Ulta to beat estimates, says analyst
Ulta Salon, Cosmetics & Fragrance (ULTA) may not be a familiar name to everyone but Christine Short of Estimize suggests investors pay attention to it. When the cosmetics retailer reports Thursday after the closing bell Estimize predicts earnings of $1.29 a share, beating the street estimates by three cents.
Short says it will mark a continuation of the companies success that has seen double digit revenue growth every quarter since their 2007 IPO and double digit earnings growth every quarter since Q2 of 2009.
Ulta isn’t alone in those kinds of results. Short says the beauty industry has grown an average of 2.5% each of the last five years. “Women in particular are willing to forgo spending on things like apparel and accessories,” she notes, “but beauty and personal products are sort of the last thing to go.”
“We’re starting to see the space heat up,” Short says. “We’re seeing things like Kohl’s commit more money to their own beauty spaces within each of their stores... And even JC Penney; they’ve put in a lot of money on having in-store Sephora’s and that’s one of ulta’s biggest competitors.”
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Ulta is unique and particularly attractive to consumers (and therefore to investors) because Short says they cater to the lower end consumer by offering inexpensive products and beauty consultations that you won’t find at Walmart (WMT), CVS (CVS) or Walgreens (WBA), but also a better mix of higher end names at better prices than the Macy’s and Nordstroms of the world.
Despite all that many still don’t know Ulta exists and the company therefore has plenty of room to grow. Short says they plan to open 100 stores in each of the next five years while continuing to concentrate on town shopping centers, thus attracting different customers than some of their competitors who set up shop in large shopping malls.
