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Will Ulta Beauty’s Q1 Sales Grow at an Impressive Pace?

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Sales growth trend

Ulta Beauty (ULTA) will announce its fiscal first-quarter results after the close of financial markets on May 31. The company ended fiscal 2017 on a strong note with 22.6% sales growth in the fiscal fourth quarter of 2017. Overall, Ulta Beauty’s sales grew 21.2% to $5.9 billion in fiscal 2017. However, this sales growth was lower compared to the growth rate of 23.7% in the fiscal 2016 sales. Ulta Beauty has been experiencing moderation in the make-up category.

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Growth drivers in the previous quarter

Ulta Beauty’s double-digit sales growth in the fiscal fourth quarter of 2017 was driven by same-store sales growth of 8.8% resulting from higher customer traffic, new store productivity, and continued momentum in the company’s e-commerce business. Excluding the impact of the additional week in the fiscal fourth quarter, the company’s sales grew 15.7%.

The company’s e-commerce sales continued to be impressive and grew 60.4% to $248.3 million in the fiscal fourth quarter of 2017. E-commerce comparable sales accounted for 460 basis points of the company’s same-store sales growth.

Sales expectations

Ulta Beauty expects its sales in the range of about $1.51 billion to $1.52 billion in the fiscal first quarter compared to $1.31 billion in the fiscal first quarter of 2017. The company expects its first-quarter same-store sales growth in the range of 6% to 7% compared to 14.3% in the fiscal first quarter of 2017. The company expects its e-commerce sales to grow in the 40% range.

For full-year fiscal 2018, the company expects its overall sales to grow in the low-teen percentage range. The company’s same-store sales are expected to grow in the range of about 6% to 8% in fiscal 2018. The company’s same-store sales grew 11.0% in fiscal 2017.

We’ll discuss expectations from Ulta Beauty’s earnings in the next part of this series.

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