Ulta Beauty, Inc. (NASDAQ: ULTA)
Q3 2017 Earnings Conference Call
Nov. 30, 2017, 5:00 p.m. ET

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Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Ulta Beauty Third Quarter 2017 Earnings Results Conference Call. At this time, all contributors are in a listen-only mode. A quick question-and-answer session will comply with the formal presentation. If anybody ought to require operator help in the course of the convention, please press *zero in your phone keypad. As a reminder, this convention is being recorded.

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It is now my pleasure to introduce your host, Laurel Lefebvre, Vice President, Investor Relations. Please proceed.

Laurel LefebvreVice President, Investor Relations

Thank you. Good afternoon and thanks for becoming a member of us for Ulta Beauty’s third quarter 2017 convention name. Hosting our name are Mary Dillon, Chief Executive Officer, and Scott Settersten, Chief Financial Officer. Also becoming a member of us is Dave Kimbell, Chief Merchandising and Marketing Officer.

Before we start, I would wish to remind you of the Company’s Safe Harbor language. Statements contained on this convention name which aren’t historic details could also be deemed to represent forward-looking statements inside the which means of the Private Securities Litigation Reform Act of 1995. Actual future outcomes could differ materially from these projected in such statements because of quite a lot of dangers and uncertainties, all of that are described within the Company’s filings with the SEC. During the Q&A session, we respectfully request that you simply ask one query solely please, to permit us to have time to reply to as a lot of you as attainable in the course of the hour scheduled for this name. I am going to now flip it over to Mary.

Mary DillonChief Executive Officer

Thank you, Laurel. Good afternoon, everybody. Our third quarter outcomes clearly exhibit the power and distinct benefits of the Ulta Beauty enterprise mannequin. We delivered a double-digit comp regardless of a moderation within the development fee of our largest class — make-up, and significant disruption from hurricanes. We flexed our merchandising and advertising and marketing plan, leveraged our client insights and CRM platform, and labored with our model companions to create compelling affords for our company. We additionally benefited from the unrivaled breadth of magnificence classes and merchandise and that we provide.

These levers allowed us to drive important share acquire, proceed to quickly develop our base of loyalty members, and thrive regardless of shifting class traits inside the magnificence business, and disruption in a few of our largest markets. Before I share outcomes, together with the monetary affect of the hurricanes, I would wish to take a second to say the improbable job our groups did to arrange for the storms, help our area associates who had been personally impacted, and get our shops again up and operating following an extremely difficult time for these areas. It was actually inspiring to see the collaboration and caring from all corners of our group to handle by this era.

To recap our third-quarter monetary efficiency, we grew the highest line 18.6% and delivered wholesome 10.three% comps on high of 16.7% comps within the third quarter of 2016, an acceleration on a two-year stat in comparison with the second quarter. The disruption from the hurricanes in Florida and Texas negatively impacted our consequence by slightly greater than a degree of comp. Comp gross sales had been pushed by balanced visitors and ticket development and continued power in e-commerce. In phrases of class traits, our highest gross sales development was in skincare and perfume, whereas haircare additionally strengthened. Makeup, whereas nonetheless producing very wholesome development by any requirements, was softer in comparison with final 12 months, when it drove a disproportionate quantity of our comp development. GAAP-diluted earnings per share of $1.70 grew 21.four%.

We delivered higher than anticipated EPS development, regardless of gross margins contracting a bit greater than initially deliberate. Some of this margin stress was anticipated, pushed by new retailer and boutique exercise within the quarter, and advertising and marketing and test-and-learn actions pushed again from the primary quarter into the again half. In mild of the hurricane disruption and the moderation in coloration cosmetics development, we determined to spice up our CRM and promotional exercise. This allowed us to proceed to drive robust market share features and fast membership development in our Ultamate Rewards loyalty program.

I am going to flip now to a extra detailed dialogue of the methods that drove our leads to the third quarter, starting with our strategic crucial to accumulate new company and deepen loyalty of present company. Our loyalty program continues to ship important advantages and nicely over 90% of our gross sales are captured by this system. At the tip of October, our Ultamate Rewards program grew to 26.four million lively members, up 21% year-over-year. Retention charges, gross sales per member, frequency of buy, and common member ticket are wholesome and secure. To replace you on our efforts to extend adoption of our bank card, which we launched final 12 months, we rolled out in-store initiatives to drive consciousness and are providing new incentives like a free present with signup, along with financial savings on visitor’s first buy with the cardboard.

We additionally launched the potential to use on-line and purchase, which drove considerably increased on-line functions. Credit card signups proceed to develop, with new accounts and conversion above plan, and we proceed to garner a a lot increased share of pockets of our prospects who signed up for the bank card. We’re additionally more than happy with the expansion and third-party distribution of present playing cards by our Blackhawk relationship. We rolled out our present playing cards to 10 extra retail companions within the third quarter, bringing our attain to 13,000 shops. We plan so as to add one other 500 shops with three extra grocery chains within the fourth quarter, with extra retail companions within the pipeline. Aided by this growth, present card gross sales grew almost 50% within the third quarter, with expectations for a robust fourth quarter efficiency.

Now turning our to our advertising and marketing packages, we executed one other profitable 21 Days of Beauty occasion in September. Historically, this has been a promotion centered on coloration cosmetics, with the strategic intent of migrating prospects from a primarily mass basket to a richer basket mixing mass and status objects. This 12 months, we included skincare objects to benefit from the present robust pattern in skincare. We improved our general choices that includes extremely sought-after manufacturers and merchandise like MAC lipstick, and elevated influencer content material throughout Ulta Beauty channels, digital companion platforms and influencers’ personal channels, which all drove pleasure for the occasion.

In October, we had robust outcomes with our signature Gorgeous Hair occasion and centered on our partnership with the Breast Cancer Research Foundation. We constructed on the success of our Gorgeous Way to Give marketing campaign, performing 42,000 providers throughout our salon Cut for a Cause occasion, partnered as soon as once more with The Ellen DeGeneres Show, garnered greater than 5 million views of our new social media marketing campaign, that includes breast most cancers survivors with an empowering and provoking message, and executed a sequence of actions all month lengthy in shops, distribution facilities, and in company. We raised $four million this 12 months alone to fund analysis tasks that help BCRF Quest for a Cure.

