ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA) has reported a 22 percent rise in profit for the quarter ended Aug. 01, 2015. The company has earned $74.17 million, or $1.15 a share in the quarter, compared with $60.79 million, or $0.94 a share for the same period last year.
Revenue during the quarter grew 19.44 percent to $877 million from $734.24 million in the previous year period. Gross margin for the quarter contracted 38 basis points over the previous year period to 34.95 percent. Total expenses were 86.49 percent of quarterly revenues, down from 86.66 percent for the same period last year. This has led to an improvement of 16 basis points in operating margin to 13.51 percent.
Operating income for the quarter was $118.46 million, compared with $97.98 million in the previous year period.
"The Ulta Beauty team achieved outstanding results in the second quarter, with top line momentum delivering better than expected earnings growth," said Mary Dillon, chief executive officer. "Strong traffic growth drove healthy comparable sales increases across stores, salon and e-commerce, while average ticket growth also contributed. An exciting pipeline of new products, combined with increasing effectiveness of our marketing strategies, drove market share gains across all categories."
For the third-quarter 2015, ULTA Salon, Cosmetics & Fragrance, Inc. expects net sales in the range of $869 million to $883 million. The company projects diluted earnings per share to be in the range of $1 to $1.05.
Operating cash flow declines
ULTA Salon, Cosmetics & Fragrance, Inc. has generated cash of $125.70 million from operating activities during the first half, down 5.65 percent or $7.53 million, when compared with the last year period. The company has spent $137.22 million cash to meet investing activities during the first six months as against cash outgo of $194.24 million in the last year period.
The company has spent $52.41 million cash to carry out financing activities during the first six months as against cash inflow of $4.60 million in the last year period.
Cash and cash equivalents stood at $325.21 million as on Aug. 01, 2015, down 10.42 percent or $37.84 million from $363.06 million on Aug. 02, 2014.
Working capital increases
ULTA Salon, Cosmetics & Fragrance, Inc. has recorded an increase in the working capital over the last year. It stood at $945.87 million as at Aug. 01, 2015, up 14.30 percent or $118.32 million from $827.55 million on Aug. 02, 2014. Current ratio was at 3.55 as on Aug. 01, 2015, down from 3.76 on Aug. 02, 2014.
Cash conversion cycle (CCC) has decreased to 41 days for the quarter from 74 days for the last year period. Days sales outstanding went down to 2 days for the quarter compared with 4 days for the same period last year.
Days inventory outstanding has decreased to 56 days for the quarter compared with 103 days for the previous year period. At the same time, days payable outstanding went down to 17 days for the quarter from 33 for the same period last year.
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