Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA): A New CEO for This Growing Company

Sally Beauty is much more of a value play than Ulta. Sally Beauty’s gross profit margin in the second quarter was 49.5%. The company repurchased $191 million in stock. This repurchase completed its $300 million program and the company authorized a new $700 million repurchase program. On the balance sheet there’s $293 million in cash and no debt.

Regis Corporation (NYSE:RGS) is best known for its Supercuts franchise and the salons in Wal-Mart Stores, Inc. (NYSE:WMT). The company thou is a work in progress as service traffic at its location has been trending lower. The company has extended salon hours to help bring in traffic, but that has resulted in lower margins as expenses increased.

Going forward, Regis is a turnaround play. The problem is that the turnaround requires the work of lots of people. The company has over 10,000 locations. It takes the work of a great stylist to keep customers coming in. Let’s face it, not everyone can cut hair well. That’s the challenge that Regis is dealt. The company is making an effort to tackle this problem by beefing up its field organization to better execute in its salons. Management is working to make Regis into an efficient operation, but it will take time.

Foolish assessment

Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) has a compelling business model and is primed for further growth. New CEO Mary Dillon has a lot of experience in marketing and I see her continuing to grow the business. The stock remains volatile, but the long-term future for Ulta remains bright.

The article A New CEO for This Growing Company originally appeared on Fool.com and is written by Mark Yagalla.

Mark Yagalla has no position in any stocks mentioned. The Motley Fool recommends Ulta Salon, Cosmetics & Fragrance. The Motley Fool owns shares of Ulta Salon, Cosmetics & Fragrance. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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