Sep 7, 2012
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Ulta Beauty profit lifted by pricier brands, new stores

Sep 7, 2012

Beauty retailer Ulta Beauty (ULTA.O) reported a higher-than-expected profit for the ninth straight quarter and forecast strong earnings for the current quarter as it benefits from opening new stores and selling more high-priced products.

Ulta Beauty store

The company's shares were up 9 percent at $104.30 after the bell. They closed at $95.26 on Thursday on the Nasdaq.

Ulta Beauty, which sells haircare products, cosmetics and fragrances of brands including Chanel, Elizabeth Arden (RDEN.O) and L'Oreal (OREP.PA), has been stepping up store expansion and adding pricier products to draw more shoppers.

Luxury spending has remained healthy despite broader economic concerns as affluent consumers continue to spend, prompting bullish sales forecasts from companies such as Estee Lauder (EL.N), Michael Kors (KORS.N) and Saks (SKS.N).

William Blair & Co analyst Daniel Hofkin said that Ulta Beauty's increasing focus on premium brands such as L'Oreal's Lancome and Estee Lauder's Clinique would bode well for the company's margins and in-store appeal.

Ulta Beauty, which recently said it will add 50 Lancome boutiques to its stores, outlined plans to open Clinique boutiques at 35 additional shops.

The retailer, which expects to open 52 stores in the third quarter, forecast earnings of 54 cents to 56 cents per share, on revenue of $494 million to $503 million for the period.

Analysts were looking for a profit of 54 cents per share on revenue of $501.2 million, according to Thomson Reuters I/B/E/S.

Bolingbrook, Illinois-based Ulta Beauty also forecast full-year earnings above expectations.

Second-quarter profit grew to 54 cents per share, beating Wall Street estimates of 51 cents per share.

Revenue for the company, also known for offering a full-service salon in each of its stores, rose 22 percent to $481.7 million, while analysts had expected $473.8 million.

(Reporting by Ranjita Ganesan and Maria Ajit Thomas; Editing by Joyjeet Das and Steve Orlofsky)

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