What happened

Shares of Ulta Beauty (ULTA -0.40%) were rising on Friday morning after the company reported strong earnings and a better-than-expected sales increase. 

As of 10:15 a.m. EDT, Ulta's shares were up about 7% from Thursday's closing price.

So what

Ulta reported earnings for the quarter that ended on Feb. 1, and they were good. Net income rose 3.7% to $222.7 million on a 8.5% increase in sales. Comparable sales, or year-over-year sales for stores open for more than 14 months, increased 4%. That was down from 9.8% in the year-ago period, but it was better than the 3.38% increase expected by Wall Street analysts polled by Thomson Reuters.

A row of lipstick testers in a cosmetics store

Image source: Getty Images.

Guidance was also solid. The company expects to open about 75 net new stores in fiscal 2020, which, along with comparable sales growth of 3% to 4%, will help increase total sales by 7% to 8%, it forecasts. Investors should expect capital expenditures between $280 million and $300 million, it said. 

Now what

There was an important footnote to that guidance: It doesn't include assumptions related to the outbreak of the novel coronavirus. With retail sales traffic already falling in the United States as consumers avoid crowded areas, Ulta's guidance assumptions might have to be revised downward in a month or two. Stay tuned.