How Ulta Beauty Performed in 3Q17

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Part 2
How Ulta Beauty Performed in 3Q17 PART 2 OF 5

What Drove Ulta Beauty’s Fiscal 3Q17 Earnings?

Earnings surpass estimates

Ulta Beauty (ULTA) continued to exceed earnings expectations in fiscal 3Q17, which ended on October 28, 2017. The company delivered adjusted EPS (earnings per share) of $1.75 in fiscal 3Q17, exceeding the consensus analyst estimate of $1.67.

What Drove Ulta Beauty’s Fiscal 3Q17 Earnings?

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Year-over-year growth

Ulta Beauty’s adjusted EPS grew 25.0% on a year-over-year basis in fiscal 3Q17. This growth was mainly driven by higher sales, a lower tax rate, and a lower share count. We’ll discuss the company’s sales in part three of this series.

Including non-recurring items, the company’s reported EPS of $1.70 in fiscal 3Q17 was negatively impacted by $0.08 from lost sales and one-time costs associated with hurricanes.

The third quarter EPS was favorably impacted by a $0.04 benefit associated with the lower tax rate. The lower taxes were a result of the new accounting standard related to employee stock options. A lower share count benefited Ulta Beauty’s fiscal 3Q17 earnings by $0.03 per share.

Guidance reiterated

Following its fiscal 3Q17 performance, Ulta Beauty reaffirmed its outlook for full-year fiscal 2017. The company expects its EPS growth in the high 20% range in fiscal 2017. Ulta Beauty’s earnings guidance includes the impact of the 53rd additional week in the current fiscal year. It also includes the impact of about $370 million in share repurchases and the impact of the year-to-date tax rate benefit. The guidance excludes the impact of Hurricane Harvey and Hurricane Irma.

For fiscal 4Q17, the company expects EPS in the $2.73 to $2.78 range. The company’s EPS in fiscal 4Q16 was $2.24.

Let us look at Ulta Beauty’s sales performance in the next part of this series.


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