We proceed to companion with Refinery29 and the iHeartMusic Festival to drive model consciousness, and we launched a brand new partnership with Allure journal to reinforce our place as a magnificence vacation spot. This partnership included an Allure journal curated mini-book referred to as Shop Like a Beauty Editor. This e-book featured the favourite picks of Allure magnificence editors obtainable at Ulta Beauty. The program additionally highlighted visible content material from Allure editors and their emails within the Mix part on ulta.com. We additionally turned the unique and presenting sponsor of Demi Lovato’s Simply Complicated, which is a full-length documentary on YouTube that provides an intimate look into the lifetime of the favored star. The video has already been considered greater than 10 million instances. The partnership contains three “get the look” movies that includes merchandise offered at Ulta Beauty.

These efforts are a part of our multi-year technique to extend consciousness of the Ulta Beauty model, which has led to all-time excessive outcomes for this metric. Aided model consciousness now stands at 87%, up from 84% final 12 months, whereas unaided model consciousness grew to 50% in comparison with 41% final 12 months. Next, I would like to supply an replace on our merchandising initiative. The Ulta Beauty staff did a improbable job maximizing our model partnerships, guaranteeing that must-have and often-exclusive product is on our cabinets. We proceed to drive fast market share features throughout the board, with specific power in status magnificence. According to 3rd quarter information tracked by the MPD group, Ulta Beauty continued to quickly develop our share of status make-up, accelerated our features in status skincare and perfume, and added 320 foundation factors of market share in status magnificence general.

Year-to-date, Ulta Beauty grew the status section by 28%, whereas all the retail tracked by MPD solely grew within the low single digits, netting to a complete status magnificence business development fee of 5%. Our broad and balanced portfolio of product classes and types continues to be a lever in our capability to ship wholesome comp. Skincare in each mass and status, perfume, skilled hair care, solar care, equipment, and private care home equipment all delivered nicely above common development. Similar to what we mentioned final quarter, the business general seems to be experiencing a little bit of a lull in innovation and coloration cosmetics, though not throughout all manufacturers. Our status boutiques that includes Clinique, Lanôme, MAC, and Benefit manufacturers had been very robust, as we proceed to roll out 700 boutiques this 12 months. These 4 high-growth manufacturers contributed nearly a 3rd of our whole comp development in the course of the quarter. We are delighted with our new partnership with MAC.

At the tip of the quarter, we had 107 shops rolled out, and can have roughly 120 boutiques by year-end. We additionally rolled out 5 of MAC’s hero SKUs in our impulse photos throughout the chain. Our assortment options a number of unique instantaneous artistry kits obtainable solely at Ulta Beauty. MAC has rapidly change into the No. 1 model in 80% of the shops the place it’s launched. It is an in depth second in the remaining. Our client insights staff has surveyed our MAC company, with their findings demonstrating that we’re serving to to recruit a brand new client to the model. With roughly 50% of the MAC patrons at Ulta both new to MAC or lapsed MAC customers who hadn’t bought the model in over a 12 months.

Beyond the status boutiques, we now have seen the remainder of our status coloration cosmetics class slowing in comparison with final 12 months’s distinctive tempo of development, however status make-up continues to be very wholesome, comping within the excessive single digits. Many of our manufacturers like Tarte and Two-Faced are delivering robust innovation and double-digit comps. Encouragingly, coloration cosmetics, each mass and status, had been very robust throughout Black Friday weekend, which we consider bodes nicely for this class in the course of the vacation season. We’re additionally enthusiastic about developments on the mass aspect of the assortment in make-up, with Elle rolling out chainwide subsequent 12 months, and cult favourite, Morphe, a social media influencer model, centered on eyeshadow palettes and brushes, added to 300 doorways and at ulta.com.

Another model born on social media is Dose of Colors, which was obtainable on-line just for the previous a number of months. Following its success on ulta.com, we lately launched two common palettes to 400 shops and shall be including 21 lip and eyeshadow Dose of Color SKUs in time for the vacation. Fragrance was one other spotlight in the course of the quarter, comping within the excessive teenagers, with success within the base enterprise and several other robust, new launches, together with Chanel Gabrielle, Gucci Bloom, and Carolina Herrera Good Girl. We proceed to launch unique fragrances like Ballet Rose from Philosophy, and an unique line of 4 fragrances from Kate Spade. Both status and mass skincare comps nicely above the home, with newness from No. 7, Yes To, Skinfood, and Memebox driving power in mass skincare, and Mario Badescu, Dermologica, Peter Thomas Roth, and Juice Beauty driving distinctive development on the status aspect of skincare.

Our skilled haircare class was bolstered by the rollout of Bumble + Bumble in additional than 500 shops, new manufacturers like Aquage, the chainwide rollout of Drybar, and newness driving robust double-digit comps in DevaCurl, Kenra, Matrix, and Pureology. As you may see, there’s quite a bit occurring in our assortment, as we now have entry to increasingly manufacturers that proceed to raise our product choices. Looking forward to the brand new 12 months, we’re excited concerning the new model pipeline with additions in each main class, together with make-up, skincare, and haircare, in addition to a big refill in our mass cosmetics space deliberate for the start of 2018, to make room for model additions and expansions.

Our positioning of all issues magnificence, multi functional place, provides us a number of levers to drive development and rapidly adapt to traits and alter in business dynamics. Let me flip now to our providers enterprise. Salon gross sales grew 10.eight% and comped three.eight% within the third quarter. While a moderation from our fast development earlier within the 12 months, these will increase present that we proceed to realize share and much exceed development charges for the providers business. We noticed some regional variation in our development charges, with slower development in Florida and Texas, two of our greatest markets for providers, reflecting disruption from the hurricane. The staff managed labor and working prices nicely, and elevated the revenue fee of the providers enterprise whereas investing in development initiatives. We’re within the early phases of testing our improved salon enterprise mannequin in two markets and we’re inspired by the early indicators.

Initial surveys of our company revealed considerably increased engagement and satisfaction with this new method. As a reminder, the brand new guest-centric mannequin encompasses a simplified menu for hair and pores and skin providers, a extra clear pricing mannequin to obviously and constantly talk pricing to our company, and elevated coaching for stylists. We consider this revolutionary method is the inspiration for long-term development and share acquire. Earlier this 12 months, we launched our professional staff, a bunch of salon stylists from Redken, Matrix, L’anza, and Wella, who’re charged with elevating the profile of the salon at Ulta Beauty, constructing pattern collections, and main education schemes for our 7,000 stylists.

