Ulta Salon Cosmetics & Fragrance Inc ULTA
Q1 2013 Earnings Call Transcript

Transcript Call Date 06/11/2013

Operator: Greetings, and welcome to the Ulta Beauty First Quarter 2013 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Laurel Lefebvre, Vice President of Investor Relations. Thank you. You may now begin.

Laurel Lefebvre - VP, IR: Thank you for joining us for Ulta's first quarter 2013 conference call. Hosting our call are Dennis Eck, Interim Chief Executive Officer; and Scott Settersten, Chief Financial Officer. Also joining us are Janet Taake, Senior Vice President, Merchandising; and Jeff Severts, Senior Vice President, Marketing.

Before we begin, I'd like to remind you of the Company's Safe Harbor language. The statements contained in this conference call, which are not historical facts, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those projected in such statements due to a number of risks and uncertainties, all of which are described in the Company's filings with the SEC. We may make references during this call to the metrics free cash flow, a non-GAAP financial measure defined as cash provided by operating activities minus purchases of property and equipment.

With that, I'll turn it the call over to Dennis.

Dennis K. Eck - Interim CEO: Thank you, Laurel. Good afternoon everyone. We are pleased to announce a strong first quarter with better than expected sales and margin performance. The team is executing our five point strategy very well and our outlook for continued market share gains is excellent. To update you on our CEO search, we are making good progress. We have been very happy with the high quality of candidates. As expected, there is a high level of interest in this opportunity. The Board of Directors is partnering with our search firm Herbert Mines. We are working through a comprehensive process to identify the best candidate. We hope to conclude our search in the near future.

With that I would turn over to Scott.

Scott Settersten - CFO and Assistant Secretary: Thanks, Dennis, 2013 is off to a good start with solid first quarter results. To recap the Q1 headlines, we grew the top line 22.9%. Comparable store sales increased 6.7% including the impact of our e-commerce business which had a very strong quarter with 70% top line growth. This compared to a 10.1% retail only comp in Q1 of 2012. Operating income increased 17.8% while operating margin declined 50 basis points to 11.6%. Earnings per share increased 20.4% to $0.65 per share.

I will walk you through our financials in more detail in a moment but first the team and I will update you on our progress with – of this five point multiyear growth strategy, which includes; one, accelerating store growth; two, introducing new products, brands and services; three, enhancing our loyalty program; four, broadening our marketing reach; and five, increasing our digital focus including e-commerce.

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