Ulta Beauty posts higher than expected Q2 earnings
Bolingbrook, Illinois-based cosmetics retailer Ulta Beauty, Inc. announced a 26.3% decline in second-quarter net sales on Thursday due to disruption linked to Covid-19, but still managed to beat analysts’ expectations with its quarterly profit.
In the second quarter ended August 3, 2020, the company’s sales totaled $1.23 billion, down from $1.7 billion in the same period in the previous year. Quarterly e-commerce sales increased an impressive 200% but were not enough to offset lost revenues in brick-and-mortar stores.
Comparable sales for the quarter fell 26.7%, with transactions declining 36.2%, while average ticket increased 14.9%.
Quarterly net earnings came to $8.1 million, or $0.14 per diluted share, compared to $161.3 million, or $2.76 per diluted share, in the prior-year period. Adjusted earnings per share were $0.73.
Analysts polled by FactSet and cited by MarketWatch had expected Ulta to post an adjusted profit of $0.06 per share on sales of $1.25 billion.
Taking into account the first quarter of the year, net sales for the first six months of fiscal 2020 totaled $2.4 billion, decreasing 29.6% from $3.4 billion in the first half of the previous year. Comparable sales for the period fell 31.1%, reflecting a 37.4% decline in transactions and a 10.1% increase in average ticket.
First-half net loss was $70.5 million, or $1.25 per diluted share, compared to net income of $353.5 million, or $6.02 per diluted share, in the same period in the previous year.
“While the pandemic continues to impact our business, we are encouraged by improving trends,” said Ulta Beauty CEO Mary Dillon in a release. “We believe the near-term operating environment will continue to be dynamic and challenging, but I remain optimistic and excited about the long-term opportunity for Ulta Beauty.”
Looking to the future, the retailer has not provided financial guidance for fiscal 2020, but did say that it expects to incur between $35 million and $40 million in PPE and Covid-19-related costs in the second half of the year.
Having announced plans to permanently close 19 brick-and-mortar locations in the second quarter, the company expects to open a total of 30 new stores in fiscal 2020.
Following the announcement of Ulta’s Q2 results on Thursday, shares in the retailer shot up more than 16% in the extended session.
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