Even as it expanded on its Target Corp. partnership, Ulta Beauty comps declined in the second quarter as earnings and sales fell short of Wall Street estimates.
Net income was $252.6 million, or $5.30 per diluted share, versus $300.1 million, or $6.02 per diluted share, in the year-prior quarter, the company stated.
Ulta failed to meet a Zacks Investment Research analyst consensus estimate that called for earnings per diluted share of $5.45. The company missed a Zacks revenue estimate by 2.24%.
Comparable sales slid 1.2% in the quarter year over year, Ulta noted, the result of a 1.8% decrease in transactions and a 0.6% increase in average ticket.
Net sales were $2.55 billion versus $2.53 billion in the year-before quarter. Operating income was $329.2 million versus $391.6 million in the year-previous period.
As a percentage of net sales, cosmetics and haircare declined in the quarter year over year while skincare and fragrance gained. Services were flat year over year.
In a conference call, the company noted that royalty income from Ulta’s Target deal helped boost sales in the second quarter. After four openings in the second quarter, 541 Ulta shops operate in Target stores, with the goal of reaching 800.
In announcing the financial results, Dave Kimbell, Ulta’s CEO, said, “While we are encouraged by many positive indicators across our business, our second quarter performance did not meet our expectations, driven primarily by a decline in comparable store sales. We are clear about the factors that adversely impacted our store performance, and we have actions underway to address the trends. We are focused on driving stronger sales and traffic and continuing to exercise financial discipline. In light of our first-half trends and a more cautious outlook, we have updated our full-year expectations. I remain confident in the power of our differentiated model, the strength of our financial foundation, and our ability to deliver value for our shareholders over the long term.”
