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Illinois-based Ulta Salon, Cosmetics & Fragrance Inc. (ULTA">ULTA) recently announced strong holiday sales for the seven-week period starting from November 13, buoyed by which it also lifted its outlook for the fourth quarter of 2011.

Net sales for the holiday period soared 24.4% year over year to $386.0 million driven by a rise in comparable store sales, which escalated 12.6% from 9.5% reported in the same prior-year period. Over a two-year holiday period, comparable store sales surged 22.1%.

The beauty retailer benefited from continued demand across all its categories.

Ulta, the largest beauty retailer that provides a one-stop shop for prestige, mass and salon products and services in the U.S., continues to introduce exciting merchandising and marketing plans as well as new product offerings across all categories to attract customers. In fact, the momentum will continue beyond the holidays, with Ulta’s skincare event in January.

Ulta Salon which currently operates 449 retail stores across 43 states raised its earnings per share (EPS) outlook for the fourth quarter to 67 cents to 68 cents from the previous range of 62 cents to 64 cents and prior year quarter earnings of 49 cents, as the holiday sales remained remarkable.

The company also raised its sales expectations for the quarter to $574 million-$579 million from $552 million-$562 million as well as comparable store sales growth to 10-11% from 6-8%.

Ulta, which sells cosmetics, fragrance, haircare and other beauty products, is witnessing strong performance and expects to close the current year on a high. For 2011, the company projects EPS in the range of $1.84-$1.85, implying a year-over-year growth of approximately 59%.

Encouraged by the news, the company’s share price rose $3.19 to close at $69.56 on Thursday.

In the recently concluded third quarter 2011, Ulta Salon reported earnings of 42 cents per share, which surpassed the Zacks Consensus Estimate of 38 cents. Quarterly earnings almost doubled from the year-ago level of 23 cents a share and also beat management’s guided range of 36 cents-38 cents. The better-than-expected results were attributable to double-digit growth in the top line resulting from robust guest count as well as a rise in average ticket price.

The Zacks Consensus Estimates for fiscal 2011 and 2012 are pegged at $1.81 and $2.27, respectively. We expect estimates to go up in the coming days as the company has raised its outlook.

Ulta, which competes with Regis Corp. (RGS">RGS) and Sally Beauty Holdings Inc. (SBH">SBH), expects to report fourth quarter 2011 results on March 5, 2012.

Ulta currently retains a Zacks #2 Rank, implying a short-term Buy rating on the stock. Our long-term recommendation for the stock remains Outperform.

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