Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) will conduct a conference call to discuss its third quarter 2013 results on Thursday, December 5, 2013 at 5:00 p.m. Eastern Time / 4:00 p.m. Central Time. A press release detailing the Company's third quarter 2013 results will be issued after the market closes and prior to the call.
Wall Street anticipates that the personal services company will earn $0.74 per share for the quarter. iStock expects ULTA to beat Wall Street's consensus number. The iEstimate is $0.75.
Ulta operates specialty retail stores in the United States. Its stores offer cosmetics, fragrance, haircare, and skincare products, as well as related accessories and services. The specialty retailer has topped Wall Street's earnings forecast 16 consecutive quarters.
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On average, ULTA actual results were $0.04 more than the consensus estimate with a range of $0.01 to $0.06 more than expectations during the last four years. That's about as solid and consistent a record one could ask for from quarterly checkups.
The beauty operator's EPS price-sensitivity has been nearly as impressive. ULTA shareholders' statements looked better 13 of the 16 quarters. Typically, investors bid the stock higher by 10.52% in the three-days surrounding the 13 plus EPS reactions. Shares moved a minimum of 3% to a max gain of 26.40%.
Now, three times Ulta investors got a haircut they didn't like, unless they were short the stock. Two of the three losses were quite ugly, dropping -16.60% and -16.30%, and one manageable slip of -3.70%.
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Good times for Ulta's top and bottom lines should continue. According to Google Trends, search-volume-intensity increased 12.9% year-over-year (YoY). Meanwhile, analysts are calling for YoY EPS growth of 25.42% and a revenue increase of 23%. So, Google! Trends hint at potential risk to the downside.
Inventory climbing fast is another concern that we have. Quarter-over-quarter (QoQ), merchandise increased by 21.69% and 45.60% YoY. When you factor it on a per store basis as ULTA opened 72 stores in the past 12 months, then the numbers look a little better at 17.2% QoQ and 28.38%
YoY. However, YoY revenue increased at a slower pace of 19.85%. It could mean the retailers margins could slip if heavy discounts were used to push stale products out the door.
Overall: The iEstimate and Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) earnings history suggests another bullish surprise is on the way. We are, however, concerned that Wall Street could find things to dislike if margins shrink or sales are tough lighter than expected.
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