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FINANCE

Ulta Beauty Q3 earnings top estimates, but outlook is mixed

BY Marianne Wilson

The powerhouse that is Ulta Beauty delivered another strong quarter of earnings and revenue even as its same-store sales growth cooled.

Net income increased 19.5% to $104.6 million, or $1.70 a share, in the quarter ended Oct. 28, compared to $87.6 million, or $1.40 per share, in the year-ago period. Analysts had expected earnings of $1.66 a share.

Net sales increased 18.6% to $1. 34 billion from $1.13 billion last year. The retailer estimated approximately $14 million in lost sales due to Hurricanes Harvey and Irma.

Total same-store sales increased 10.3%, compared to an increase of 16.7% last year, and were driven by 6.0% transaction growth and 4.3% growth in average ticket. The company estimates that Hurricanes Harvey and Irma resulted in approximately 100 basis points of negative impact to comparable stores sales in the third quarter of fiscal 2017.

E-commerce sales grew 62.9% to $119.8 million from $73.6 million last year, representing 370 basis points of the total company comparable sales increase of 10.3%.

“Our third quarter results clearly demonstrate the strength and distinct advantages of the Ulta Beauty business model,” said Mary Dillon, CEO. “We delivered double digit comparable sales growth, in spite of a moderation in the growth rate of our largest category — makeup — and meaningful disruption from hurricanes. We flexed our merchandising and marketing plans, leveraged our consumer insights and CRM platform, and worked with our brand partners to create compelling offers for our guests.”

Ulta expects fourth-quarter sales between $1.93 million to $1.96 million, with a same-store sales increase of 8% to 10%. It estimated fourth-quarter per-share earnings between $2.73 to $2.78. Analysts were looking for earnings of $2.83 a share on sales of $1.93 billion and a same-store sales increase of 9.4%

During the third quarter, the retailer opened 48 stores. It ended the quarter with 1,058 stores.

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FINANCE

Costco blows it away in November with double-digit comp growth

BY Marianne Wilson

Costco Wholesale Corp. easily topped expectations in November, reporting its 14th straight month of sales growth.

Costco “turned in a month for the ages in the current retail environment,” Ken Perkins, analyst at Retail Metrics, told MarketWatch.

Net sales surged 13.2% to $11.26 billion in November, up from $9.95 billion in the year-ago period. Online sales rose 39%, and were up 44% in the 12-week period through Nov. 26, helped by an expanded assortment and faster delivery times.

Costco’s total same-store sales rose 10.8%, its biggest monthly gain since September 2011. Excluding the impacts from changes in gasoline prices and foreign exchange, U.S. same-store sales rose 8.4%. 6.3% in Canada and 7.2% internationally.

Customer traffic at Costco’s U.S. locations was up 5.9% in November. The retailer saw growth across hardline and soft line categories, as well as food and sundries.

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FINANCE

Kroger surges in Q3 with higher-than-expected sales and earnings

BY Marianne Wilson

The Kroger Co. has regained its momentum in one of the retail industry’s most competitive segments.

Kroger on Thursday reported net earnings of $397 million, or $0.44 per diluted share, in the quarter ended Nov. 4, compared to $391 million, or $0.41 per diluted share, in the year-ago period. (This includes an incremental $111 million contribution to the UFCW Consolidated Pension Plan in the quarter.)

Total sales increased 4.5% to $27.7 billion, compared to $26.6 billion for the same period last year. Total sales, excluding fuel, increased 3.0%. Same store sales, without fuel, increased 1.1%. The company said it expects the figure to rise even more in the fourth quarter.

Kroger’s digital revenue more than doubled in the quarter, Bloomberg reported, and while the rise came off of a small base, it shows the company has a chance to compete with the likes of Amazon and Walmart.

In October, the retailer launched an initiative, “Restock Kroger,” that includes investing $500 million in store employees, cutting costs to continue reducing product prices and the launch of a new apparel brand in 2018.

“This quarter shows that by investing for the future, our business continues to improve and gain momentum,” said Kroger chairman and CEO Rodney McMullen. “We remain confident in our ability to continue to grow identical supermarket store sales and market share for the balance of the year and in 2018.”

“The holidays are always Kroger’s time to shine,” McMullen added. “In fact, we had our best ever Black Friday results for general merchandise, led by record sales at Fred Meyer.”

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