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Is Ulta Beauty Poised to End Fiscal 2018 with Impressive Results?

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Mar. 12 2019, Published 2:30 p.m. ET

Expectations from fourth-quarter results

Ulta Beauty (ULTA) is scheduled to announce its results for the fourth quarter of fiscal 2018, which ended on February 2, 2019, after the market closes on March 14. The beauty retailer exceeded analysts’ earnings expectations in the first three quarters of fiscal 2018. Ulta Beauty expects its fiscal 2018 fourth-quarter EPS to be in the range of $3.50–$3.55. Its fiscal 2017 fourth-quarter EPS were $3.40.

Analysts expect Ulta Beauty’s fourth-quarter adjusted EPS to rise 29.5% to $3.56. Higher sales, lower taxes, and the favorable impact of share repurchases are expected to drive its EPS growth.

For fiscal 2018, Ulta Beauty expects its EPS growth to be in the low-20% range. Analysts expect Ulta Beauty’s adjusted EPS to rise 31.1% to $10.89 in fiscal 2018.

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Sales growth so far

Ulta Beauty’s fiscal 2018 third-quarter sales increased 16.2% to $1.56 billion, and its same-store sales rose 7.8%. The company’s sales increased 16.3% to $4.59 billion in the first nine months of fiscal 2018, and it saw same-store sales growth of 7.5% in the same period. Its e-commerce sales increased 42.9% in the period.

Ulta Beauty has been enhancing its product offerings by expanding the availability of its established and upcoming brands in its stores as well as on its website. One of the notable partnerships it made last year was with celebrity Kylie Jenner to launch the Kylie Cosmetics line in all Ulta Beauty stores.

Growth expectations

Ulta Beauty expects its fiscal 2018 fourth-quarter sales to be in the range of $2.085 billion–$2.103 billion compared to ~$1.94 billion in the fourth quarter of fiscal 2017. Ulta Beauty expects its fourth-quarter same-store sales growth to be in the range of 7%–8%. Analysts expect Ulta Beauty’s fourth-quarter sales to increase 8.9% to $2.1 billion.

Ulta Beauty’s guidance for fiscal 2018 sales growth is in the low-teen percentage range. The company expects its fiscal 2018 same-store sales growth to be in the 7%–8% range. Analysts expect its sales to grow 13.9% to $6.7 billion in fiscal 2018 driven by strong e-commerce sales, retail store sales, and revenue from its salon service.

Ulta Beauty stock has risen 26.5% year-to-date as of March 11. Analysts’ average 12-month price target for Ulta Beauty stock is $322.18 as of March 11. This price estimate indicates a potential upside of ~4%.

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