The professional staff is already making a huge impact and getting a whole lot of consideration within the salon world, with in depth protection in business publications like Modern Salon and Behind the Chair. This publicity is positioning us as a trendsetter and serving to us to draw the perfect expertise to our salon staff. Now to replace you on our new retailer program. We opened 48 shops within the third quarter, ending the quarter with 1,058 shops. We had been in a position to open nearly all of our 100 internet new shops in our 2017 program earlier than Black Friday weekend to benefit from vacation visitors and gross sales. New shops proceed to open up very robust, with the Class of 2017 shops exceeding its finances and IRR hurdles.

Earlier this month, we opened our first Manhattan retailer in an important neighborhood location at 86 and third. This retailer is off to a superb begin in its first few weeks. Similar to the Michigan Avenue retailer in Chicago, we’re seeing nice leads to the salon after hiring a seasoned staff of salon professionals. The Manhattan retailer affords prolonged hours to accommodate early morning blowouts within the salon earlier than work or faculty. We’re happy to report that our newly opened high-profile shops in Chicago, the Mall of America, and Manhattan are all performing very nicely. Looking forward to 2018, the vast majority of our 2018 actual property program has been authorized and we’re on observe to open up one other 100 shops subsequent 12 months.

Now turning to our e-commerce enterprise. Ulta.com’s gross sales grew 62.9%, representing almost 9% of whole firm income and persevering with the fast development we have seen for the previous a number of quarters, as we improve our assortment, web site expertise, and supply capabilities. E-commerce gross sales had been pushed by transaction development. Total visitors development was up 57% and cell visitors grew 92%, pushed by investments in digital advertising and marketing. We relaunched our cell web site in the course of the quarter, enhancing the visitor expertise with the redesign of the procuring cart and checkout experiences.

We additionally improved the bank card software expertise, implementing the flexibility to use and purchase in a single transaction, which has greater than doubled the variety of bank card account signups on-line. We additionally gave the Ulta Beauty app a mini-makeover, including options like the flexibility to purchase and electronic mail present playing cards from our cellphone, simpler use of options like checking Ultamate Rewards account and level steadiness, and improved variations of our try-on app, Glam Lab, a characteristic to allow push notifications to get alerts concerning the newest promotions and unique product launches, and the potential for company to make use of voice search to seek out merchandise. Mobile app visitors elevated greater than 300% in the course of the quarter.

We proceed to construct our ulta.com assortment with the addition of extra online-only manufacturers like Lime Crime, one of many first digitally native magnificence manufacturers, providing edgy make-up and hair coloration; Little Barn Apothecary tub merchandise; the Pérsona identification palette created by YouTube influencer, Simply Sona, and unique to Ulta Beauty; and Milani make-up and primers. Online-only manufacturers accounted for a good portion of our e-commerce development in the course of the quarter. Ulta.com additionally delivered glorious outcomes with our signature promotions like 21 Days of Beauty, the Gorgeous hair occasion, in addition to online-only promotions, together with Platinum Perks, magnificence pattern baggage with buy, and limited-time magnificence breaks. We launched shoppable Instagram in August and we’re seeing rising curiosity and engagement on this platform.

Turning to the event of our omnichannel capabilities, final quarter we talked about our store-to-door take a look at in 40 shops, which enabled company to position ulta.com orders in-store and have merchandise delivered to their house. We rolled out this functionality chainwide on the finish of the third quarter. While this initiative continues to be pretty small when it comes to demand, it is proving fairly helpful and satisfying company in search of scorching manufacturers that aren’t obtainable in each retailer, similar to MAC or Morphe.

The variety of omnichannel consumers continues to steadily enhance. Guests buying each in-store and on-line now characterize 9.1% of our loyalty members, in comparison with 7.5% a 12 months in the past. She’s spending 2.7 instances greater than a retail-only visitor when she outlets in each channels, together with doubling her spend in our shops. Finally, to replace you on our provide chain operations. We proceed to develop capabilities and leverage economies of scale in our distribution community to ship distinctive visitor experiences whereas specializing in value optimization. Our DC community is forecast to ship almost 20% extra models this 12 months in comparison with 2016, with nearly 10% of models supporting our e-commerce enterprise. Our improved operational capabilities are supporting this development whereas capturing important financial savings.

E-commerce prices per order are down 10% year-over-year, with a four.four% discount in retail replenishment prices over the identical interval. From a speed-to-guest perspective, the availability chain staff has achieved a 20% discount in retail replenishment lead instances, with most of our e-commerce orders processed inside 24 hours of an order being positioned. We’ve additionally continued to implement expertise to supply better management and visibility, supporting ongoing efforts to enhance service and cut back prices. Our DC community has continued to mature with the ramp of our new DC working mannequin in Greenwood and Dallas. These two services are anticipated to course of almost 85% of our e-commerce quantity in the course of the peak 2017 vacation season.

As we put together to go stay with the Fresno DC subsequent summer time, we’ll proceed to see extra e-commerce demand to fill out of our new DC working mannequin. Speaking of Fresno, building of our new West Coast distribution heart is almost full and hiring the brand new administration staff is nicely underneath approach. We’re on observe to open subsequent summer time. The Fresno DC will add one other 670,000 sq. toes of capability that may service as much as 400 shops, and 45,000 e-commerce orders per day. Fresno will even present a platform to implement new applied sciences to extend productiveness and considerably cut back transit time for our West Coast prospects.

From a list perspective, we have been constructing our DC and retailer stock ranges to arrange for the numerous quantity spikes that we anticipate in the course of the vacation season. The staff has accomplished an important job sustaining high-end inventory ranges, and whereas they continue to be above aim, we have centered additionally on attaining our stock time period targets. Inventory per door grew by 6.5%, nicely beneath our whole gross sales comp of 10.three% within the third quarter; a strong achievement in mild of the extra security inventory we inbuilt help of our fourth quarter gross sales projections. I am additionally actually pleased with the partnership among the many provide chain staff, retailer operations and merchandising groups to make sure the seamless execution of our many new model launches and class reflows. That completes my progress report on our strategic imperatives.

Looking forward to the remainder of the 12 months, we’re trying ahead to an thrilling fourth quarter as our groups work collectively to encourage our 26 million loyal company who deal with themselves and their mates and households this vacation season. Our retailers have deliberate an important assortment of numerous newness and exclusives. Our advertising and marketing is executing a compelling 360-degree plan round our Bring the Beauty theme, together with new created-for-television radio. Our retailer groups are guaranteeing robust execution of the planograms and occasions, and we’re investing in labor hours to offer nice service, and our provide chain and assistant groups are supporting the shops and ulta.com with improved stock planning resulting in increased in-stock ranges. We are prepared. With that, I am going to flip it over to Scott to debate in additional element our third quarter monetary outcomes and our outlook for the present quarter.

