Will Ulta Continue Posting Beautiful Earnings Results When They Report This Afternoon?

Photo Credit: Mike Mozart

Beauty retail juggernaut, Ulta, is set to report 3Q2015 earnings today after the market closes. Amidst an overall weak retail sector, Ulta has emerged as one of stronger companies, boasting double digit sales and earnings increases over the past few years. Shares are up over 380% across the past 5 years and over 30% this year alone. The company carries over 20,000 products from 500 different companies and has been able to secure a very loyal customer base. Expectations for today’s results are optimistic, as analysts are certain of year-over-year increases in EPS and revenue. The Estimize consensus is calling for EPS of $1.06 and revenue of $873.81 million while Wall Street analysts are forecasting EPS of $1.05 and revenue of $879.02 million.

Ulta prides itself on the customer in-store experience. Locations average 10,000 square feet, and are a major hub for all things beauty, including cosmetics and unique salon products and services. The company claims its store layouts and wide array of merchandise and full service salons differentiate it from online retailers like Amazon and generalist retailers like Target and Wal-Mart. By snagging market share from competition, Ulta has been able to attract a new and highly lucrative demographic. Teenagers have been increasingly shopping in stores and are attracted to some of the new indie and trendy lines of beauty products. As Ulta keeps up with the latest styles, teenagers will continue to flock to stores.

In the previous quarter, Ulta opened 22 new stores, adding the total count to 817. Fifty-nine additional locations are expected to open by the end of the fourth quarter, quite opposite from the store closings several other retailers have been suffering. More store openings means that comparable sales have been strong and the company guidance expects an increase of 8-10% this quarter. The beauty powerhouse has been able to consistently introduce fresh new products and the integration of its loyalty rewards program has brought in about 80% of total sales.