Thursday, Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA), a beauty products retailer, reported an increase in first quarter earnings, as revenues improved from last year. Going forward, the company issued second quarter outlook, with earnings and revenues expected to decline year-on-year.
The Bolingbrook, Illinois-based company's first quarter net income increased to $4.9 million or $0.08 per share from $4.3 million or $0.07 per share in the prior-year quarter. Net income for the year ago quarter included $0.01 per share of severance costs for the management change in March 2008.
Nine analysts polled by Thomson Reuters expected the company to earn $0.05 per share for the quarter. Analysts' estimates typically exclude special items. Quarterly net sales increased 12.3% to $268.8 million from $239.3 million a year ago. Seven analysts estimated revenues of $265.05 million for the quarter.
Comparable store sales decreased 2.3%, compared to an increase of 3.9% in the year ago quarter.
Lyn Kirby, president and chief executive officer, said, "In a difficult retail environment, we continue to build our customer base and grow loyalty to the Ulta brand, as evidenced by the 2% increase in traffic and expansion in our market share. As a result, our comparable store sales were at the top end of our first quarter guidance and with careful expense control we achieved earnings ahead of our guidance."
Looking ahead, the company expects second quarter net sales in the range of $264 million to $272 million, compared to net sales of $249.1 million a year ago. Comparable stores sales are expected to decrease 2% to 5%, compared to an increase of 3.7% in the second quarter last year.
Income is estimated to be in the range of $0.03 to $0.05 per share, compared to $0.06 per share in the prior-year period. Analysts are looking for earnings of $0.04 per share on revenues of $269.07 million.
For fiscal 2009, the company plans to generate free cash flow of at least $15 million, compared to $35.7 million net cash out flow in fiscal 2008.
Additionally, in a separate press release, the company said it reached a preliminary settlement in a securities class action lawsuit filed on December 17, 2007 in the United States District Court for the Northern District of Illinois, in which the company, its chief executive officer and chief financial officer were named as defendants. All amounts to be paid under the tentative settlement will be paid out of proceeds of the company's D&O insurance coverage.
ULTA closed Thursday's trading at $9.60, down $0.10 or 1.03%, on a volume of about 238 thousand shares. In the after hours, the share traded at $10.00, gaining $0.40 or 4.17%.
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