Scott SetterstenChief Financial Officer

Thanks, Mary. Good afternoon, everybody. Starting with the revenue assertion. Sales for the third quarter rose 18.6% to $1.34 billion, pushed by 10.three% comparable gross sales development and powerful new retailer productiveness. Adjusting for roughly $14 million in misplaced gross sales as a result of hurricanes in Texas and Florida, whole gross sales would’ve been above the excessive finish of our steerage. The whole firm comp of 10.three% was composed of 6% transaction development and four.three% common ticket development. E-commerce gross sales development remained very wholesome, contributing 370 foundation factors to the overall comp. We estimate that the hurricanes in September impacted our general comp fee by about 100 foundation factors, so the adjusted comparable gross sales development of 11.three% was above the excessive finish of our steerage vary of 9 to 11%.

Our retail comp was 6.eight%, break up evenly between visitors and common ticket development. Ticket was pushed primarily by a rise in common promoting value, whereas development in models per transaction was up barely. The salon enterprise comped three.eight%, pushed primarily by ticket development. The retail and salon comps mixed was 6.6%. Gross revenue fee decreased 110 foundation factors, primarily because of deleverage and merchandise margins. Rent and occupancy leveraged barely, regardless of extra new shops opening versus final 12 months, and extra high-rent areas within the portfolio year-over-year. Supply chain expense was flat as a fee of gross sales year-over-year as we balanced investments in our DC community and programs with value efficiencies ensuing from the maturation of our Dallas and Greenwood DCs.

Product margins declined as anticipated, reflecting the dynamics we have mentioned for the previous a number of quarters, regarding channel, class, and model headwind. The next mixture of e-commerce gross sales and status model boutique gross sales had been essentially the most important drivers. Increased engagement in our loyalty program additionally pressured gross margins barely. In addition, in mild of the relative softness in our make-up class, exacerbated by the hurricanes coinciding with our signature occasion, 21 Days of Beauty, we elected to drive market share features by a wide range of compelling affords. These actions yielded the specified end result of serious share features in the course of the quarter however weighed on gross margin charges greater than we anticipated going into the third quarter.

We additionally delivered 90 foundation factors of SG&A enchancment, a robust efficiency in mild of extra bills associated to the hurricanes. The enchancment was pushed by company overhead leverage and glorious management of variable retailer prices offset by investments and retailer labor associated to our status boutique technique and investments in retailer hours to execute model rollouts and reflows, in addition to to strengthen visitor service general. Advertising expense was flat as a share of gross sales. Advertising expense was flat as a share of gross sales. As you might recall within the first quarter, we benefited from shifting the timing of among the deliberate promoting bills into the third and fourth quarters.

Turning to EPS, earnings per share grew 21.four% to $1.70. A couple of places and takes to cowl right here. We had a $zero.04 profit within the third quarter associated to a decrease tax fee in comparison with the third quarter of final 12 months, partially as a result of new accounting customary that adjustments how corporations report the tax results of worker inventory choice workout routines and investing of fairness awards. Earnings per share had been negatively impacted by about $zero.08 from misplaced gross sales and one-time prices related to the hurricanes in September. In phrases of extra everlasting and strategic impacts, we proceed to return extra money to shareholders by our share repurchase program. Earnings per share within the third quarter benefited by about $zero.03 as a result of decrease share rely year-over-year.

Moving on to the steadiness sheet. Inventories elevated 6.5% on a per-store foundation, nicely beneath the comp fee; a strong efficiency given the numerous funding in new manufacturers and boutiques. The ramping of the Dallas DC and stock to help excessive in-stock ranges for the sturdy comp development anticipated this vacation season. Capital expenditures had been $144 million for the quarter, pushed by new shops, programs, and fixtures for model growth. We ended the quarter with $107 million in money and short-term investments. In phrases of share buy-backs, we proceed to be extra lively with repurchase exercise inside our 10b5-1 plan in view of the pullback in our share value.

During the third quarter, we repurchased roughly 591,000 shares of our inventory at a value of $131.7 million. As of October 28, 2017, roughly 136 million remained obtainable underneath the 425 million share repurchase program introduced in March 2017. Turning now to steerage for the fourth quarter in full-year 2017. For the fourth quarter, we anticipate gross sales to be within the vary of $1.926 billion to $1.959 billion, versus $1.581 billion final 12 months. We anticipate comparable gross sales to extend within the vary of eight to 10% versus 16.6% final 12 months. E-commerce gross sales are anticipated to develop within the 40% vary. We plan to open roughly 16 new shops within the fourth quarter in comparison with 25 final 12 months.

We’re planning to open extra shops in Q1 2018 in comparison with Q1 2017. Combining the timing impacts, This fall pre-open expense is predicted to be flattish as a fee of gross sales. Diluted earnings per share are anticipated to be within the vary of $2.73 to $2.78 versus $2.24 final 12 months with modest working margin deleverage anticipated. We anticipate gross revenue to be flattish, as we at the moment are forecasting much less leverage on hire and occupancy prices on a extra average retail comp expectation, in comparison with earlier within the 12 months. Our present forecast additionally contains prudent assumptions for merchandise margin in mild of present class dynamics. We anticipate that SG&A expense will deleverage, as we’re planning increased labor prices pushed by the complete rollout of the status boutiques for the 12 months. That places extra stress on the payroll line within the short-term, in addition to slight deleverage of selling expense associated to the timing of promoting prices that had been moved from Q1.

These components shall be partly offset by leverage of company overhead bills. The tax fee for This fall, excluding any affect of the brand new accounting customary for share-based funds, is predicted to be 37.four%, and our totally diluted share rely is estimated at 61.four million. Rolling that up for the full-year steerage, we anticipate to finish the 12 months with 1,074 shops, and can full 11 main remodels and seven relocations. We anticipate to develop our e-commerce roughly 50 to 60%. We are sustaining our expectations for whole firm comps to be within the 10 to 11% vary.

CapEx is now anticipated to be roughly $450 million, in comparison with our earlier yield of $460 million, which incorporates new shops, remodels, relocations, roughly 700 status model expansions, and investments in programs. We are sustaining our steerage for earnings-per-share development to be within the excessive 20s share vary. This contains the affect of the 53rd week, which is estimated to characterize about $100 million in gross sales and $14 million in pre-tax earnings. It additionally contains the affect of the third quarter hurricanes, assume share buy-backs within the 370 million vary, and assumes a full-year tax fee of 35.6%.

