Ulta Beauty (NASDAQ:ULTA) posted fourth-quarter earnings results on March 10 that continued the retailer's impressive trend of market-thumping growth. Sales, net income, and earnings per share all jumped at least 20%.

Here's how the headline results stacked up against the prior year:


Q4 2015 Actuals

Q4 2014 Actuals

YOY Growth


$1.27 billion

$1.05 billion


Net Income

$108 million

$87 million


Earnings Per Share




Data source: Ulta Salon financial filing.

What happened this quarter?
By all measures, Ulta had a strong holiday season. Sales growth outpaced management's aggressive target, even as profitability ticked higher. Here are the highlights of the quarter:

  • Comparable-store sales soared 13%, thanks to 9% higher customer traffic and a 4% boost in average spending. That result was enough to push comps up 12% for the full year, beating management's (recently raised) guidance of between 10% and 11% growth.
  • Digital sales rose 44% for a slight decline from the prior quarter's 52% spike, yet the e-commerce sales channel generated higher profitability.
  • Overall gross profit improved significantly, rising to 35% of sales from 33% in the prior-year period.
  • Expenses rose at a slightly slower pace than revenue, which produced an uptick in net profitability to 8.5% of sales from 8.3% last year.

What management had to say
In an environment where many national retailers had to settle for minor comps declines and lower profit margins, Ulta celebrated the fact that it bucked that negative trend. "Our fourth quarter results capped an exceptional year," CEO Mary Dillon said in a press release.

Image source: Ulta Beauty.

"We continue to benefit from the powerful combination of strong demand in the beauty category and Ulta Beauty's highly differentiated offering that propels our business to transcend prevailing trends across the retail landscape," Dillon explained.

"We made significant progress against our strategic imperatives, while achieving outstanding sales and earnings growth."

Looking forward
Geographic expansion remains a key focus for Dillon and her team this year. Ulta plans to open another 100 new stores after adding 100 to its base in 2015 (the store footprint currently sits at 874). The company also targets strong comps growth of between 8% and 10% at existing locations. Between those two trends, net sales should grow at a pace very close to last year's 22% pop.

Ulta plans to rely on increased marketing, branding, and a compelling product assortment to help keep customer traffic churning higher. Its loyalty program, which counts nearly 20 million active members, will likely play a large role in that initiative as well.

Beyond the operating gains, shareholders look set to benefit from a declining outstanding share base. Ulta this week announced a deal to quickly repurchase $200 million of its stock, in addition to its regular buybacks that totaled $170 million in 2015.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.