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How Ulta Beauty Performed in 3Q17

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

What Affected Ulta Beauty’s Sales in 3Q17?

Sales performance

After exceeding analysts’ sales expectations for the past several quarters, Ulta Beauty’s (ULTA) sales for fiscal 3Q17 were almost in line with the consensus analyst estimate. The beauty retailer generated sales of $1.3 billion in fiscal 3Q17, which ended on October 28, 2017. The company’s sales rose 18.6% on a year-over-year basis in fiscal 3Q17. This growth rate was lower than the 20.6% sales growth rate in fiscal 2Q17 and 24.2% sales growth in fiscal 3Q16.

What Affected Ulta Beauty’s Sales in 3Q17?

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Headwinds and tailwinds

Ulta Beauty’s sales growth in fiscal 3Q17 was driven by new store productivity and same-store sales growth of 10.3%. The fiscal 3Q17 same-store sales growth was a result of a 6.0% transaction growth and a 4.3% rise in average ticket size. However, hurricanes impacted Ulta Beauty’s same-store sales growth in fiscal 3Q17 by about 100 basis points. The company lost about $14 million in sales due to the hurricanes in Texas and Florida.

In terms of merchandise categories, skincare and fragrance performed well. The company also experienced improved sales in the hair care category.

The company’s e-commerce sales continued to be impressive in fiscal 3Q17 and rose 62.9% on a year-over-year basis. The company’s e-commerce sales now account for 9.0% of the overall sales.

Sales guidance

Ulta Beauty continues to expect its same-store sales to grow about 10% to 11% in full-year fiscal 2017, which ends on February 3, 2018. This estimate includes the impact of e-commerce sales. The company anticipates its e-commerce sales growth in the 50% to 60% range in fiscal 2017.

Let’s understand why the company’s margins contracted in the next part of this series.

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