Operating margin continues to be anticipated to incorporate modestly for the 12 months, albeit a bit lower than initially deliberate as a result of actions we took within the third quarter to seize market share, and the weather of the This fall P&L I simply described. Updating our preliminary view of the 20 to 30 foundation factors of working margin enchancment, we now anticipate margin charges to be within the vary of flat to up about 10 foundation factors. We stay assured in our long-term-range plan to ship earnings-per-share development within the low 20 share vary. We proceed to plan for margin fee enchancment to construct in 2018 and 2019 to succeed in our aim of 15% by the tip of 2019.

This margin growth is predicted to return primarily from hire and occupancy leverage, advantages of our provide chain investments, and extra environment friendly distribution facilities and programs, and company overhead financial savings as we acquire efficiencies and lap over important investments the final a number of years which have enabled us to execute our development methods and infrastructure initiatives. Now, I am going to flip it over to the convention name host to average the Q&A session.

Questions and Answers:

Operator

Thank you. At this time, we shall be conducting the question-and-answer session. If you’d wish to ask a query, please press *1 in your phone keypad. A affirmation tone will point out your line is within the query queue. You could press *2 if you need to take away your query from the queue. For contributors utilizing speaker gear, it could be obligatory to choose up your handset earlier than urgent the * key.

Our first query comes from Ike Boruchow of Wells Fargo. Please proceed along with your query.

Ike BoruchowWells Fargo — Analyst

Good afternoon, everybody. Scott, I assume my query is for you on the gross margin line. I apologize if I missed this. For the gross margin decline in Q3, are you able to parse out how a lot of that was fastened value, deleverage versus merchandise margin? Then, for those who guided gross margin for This fall flattish, might you additionally stroll us by the places and takes on merch margin versus fastened prices?

Scott SetterstenChief Financial Officer

Sure, Ike. Well, I am not going to parse out the idea factors, however I am going to offer you slightly bit extra coloration on what we have described in our ready remarks. As far as 3Q is worried, once more we’re down 110 foundation factors precise for the quarter after the going-in assumption was type of flattish, I’d say, on the gross revenue line. So, once more, a part of it was anticipated and a part of it was surprising. The anticipated half, I assume I’d say status boutiques, these manufacturers placing slightly bit extra stress on gross revenue. We’ve talked about that now for fairly a while. Again, these manufacturers carried out extraordinarily nicely in the course of the quarter, had been an even bigger share of the pie general, so created some downward stress on fee.

The same story with e-commerce. Again, the going-in assumption was a couple of 50% development fee and ended up being simply over 60% year-over-year for the quarter. E-commerce with among the promotional exercise that we do, normally usually over-indexes there with the digital connectivity that we see there. Again, e-commerce creates slightly headwind on the gross revenue line, however on the EBIT line, we’re nearly agnostic on the place that sale goes, whether or not it is to the retail fleet or to our e-commerce community. So, very blissful there general with the outcomes.

As far because the surprising piece was involved, once more, coloration cosmetics proceed to be slightly softer than we had been pondering again in late August after we put our forecast collectively. Then, after all, we had the hurricanes spring on us in a way more important approach than possibly you’ve got seen with another retailers. Quite a lot of shops impacted; a whole lot of them very high-volume shops in key markets for us, on the peak of one in every of our signature occasions for the 12 months. I feel we had greater than 1,000 shops impacted both full closures or partial closures. Again, powerful to find out what the CNN impact on a few of that stuff proper? It was raining laborious in a whole lot of components within the U.S., not in simply these two markets. So, that reacted to in the course of the quarter. We noticed some softness within the gross sales traits and we reacted appropriately. OPA, fortunately, we have a whole lot of leverage we are able to pull in, so we mobilized the interior forces right here and we had been in a position to recapture a whole lot of these gross sales, albeit at a considerably decrease margin.

Fixed retailer value, there was leverage there, though not as a lot as we thought going into the quarter as a result of the retail comps had been slightly bit softer and, after all, pondering again the final 12 months on the very wholesome retail comps that we generated not according to the charges of leverage we noticed final 12 months. Supply chain did slightly higher general. Again, we had been pondering it might be type of flattish, however they did slightly higher than we had been anticipating entering into, so issues are working nicely behind the home.

Privity quantities [00:36:43] of 3Q and looking out forward at 4Q, gross revenue we’re pondering type of flattish for the quarter general. Again, merchandise margins we’re pondering flattish to down modestly for the quarter. So, once more, not the identical type of circumstances obvious within the fourth quarter. So, it is already a promotional interval, so margin charges are already underneath stress from simply the character of the general atmosphere there. We’ve referred to the bank card, which provides us a whole lot of tailwinds with basket construct and issues like that. So, we’re doing an important job signing up folks there. Gift playing cards are one other factor we have applied with wholesome development charges there year-over-year. Of course, these are post-holiday redemptions by and huge, the place the margin fee atmosphere I would say is slightly bit more healthy than possibly pre-holiday. So, we’re optimistic that we are able to maintain margin charges flattish within the fourth quarter.

Fixed retailer value leverage, we anticipate to get some within the fourth quarter. Again, in all probability not as a lot as we noticed final 12 months in a more healthy retail comp general. Supply chain, we will get leverage there this 12 months within the fourth quarter, which is sort of a little bit of a special story than what we have seen the previous couple of years within the fourth quarter after we’ve been ramping up these new distribution facilities. So, once more, an important story. Those buildings are on-line, we’re optimizing them, and they’re driving efficiencies and leverage for us general in gross revenue margins.

Ike BoruchowWells Fargo — Analyst

Got it. Very useful. Thanks, Scott.

Operator

Our subsequent query comes from Omar Saad of Evercore ISI. Please proceed along with your query.

Omar SaadEvercore ISI — Senior Managing Director

Yes, thanks for taking my query. I used to be questioning for those who might develop upon the class shift you are seeing slightly bit within the market. It appears like skincare continues to strengthen because the make-up coloration enterprise softens. How ought to we take into consideration the skincare dynamic relative to make-up? Is it a web based buy? Is it a replenishment? Do you see a whole lot of innovation coming down on that aspect of the enterprise as nicely? Help us take into consideration that transition and what it would appear to be from our aspect. Thanks.

