A make-up darling
Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) Beauty stores look and feel just like LVMH Moet Hennessy Louis Vuitton SA(ADR) (OTCMKTS:LVMUY)’s Sephora stores. That’s a good sign, however, because Sephora is one of the best performing segments of LVMH and looks set to overtake the company’s iconic leather bags as the largest contributor to the top line.
Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) has 575 stores in 46 U.S. states. Sales have grown every year for the past decade, with earnings trending higher, too. Although earnings dipped slightly in 2009, they picked up again the next year and are now more than double their pre-recession levels. And its profit margin has more than doubled since the recession’s end, too.
Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) shares are trading near their all time highs and the P/E is a high 35 or so. More aggressive growth investors, however, might still be interested since growth has been solid so far and management believes that it has room to more than double the store count.
Clothing for men
Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) not only grew revenue right through the recession, but its bottom line also kept heading higher. That’s impressive for any retailer, let alone one that only sells clothing for men. In fact, profit margins were on a generally higher tract until last year, when they fell over four percentage points. That led to the first earnings decline in a decade, with the bottom line falling from $3.49 to $2.89 a share.
The shares have fallen from their all time high of around $55 reached at the end of 2011 to their recent price in the $40 range. Sales and earnings fell year over year in the April quarter, too, so performance hasn’t turned higher yet. Increasing costs for products and weak advertising results are what management attributes the weakness to.
Although that could be the sign of a mature business getting ready to slow down, The Men’s Wearhouse, Inc. (NYSE:MW) has over 1,200 stores compared to Jos. A. Bank Clothiers Inc (NASDAQ:JOSB)’s 600 or so stores. That suggests that Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) has plenty of room to expand. It could be a good time now for growth investors to pick up a historically strong grower at a bargain price: Its P/E is only about 16.
Growing without debt
Although not using debt is a conservative approach to running a business, it doesn’t mean that a company can’t grow quickly. Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA), Dick’s, and Jos. A Bank all prove this. The benefit of such a conservative balance sheet, of course, is safety in bad times. That’s well worth the slightly high price tags at Dick’s and Ulta. Jos. A. Bank Clothiers Inc (NASDAQ:JOSB), meanwhile, is working through some difficulties, but has plenty of time to figure things out.
Reuben Brewer 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. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article 3 Debt-Free Retail Companies With Top Line Growth originally appeared on Fool.com is written by Reuben Brewer.
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