimate by 0.40%. Ulta Beauty’s sales rose 20.6% on a year-over-year basis in fiscal 2Q17. This growth rate looks impressive compared to what other retailers and department stores delivered in a challenging second quarter. JCPenney (JCP), which competes with Ulta Beauty through its in-store Sephora, delivered a sales growth of 1.5% in fiscal 2Q17.
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What drove Q2 sales
Ulta Beauty’s sales growth in fiscal 2Q17 was driven by strong new store productivity and an 11.7% same-store sales growth. The company’s prestige cosmetics continued to deliver an impressive performance in the quarter. Categories such as skincare, fragrance, and haircare also performed well.
The company’s online sales were impressive, rising 72.3% to $96.3 million in fiscal 2Q17. Its online sales growth represented 340 basis points of its fiscal 2Q17 same-store sales growth.
Why investors were not impressed
As mentioned in Part 1 of this series, Ulta Beauty stock fell on August 25, 2017, in reaction to the slowdown in the company’s fiscal 2Q17 same-store sales growth. Same-store sales rose 11.7% in fiscal 2Q17, which was lower than 14.4% same-store sales growth in fiscal 2Q16 and 14.3% growth in fiscal 1Q17.
The slowdown in the company’s same-store sales growth in fiscal 2Q17 was due to less promotional activity in the quarter.
Ulta Beauty raised its fiscal 2017 sales guidance following its fiscal 2Q17 results. The company now expects same-store sales growth of 10.0% to 11.0% in fiscal 2017, including the impact of the online business. It previously expected same-store sales growth of 9.0% to 11.0% in fiscal 2017.
The company expects its fiscal 2017 online sales growth in the 50.0% to 60.0% range compared to the prior guidance of 50.0%.
We’ll look at the company’s margins in the next part of this series.
- Fiscal 2Q17 ended on July 29, 2017 ↩