Mary DillonChief Executive Officer

First of all, I’d say that one of many nice issues concerning the Ulta Beauty enterprise mannequin is that we take part — the All Things Beauty All in One Place line is actual — so we take part in all the key magnificence classes, which provides us a whole lot of capability to drive development and share features and flex with class cycles. I’d say, to start with, we take a extremely macro, type of long-term view of this. There are many classes inside the massive magnificence class and there are cycles that occur. I am going to come again to skincare in a minute. But one factor I am going to say is that company are simply as engaged as ever in make-up. If you simply take a look at what’s occurring on YouTube or Instagram, or our personal followers throughout channels, for those who take a look at the traits that we see in demographics, the wonder fanatic section of the longer term — millennials, Latinas, teenagers, all over-index, notably in make-up.

We really feel assured that the involvement and engagement in make-up and considerably softer present efficiency just isn’t a long-term pattern. It’s about innovation lapping over some actually massive sorts of innovation platforms within the final couple years. Makeup is nice. We additionally noticed not solely robust development, however actually robust share features proceed for us in make-up. That’s good. Now, as you stated, what’s type of cool is that we have seen some acceleration in another classes. So, specifically, perfume and skincare each accelerated when it comes to development in our share acquire, and we expect that has long-term life to it as nicely.

Skincare has actually been pushed by a whole lot of innovation. Dave can add extra coloration to this. Some attention-grabbing innovation in what I would name quicker, extra enjoyable methods to do skincare like masks or extra attention-grabbing efficacious substances from Korea. So, that is attention-grabbing. We assume that has no purpose to not be robust throughout status and mass. We see a whole lot of innovation coming down the pike. I would say throughout all classes for us, as we glance out into fourth quarter 2018.

Omar SaadEvercore ISI — Senior Managing Director

That’s actually useful. Thank you, Mary.

Director

Our subsequent query comes from Joe Altobello of Raymond James. Please proceed along with your query.

Joe AltobelloRaymond James — Analyst

Thanks, guys. Good afternoon. I need to speak about your retailer goal of 1,400 to 1,700 doorways over the subsequent few years. I do know previously you’ve got talked about that a few of that shall be decided by how rapidly your e-commerce enterprise grows clearly. That’s been outpacing I feel each your and our expectations. So, how ought to we take into consideration that final quantity given the fast tempo of e-commerce development? Would we anticipate to be towards the low finish of that vary in 5 years or so?

Mary DillonChief Executive Officer

I’d say, to start with, we love the truth that our e-commerce development is choosing up. As Scott stated, I feel very nicely, we’re agnostic about it from a backside line revenue perspective, however we’re really actually constructive about it because it pertains to buyer engagement. So, the oldsters which can be 9% of our loyalty members which can be on the channel, multichannel proper now, by far are our greatest guess in setting nearly thrice the quantity of anyone who’s solely procuring within the retailer. But she’s additionally procuring much more within the retailer than earlier than. We’ve talked about this quite a bit. It’s not a channel shift, it is really an growth of us getting extra per share of pockets. So, that is all nice.

Now, after all, we’re at all times occupied with our bodily footprint and buildout. That’s one thing that we’re very rigorous and disciplined about. We haven’t any purpose to alter that concentrate on proper now. There’s a variety for a purpose as a result of it is a vary. I do not assume there’s anybody cut-off date. But to me, the perfect factor is that yearly, our retailer fleet continues to carry out higher than the 12 months earlier than. So, 2017 retailer fleet is forward of finances and our IRR goal and we proceed to see it strengthen. So, I assume one of the best ways to consider is we really know that we after we construct shops, the e-commerce enterprise additionally grows with it, so they really are complementary, not stealing from one another. So, we now have no purpose to assume that dynamic will change and we, after all, are very disciplined about our actual property choices. But we’d maintain that concentrate on within the vary it is in proper now.

Scott SetterstenChief Financial Officer

I’d simply remind of us, once more, Ulta is slightly bit totally different than a whole lot of typical retailers which can be struggling today. These shops are inbuilt typically important SLE, 20%+ at low to mid-single-digit comp type of numbers on the highest line. So, once more, whereas we monitor retailer productiveness very carefully, there’s nothing immediately that may counsel to us that there must be any type of radical adjustment on our long-range goal at this level.

Joe AltobelloRaymond James — Analyst

That’s useful. Just one final one. Are there any lingering impacts from the hurricanes within the fourth quarter?

Scott SetterstenChief Financial Officer

No, it is a fairly sizable cost we needed to take in. There are insurance coverage claims being ready and we’re engaged on attempting to get as a lot of that again as we are able to within the fiscal 12 months.

Joe AltobelloRaymond James — Analyst

Okay, nice. Thank you, guys.

Operator

Our subsequent query comes from Stephanie Wissink of Jefferies. Please proceed along with your query.

Stephanie WissinkJefferies & Company, Inc. — Analyst

Hi, good afternoon, everybody. Mary, only a query in your remark across the pipeline into 2018 innovation, newness, after which a few of your initiatives round recasting your MAC make-up enterprise. Could you simply speak about some extra of that enthusiasm? Thank you.

Mary DillonChief Executive Officer

Yeah. Actually, you already know what? I am going to let Dave take this since he is the closest to it.

Dave KimbellChief Merchandising & Marketing Officer

We’re enthusiastic about it. We’re at all times trying to proceed to innovate in each class that we now have. Makeup is not any exception, notably given the significance in among the issues that we have seen this 12 months. So, on either side of the home — in status and in mass — we have fairly all kinds of newness coming in. I would classify that in three ways in which do apply to each mass and status. One is sustained innovation from a few of our greatest manufacturers, manufacturers which were profitable this 12 months like Tarte and Two Faced manufacturers which were necessary drivers for us previously, like NYX and Urban and IT Cosmetics will proceed to have robust pipelines that we’re enthusiastic about. We’re partnering with them to leverage our loyalty program and all the opposite belongings we now have to make them as massive as attainable. So, we really feel very constructive about what we’re seeing as we glance out by 2018.

We’ll additionally see growth into extra shops of present manufacturers. Brands like MAC, Mary talked about ELF. Numerous manufacturers which can be in restricted doorways immediately we’ll proceed to roll out by 2018. There are quite a lot of new manufacturers that shall be launching in 2018 as nicely. Mary talked a couple of reset in mass and whereas we’re not saying all the specifics but, we see that as a development driver of our enterprise and an necessary factor of our enterprise to carry new company in and permit them to in the end store your entire retailer. We’ve bought some thrilling new manufacturers coming in on either side of the shop as nicely. So, it’s going to be a well-rounded set of improvements in make-up. The identical applies to hair care, skincare, and throughout the entire retailer. We’re optimistic and constructive about what we’re seeing.

