Ulta Salon Earnings: An Early Look

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Ulta Salon (NASDAQ: ULTA  ) is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Ulta Salon has found great success by combining two popular concepts in a single store: retail beauty products like cosmetics and hair-care products, along with full-service salons. Until very recently, that concept had produced an almost uninterrupted explosive uptrend for the stock. Let's take an early look at what's been happening with Ulta Salon over the past quarter and what we're likely to see in its quarterly report on Thursday.

Stats on Ulta Salon

Analyst EPS Estimate

$0.98

Change From Year-Ago EPS

34%

Revenue Estimate

$753.9 million

Change From Year-Ago Revenue

29%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Will Ulta Salon stay pretty this quarter?
Analysts have barely budged on their calls for Ulta Salon in recent months, keeping their estimates for the just-ended quarter steady and cutting a single penny from full-year fiscal 2014 earnings per share. But the stock hasn't been doing well, falling 10% since early December.

Ulta has done a good job with its dual salon and beauty-retail concept. By focusing on high-end products and services, Ulta has produced extremely high profit margins on its sales. Moreover, Ulta's broad range of products gives it a competitive advantage against Estee Lauder (NYSE: EL  ) and Elizabeth Arden (NASDAQ: RDEN  ) , which are dependent on the success of their own single brands to remain profitable.

Shareholders have already gotten news about what this week's quarterly results from Ulta will look like. A month ago, the company released preliminary figures that were slightly better than most analyst estimates, with a 30% jump in revenue and an 8% rise in same-store sales showing that the growth story at Ulta remains intact.

Unfortunately, Ulta lost a strong leader in former CEO Chuck Rubin, who resigned in February to head up privately held Michaels Stores. Rubin's move left the company without a permanent CEO or CFO, given former CFO Bruce Hartman's resignation in late 2012. Shares plunged on analyst downgrades following the move.

In the coming quarterly report, watch for Ulta to describe its strategy for finding a permanent leader to carry the company into its next growth stage. With the stock having stagnated lately, Ulta needs to move forward quickly to keep its multiyear momentum going.

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