(Reuters) - Beauty products retailer Ulta Beauty (ULTA.O) reported strong results, but forecast first-quarter profit below Wall Street estimates as it expects to incur higher expenses on new store rollouts and other investments.
The company forecast a profit of 60 cents to 63 cents per share and revenue of $568 million to $577 million in the first quarter.
Analysts on average expected earnings of 72 cents per share, and revenue of $579.7 million, according to Thomson Reuters I/B/E/S.
Ulta Beauty’s shares fell as much as 15 percent to $75.01 after the bell. They closed at $88.37 on the Nasdaq on Thursday. The stock has shed about 10 percent of its value this year.
Ulta, which sells haircare products, cosmetics and fragrances of brands including Chanel, Elizabeth Arden RDEN.O and L‘Oreal (OREP.PA), said it plans to invest in new stores as well as strengthening its supply chain, warehouse systems and e-commerce site.
The company also said it would expand its prestige brand boutiques, particularly its Clinique boutiques.
Bolingbrook, Illinois-based Ulta said it expects the investments to hurt first-quarter profit by 13 cents per share.
Consumers focused on Ulta’s promotions in the fourth quarter and the company sees this trend continuing in the first quarter, Chief Financial Officer Scott Settersten said on a conference call with analysts.
Retailers faced the toughest holiday season since the 2008 financial crisis as U.S. consumers curtailed spending on concern about the “fiscal cliff” and the lingering effects of Superstorm Sandy. The sluggish sales forced companies to offer aggressive promotions to clear inventory.
However, Ulta, which also offers a full service hair salon at its stores, said it expects consumer demand to pick up in the rest of the year.
Net income rose to $64.5 million, or $1.00 per share, in the fourth quarter ended February 2, from $46.3 million, or 73 cents per share, a year earlier.
Revenue rose 30 percent to $758.8 million.
Analysts were expecting a profit of 98 cents per share on revenue of $752.3 million.
Reporting By Maria Ajit Thomas in Bangalore; Editing by Roshni Menon