Mary DillonChief Executive Officer

I am going to simply add too that we’re additionally actively taking part with — there’s a whole lot of social media influencer manufacturers which can be scorching. We’ve talked about this slightly bit, however Morphe, Dose of Color, Lime Crime. These are manufacturers that had been born extra by social media, but in addition many of those manufacturers additionally perceive that the advantage of merging the digital and bodily is necessary for his or her company and for our company, as nicely. So, we’re seeing some good development with these manufacturers too.

Stephanie WissinkJefferies & Company, Inc. — Analyst

Thank you.

Operator

Our subsequent query comes from Adrienne Yih of Wolfe Research. Please proceed along with your query.

Adrienne YihWolfe Research — Analyst

Thank you very a lot. Mary, I assume my first query is for you. Can you talk about the way you select your strategic response to an more and more promotional atmosphere both maximizing revenue or market share ? What are the aggressive components that sway your choice? For Scott, off margin has been down the previous two consecutive quarters. When we glance to 2018, ought to we expect that Q1 and a couple of nonetheless have that stress after which we develop once more within the again half of the 12 months? Thank you very a lot.

Mary DillonChief Executive Officer

Thank you, Adrienne. I am going to begin along with your first query. I assume stepping again, we actually are enjoying the lengthy recreation right here and consider that Ulta Beauty has essentially the most related proposition for the wonder fanatic now and into the longer term. For us, it is actually about long-term driving extra company and gaining extra magnificence fanatics into our loyalty packages, and in addition seize extra of her share of pockets. Each quarter is slightly bit totally different, however we’re trying to drive not simply long-term share features, however actually long-term engagement with our loyalty platform. This quarter was an instance of we didn’t need to miss the chance to proceed the momentum. We gained 1.eight million new loyalty members this quarter. I think about long-term play, not only a short-term value promotion play.

We wanted to drive some visitors as a result of there was some disruption with the hurricanes and a few softness within the class. But for us, that is how we give it some thought strategically long-term is how can we proceed on the momentum that we now have to drive and get an excellent larger loyalty program, which actually is the flywheel to drive our enterprise for the long run.

Adrienne YihWolfe Research — Analyst

That’s very useful.

Scott SetterstenChief Financial Officer

Yeah, so trying forward on working margin, once more, we all know that is the recent button with our investor group. There had been some unexpected circumstances that occurred. So, softness within the coloration cosmetics space, we’re navigating our approach by there as greatest we are able to. The hurricanes, we needed to react to that. We thought that was the perfect plan of action for us. The final couple quarters weren’t what we anticipated going into 2017, however the excellent news is we had been in a position to reply and we delivered on our monetary commitments to our traders. So, that is the excellent news.

As far because the quarter sequencing goes subsequent 12 months, I am not going to have the ability to offer you in all probability the element that you really want on that. But we’re ready immediately simply to offer folks a way, like as we’re pondering of 2018, this is a few information factors that we are able to course of on. So, once more, Dave talked to newness for subsequent 12 months. So, Ulta Beauty, an important innovator, will proceed to be subsequent 12 months. Our service provider groups have been working laborious with the advertising and marketing of us determining what can we do subsequent 12 months to reenergize the colour cosmetics area, each with our present vendor companions and new of us that we are able to usher in to the assortment general, with the thought being how can we mitigate among the merchandise margin stress that we have been going through right here lately? So, that is No. 1.

We take into consideration different drivers for working margin for the long-term. One factor is CapEx for subsequent 12 months. Right now, our preliminary view — once more, we’re not guiding for subsequent 12 months — however the preliminary view seems to be like CapEx will take a big step down subsequent 12 months beneath $400 million, considerably beneath $400 million. Versus the $450 million, let’s name it, that we had in 2017. Some of you may have heard us speak about what’s driving a few of that. We cycle by the height on the boutique rollouts, so there’s been a whole lot of the accelerated depreciation flowing by the P&Ls the final couple years associated to those rework actions that we have taken throughout a big a part of the fleet to maintain our retailer fleet trying contemporary. We’re type of previous that now.

I would say we’re taking a extra average view of among the back-of-the-house investments that we have made important investments within the final couple years. Now we’re shifting into extra of an optimization type of second. Making certain we’re getting the worth out of these investments we have made the previous couple of years. You’ve heard us speak about forecasting, replenishment, grasp information, and area planning and all these sorts of issues. That’s type of what I am referring to there.

Fixed retailer value leverage. So, once more, it isn’t a straight line. This 12 months we have had some increased hire, increased profile areas go on. They had been the fitting actual property choices for us at this cut-off date, however they put stress on margin fee. There’s no avoiding that. Next 12 months as we’re our retailer rollout plan, it is going to be what I’d name a extra normalized type of hire construction. More of the Ulta historic, vanilla, energy heart type of areas. So, once more, we’ll get the advantage of biking some headwinds in fastened retailer value this 12 months.

Finally, value optimization. Again, you’ve got heard Mary and I speak about this during the last 12 months or so. There’s a extra formal plan being put in place for 2018. That’s going to go stay with boots on the bottom. We consider there are many alternatives to leverage our scale and to cut back inefficiencies that constructed up over time naturally as we have been primarily centered on development. We assume there’s nice alternative there as nicely. We simply need our investor base to grasp that there are particular actions being taken to assist us drive working margin leverage in 2018 and past, and we’ll share extra particulars on all that after we speak with you on our fourth quarter name.

Adrienne YihWolfe Research — Analyst

That’s very useful. Thank you and better of luck.

Scott SetterstenChief Financial Officer

Thank you.

Operator

Our subsequent query comes from Rupesh Parikh of Oppenheimer & Company. Please proceed along with your query.

Erica EilerOppenheimer & Company — Analyst

Good afternoon. This is definitely Erika Ilon for Rupesh. Thanks for taking our query. First, I simply wished to additionally contact on the promotional atmosphere. Just curious how the vacation promotional atmosphere has progressed this 12 months versus maybe current years. Then as we transfer previous the vacation, any ideas you may share about the way you’re occupied with the promotional atmosphere? Are you anticipating that as a few of that innovation begins to roll by that the potential should be promotional ought to abate?

Mary DillonChief Executive Officer

I am going to begin with the second a part of your query after which possibly Dave, you may add on the vacation piece too? I am going to say, not be redundant, however I am actually pleased with the truth that we have a enterprise mannequin that has a whole lot of levers and admittedly, flexibility. We’ve labored actually laborious over the previous few years to actually cut back our reliance on extra broad-based, broad scale, blunt instrument I name it, to a way more subtle lever advertising and marketing combine that is allowed us to do a pair issues.

