Why Ulta Beauty Inc (NASDAQ: ULTA) stock is falling

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Ulta Beauty Inc (NASDAQ: ULTA) stock fell over 5.8% on 7th December pre-market session (Source: Google finance). The firm’s forecast fell short of analyst expectations. The company predicted earnings of $3.50 to $3.55 a share, while analysts on average expected $3.62 a share, and revenue of $2.09 billion to $2.1 billion, short of expectations of $2.12 billion.

Merchandise inventories at the end of the third quarter of fiscal 2018 totaled $1,484.6 million compared to $1,349.7 million at the end of the third quarter of fiscal 2017, representing an increase of $134.9 million. The increase in total inventory was driven by 105 net new stores and the opening of the Company’s distribution center in Fresno, California, partially offset by inventory productivity benefits from supply chain investments in new systems and merchandise planning tools. Average inventory per store was flat compared to the third quarter of fiscal 2017. The Company ended the third quarter of fiscal 2018 with $296.9 million in cash

ULTA in the third quarter of FY 18 has reported the adjusted earnings per share of $2.18, while adjusted revenue growth of 16.2 percent to $1.56 billion in the third quarter of FY 18, which is in line with the analysts’ estimates for revenue of $1.56 billion. Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 7.8% compared to an increase of 10.3% in the third quarter of fiscal 2017. The 7.8% comparable sales increase was driven by 5.3% transaction growth and 2.5% growth in average ticket. Retail comparable sales increased 4.4%, including salon comparable sales growth of 3.5%. E-commerce sales increased 42.5% to $170.7 million compared to $119.8 million in the third quarter of fiscal 2017, representing 340 basis points of the total Company comparable sales increase of 7.8%. Salon sales increased 10.7% to $74.0 million compared to $66.9 million in the third quarter of fiscal 2017

Meanwhile, during the third quarter of fiscal 2018, the Company repurchased 451,424 shares of its common stock at a cost of $119.0 million. Year to date fiscal 2018, the Company has repurchased 1,582,118 shares at a cost of $379.4 million. As of November 3, 2018, $282.8 million remained available under the $625.0 million share repurchase program announced in March 2018.

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