Our Vanity Is a Beautiful Thing for Ulta Shareholders

Beauty care has bucked the economic malaise in recent years, and Ulta Salon, Cosmetics & Fragrance (ULTA) is living proof. The chain that claims to be the country's largest beauty retailer -- salon products and services -- delivered blowout quarterly results on Tuesday.

Net sales soared by 22.5 percent to $713.8 million, fueled by a healthy 8.7 percent increase in comparable store sales. The strong comps are on top of a 6.7 percent increase during last year's first quarter, and the average store is ringing up 16 percent more in sales than it was two years ago.

Net income followed suit, rising 19.4 percent to $50 million or 77 cents a share. Analysts were only forecasting a profit of 74 cents a share.

The Ulta-mate Sensation

Wall Street is impressed. Wells Fargo (WFC) -- which already had a bullish outperform rating on Ulta stock -- issued an upbeat analyst note after the report came out. Wells Fargo is impressed by the strong traffic trend and robust margins.

%VIRTUAL-article-sponsoredlinks%Ulta had pulled off a whopping 19 consecutive quarters of better-than-expected profitability before proving itself mortal with a miss last fall. It has now rattled off back-to-back beats to start a new streak. String it all together, and Ulta has beaten Wall Street income forecasts in 21 of the past 22 quarters.

Cosmetics offer a relatively inexpensive mood boost in much the same way that movies do -- by bringing a little fantasy into your day. This is just fine for Ulta, as its stores stock 20,000 prestige and mass-market cosmetics, fragrance, hair care, skin care, bath and body products and salon styling tools. Its salons also offer services from head to foot.

Beauty Knows No Boundaries

Ulta is expanding quickly while smaller rivals are just going through the motions. Of its 696 current locations, 120 have opened over the past year. It has expanded its square footage by 20 percent in that time.

It forecasts that its sales will climb at least 17 percent during the current quarter, thanks to a combination of brisk expansion and 5 percent to 7 percent in comparable store sales growth to prop up the top line. Just like the first quarter, this will be stacked up against a meaty surge a year earlier, when comps rose 8.4 percent during the second quarter of 2013.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Ulta Salon, Cosmetics & Fragrance. Try any of our newsletter services free for 30 days.