ROMEOVILLE, Ill. Beauty retailer Ulta, which experienced a decline in both net income and same-store sales during the fourth quarter ended Jan. 31, is scaling back store expansion plans for fiscal 2009 in light of the turbulent economy.
Net sales for the quarter rose 10.4% to $341 million from $309.3 million in the year-ago period. Same-store sales decreased 5.5%, compared with an increase of 4.5% in the year-ago period.
Net income slipped to $12.3 million, or 21 cents per diluted share, compared with $13.6 million, or 23 cents per diluted share, in the year-ago period.
“We reported solid fourth quarter results and adjusted full year earnings and comparable store sales equal to last year, despite the difficult economy,” stated Lyn Kirby, Ulta’s president and CEO. “We chose not to participate in the promotional frenzy that emerged across the retail industry in the key selling days leading up to Christmas. While this negatively affected our comp store sales during the gift-giving season, as we believe consumers favored the unprecedented discounts on apparel, we believe our balanced approach maintained the integrity of our brand and value proposition. While we had to reduce our guidance in response to the more difficult that expected holiday season, we delivered 21 cents per share for the quarter.”
In light of the current economy, the company is scaling back its store expansion and plans to open about 35 stores during fiscal 2009, an 11% increase in annual square footage.
In addition, the company has initiated a cost reduction plan that is expected to generate $15 million in savings this year. This involves supply chain, store operating costs and corporate expenses.
Meanwhile, the company is continuing to focus on brand expansion. In the first quarter, Ulta introducing several new skin care brands, including Cosmedicine and Kouros. During the year, it will continue to test existing and new brands.
In partnership with its brands, Ulta held its first ever in-store customer tutorial and promotion with hair appliance brand Chi. Looking ahead, the retailer plans to hold its Annual Spring Beauty makeover events for all of its prestige brands.