Ulta Beauty’s Fiscal 1Q17 Results Look Pretty amid Retail Woes



Fiscal 1Q17 results

Ulta Salon Cosmetics & Fragrances (publicly trading as Ulta Beauty) (ULTA) delivered an impressive performance in the first quarter of fiscal 2017. The quarter saw disappointing results from many department stores and retailers. But in fiscal 1Q17, which ended on April 29, 2017, Ulta Beauty delivered adjusted EPS (earnings per share) of $1.91. It handily exceeded the consensus analyst EPS estimate of $1.80. The specialty retailer announced its fiscal 1Q17 results after the financial markets closed on May 25, 2017.

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Strong earnings growth

Ulta Beauty’s adjusted EPS rose 31.7% on a year-over-year basis in fiscal 1Q17. This double-digit growth was driven by a 22.5% rise in sales and a higher operating margin. We’ll look at the company’s margins and sales in Parts 2 and 3 of this series.

Ulta Beauty’s bottom line in fiscal 1Q17 also rose from share repurchases, which enhanced its EPS by bringing down the average share count. The company also repurchased ~185,000 shares for $51.6 million. Ulta Beauty makes up 0.70% of the Consumer Discretionary Select Sector SPDR ETF (XLY).

The company’s 1Q17 adjusted EPS excludes the impact of the $0.14 per diluted share benefit associated with the adoption of a new accounting standard for employee share-based payments.

Earnings guidance raised

Following its strong fiscal 1Q17 performance, Ulta Beauty raised its fiscal 2017 guidance. The company expects its fiscal 2017 EPS to be in the mid-20% range, a rise from the previous guidance of the low-20% range. The updated guidance includes the impact of the additional 53rd week in fiscal 2017, the favorable impact of ~$300.0 million in share repurchases, and the tax rate benefit recorded in the first quarter.

Next, let’s look at the company’s fiscal 1Q17 margins.


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