Retail

Ulta blows past Wall Street forecasts, but shares drop on soft outlook

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Ulta Beauty blew past Wall Street's sales and earnings expectations during the fiscal fourth quarter, but it wasn't enough to appease investors.

Shares of the retailer's stock moved 5 percent lower after the market closed Thursday, as the company issued a soft outlook for the fiscal first quarter. Shares were last trading at $260.02.

Ulta's revenue increased 24.6 percent during the holiday quarter, coming in at $1.58 billion. That compares with a Thomson Reuters forecast of $1.54 billion.

The company's profit also topped Wall Street's expectations, coming in at $2.24 a share. Analysts had been predicting a profit of $2.13 a share. A year ago, the company earned $1.69 a share.

"The Ulta Beauty team delivered outstanding fourth quarter results, capping an exceptional year of sales and earnings growth while investing to drive market share gains," CEO Mary Dillon said in a statement.

Sales at the chain were fueled by new store growth and a 16.6 percent increase at its existing locations and website. Analysts had predicted the company's same-store sales would rise 13.7 percent.

Ulta's business has been on a tear, easily outpacing the growth seen across the industry. However, amid that growth, some investors have questioned when its fortunes would slow.

The company on Thursday said it expects to ring up net sales of $1.24 billion to $1.27 billion in the fiscal first quarter, with comparable sales growth between 9 percent and 11 percent. Those forecasts were light compared with what Wall Street was expecting, with the same-store sales projection marking a slowdown from the fourth quarter and prior year period.

Ulta predicts it will earn between $1.75 and $1.80 during the three-month period. While that would be a jump from the prior-year period, when it earned $1.45, it too disappointed Wall Street.

The company, whose 974 stores are mostly located in suburban areas, will open shops in Chicago and Manhattan this year. After opening 100 stores last fiscal year, it will open another 100 in fiscal year 2017.