One, allowed us to take part in issues which can be driving the type of model consciousness that we now have immediately. To have 50% unaided model consciousness proper now is definitely a extremely massive deal. We’ve been in a position to pull again on broad-based discounting and nonetheless preserve an affordable general advertising and marketing spend by shifting into issues which can be driving consciousness, permitting us to take part within the social channels the place the journey is going on for folks studying about magnificence, after which do extra demand creation in a extra focused trend. So, the entire level of the loyalty program is to be as focused as we are able to. That, along side thrilling manufacturers and assortment and occasions and all that, comes collectively in an important combine that permits us to be actually good and environment friendly.

So, there are occasions that we now have to flex levers extra aggressively than others. It can be our intention to be much less about value discounting and extra about focused promotions. Part of what we’re investing in over time is the flexibility to get much more personalised in every part we do. That’s the notion of at a time the place we’re utilizing instruments to get us into the loyalty program, that gives long-term advantages as a result of we all know that our capability to focus on them with actually thrilling, related affords that aren’t actually in discounting however simply thrilling affords, will solely enhance over time. That’s a protracted reply to your query, however that is the aim. To have leverage, have flexibility, but in addition proceed to purchase us towards extra focused private innovation. Holiday, Dave?

Dave KimbellChief Merchandising & Marketing Officer

Yeah, so far as vacation, and I feel as Scott stated earlier, after all, the vacation is at all times a really promotional interval. It has been previously and we do not anticipate that to alter this 12 months. We’re solely a couple of week into the heaviest a part of the vacation interval, so it is laborious to say precisely the way it will shake out for the remainder of the interval, however up to now we have solely seen maybe possibly modest adjustments to promotional technique or depth and we’ll be watching fastidiously. Our plan is to proceed to do all of the issues Mary stated. Continue to drive promotion the place it is necessary, as we now have deliberate by the remainder of the vacation interval, however really feel with nice merchandise, our loyalty program, promoting, advertising and marketing, in-store expertise, and all these issues to drive by the remainder of this vacation interval.

Erica EilerOppenheimer & Company — Analyst

Okay, no, that is useful. Then simply rapidly, are you able to share with us any potential plans on what you intend to do with the surplus tax profit if the proposed tax reform is handed? Just curious, ought to we anticipate that to move by to the underside line? Are you planning to reinvest it? Any ideas you may share on that potential tax profit can be useful.

Scott SetterstenChief Financial Officer

The query on everybody’s thoughts, proper? It appears it could be slightly untimely to invest on what we’d do with that, however I’d inform you that it would be topic to very complete dialogue with our model about methods to greatest deploy any potential money tax financial savings right here sooner or later. There are numerous issues that we now have on our roadmap that probably we would wish to speed up to drive the core enterprise. There are different aim ranges like worldwide issues we have been occupied with that maybe we might get slightly faster begin on. Then, after all, capital construction general, simply ensuring we optimize that for the long run.

Erica EilerOppenheimer & Company — Analyst

Wonderful. Thank you a lot.

Operator

Our subsequent query comes from Dana Telsey of Telsey Advisory. Please proceed along with your query. Telsey, your line is stay. Our subsequent query comes from Steven Forbes of Guggenheim Securities. Please proceed along with your query.

Steven ForbesGuggenheim Securities — Director

Good afternoon. I wished to concentrate on the product model providing. Maybe for those who can simply talk about the way you anticipate the Ulta Beauty assortment to evolve over time because it pertains to possibly variety of SKUs, the class publicity, and actually what you need that assortment of SKUs to face for as you concentrate on the way it suits into the general buyer worth proposition? And then lastly, nonetheless on the identical matter, are you able to contact on how that a part of the assortment carried out throughout the newest quarter, possibly year-to-date?

Dave Kimbell — Chief Merchandising & Marketing Officer

Yeah, our Ulta Beauty assortment is a key a part of our general technique. It’s part of our enterprise that we’re very pleased with and have invested in fairly aggressively during the last 12 months or so. We’ve revamped our packaging, the formulations, how we promote it, how we talk it. We’re really gearing up for even a bigger presence of that in early 2018. We’re very general happy with its consequence. It has a robust presence in make-up, after all, but in addition in pores and skin, tub, after which the vacation season is a giant time for our Ulta Beauty assortment, with an expanded assortment that’s designed only for the vacations. We’re persevering with to put money into all these issues and drive that enterprise and as I stated, have constructive and optimistic plans in 2018 to make that an excellent larger a part of our enterprise.

Having stated that, it is nonetheless comparatively small within the whole retailer. So, it isn’t going to be the key a part of our assortment, however it’s one that may add a pleasant, clearly unique, higher-margin enterprise, and one which we will proceed to put money into and drive into the longer term.

Steven ForbesGuggenheim Securities — Director

Just on that, any commentary on the efficiency of that collection of SKUs year-to-date or within the quarter?

Dave KimbellChief Merchandising & Marketing Officer

Yeah, we do not traditionally speak about any particular person model efficiency. But I would say general, once more, we’re proud and happy with the historical past of that model and optimistic about the place it is going into the longer term.

Steven ForbesGuggenheim Securities — Director

Thank you.

Operator

Ladies and gents, we have reached the tip of our question-and-answer session. I’d now like to show the decision again over to Mary Dillon for closing remarks.

Mary DillonChief Executive Officer

Thank you. I would identical to to take our 36,000 associates for his or her unbelievable dedication to serving our company and delivering operational excellence. It’s a really busy time of the 12 months. We thanks all in your curiosity in Ulta Beauty and stay up for talking with all of you quickly.

Operator

This concludes immediately’s convention. You could disconnect your traces at the moment. Thank you in your participation and have an exquisite day.

Duration: 60 minutes

Call contributors:

Mary DillonChief Executive Officer

Scott SetterstenChief Financial Officer

Dave KimbellChief Merchandising & Marketing Officer

Ike BoruchowWells Fargo — Analyst

Omar SaadEvercore ISI — Senior Managing Director

Joe AltobelloRaymond James — Analyst

Stephanie WissinkJefferies & Company, Inc. — Analyst

Adrienne YihWolfe Research — Analyst

Erica EilerOppenheimer & Company — Analyst

Steven ForbesGuggenheim Securities — Director

More ULTA evaluation

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Ulta Beauty, Inc. (ULTA) Q3 2017 Earnings Conference Call Transcript by: Pamela Hendrix published:

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