Ulta Stock: Ulta Beauties 2nd Quarter Reports Show Tremendous Growth

BlairThe article was written by Blair Goldenberg, a Financial Analyst at I Know First, and enrolled in a Masters of Finance at Colorado State University.

Ulta Stock

ulta beauty

“Every great dream begins with a dreamer. Always remember, you have within you the strength, the patience, and the passion to reach for the stars to change the world” – Harriet Tubman


  • About Ulta Beauty
  • Release of Second Quarter Report shows tremendous growth
  • Third Quarter Projections show favorable outlook

About Ulta Beauty:

Ulta Beauty (ULTA) is the largest beauty retailer in the United States and the premier beauty destination for cosmetics, fragrance, skin care products, hair care products and salon services. Since opening its first store in 1990, Ulta Beauty has grown to become the top national retailer providing All Things Beauty, All in One Place™. The Company offers more than 20,000 products from over 500 well-established and emerging beauty brands across all categories and price points, including Ulta Beauty’s own private label. Ulta Beauty also offers a full-service salon in every store featuring hair, skin and brow services. Ulta Beauty is recognized for its commitment to personalized service, fun and inviting stores and its industry-leading Ultamate Rewards loyalty program. As of July 30, 2016 Ulta Beauty operates 907 retail stores across 48 states and the District of Columbia and also distributes its products through its website, which includes a collection of tips, tutorials and social content.

Customer Loyalty Program

Ulta Beauty has a free customer loyalty program called Ultamate Rewards, where customers can redeem points on any in-store or online purchase they make with their membership card. Customers accumulate one point for every dollar that they spend and are not limited to what products they can redeem their points on. The points that Ulta customers earn expire in one year. Ulta customers who spend $450 within one year are upgraded to the next level called Platinum status. The main perks of obtaining Platinum status is that customers are able to earn points 25 percent faster and the points that they earn never expire.

Ulta beauty

Ulta Beauty Second Quarter Report:

  • Net sales increased 21.9% to $1,069.2 million from $877.0 million in the second quarter of fiscal 2015;
  • Gross profit increased 110 basis points to 36.0% from 34.9% in the second quarter of fiscal 2015, due to improvements in merchandise margins and leverage in fixed store costs, partly offset by planned supply chain deleverage related to our new distribution centers;
  • Operating income increased 21.4% to $143.8 million, or 13.5% of net sales, compared to $118.5 million, or 13.5% of net sales, in the second quarter of fiscal 2015;
  • Net income increased 21.3% to $90.0 million compared to $74.2 million in the second quarter of fiscal 2015; and
  • Income per diluted share increased 24.3% to $1.43 compared to $1.15 in the second quarter of fiscal 2015.

Ulta Beauty Third Quarter Projection

  • For the third quarter of fiscal 2016, the Company currently expects net sales in the range of $1,072 million to $1,090 million, compared to actual net sales of $910.7 million in the third quarter of fiscal 2015.
  • Comparable sales for the third quarter of 2016, including e-commerce sales, are expected to increase 11% to 13%. The Company reported a comparable sales increase of 12.8% in the third quarter of 2015.

Analysts Recommendations for Ulta Beauty


Retrieved from Yahoo Finance

Ulta’s second quarter earnings clearly show their exponential growth since last year in the beauty industry. The beauty giant is expected to continue their upward climb throughout the next quarter. Investors should expect the company to be a long term growth investment, with a proven record in recent years of continuous growth. At market close, Ulta’s stock price dipped 2.95 points, making it an attractive buy. Ulta’s future growth will be attributed to expansion of their retail stores. The projected amount in the next quarter are 100 stores, compared to the second quarters figure of 24 stores.

ulta beauty


Ulta competes with both high-end beauty retailers as well as drug store brands, and the salon market. Some high-end competitors include Macy’s, Nordstrom, and Sephora. Drug store competitors include CVS/pharmacy, Walgreens, Target and Wal-Mart. For salon services and products, competitors include Regis Corp., Sally Beauty, JCPenney salons and independent salons. However, because Ulta incorporates all three of these sectors, they have no competition of this caliber and are one of the most unique beauty retailers.



The unique structure of Ulta gives the company an advantage in the marketplace because it essentially has no competitors that offer the same services. The growth they have achieved is a result of this truth and our projection is that they will continue growing in the future. For an investor who wants a long term and reliable variance in their portfolio, Ulta is the way to go. With the current dip in the market, now is the perfect time to begin investing in Ulta beauty.