Dive Brief:

• Ulta Beauty on Thursday said that first quarter net sales rose 17.4% to $1.5 billion from $1.3 billion a year ago as comparable sales rose 8.1% down from the 14.3% rise a year ago. E-commerce sales rose 48% to $154.4 million from $104.3 million in the year-ago quarter, contributing 340 basis points to the total 8.1% comparable sales rise.

• Retail comparable sales rose 4.7%, which include salon comparable sales growth of 3.2%, according to a company press release. Salon sales alone rose 10.1% to $75.7 million, up from $68.7 million a year ago.

• Operating income rose 11.4% to $209.8 million, or 13.6% of net sales, compared to $188.4 million or 14.3% of net sales a year ago.

Dive Insight:

Ulta's massive brick-and-mortar expansion may be taking a toll as same-store sales growth retreated in the quarter, and shares got hit late Wednesday.

Nevertheless, the expansion continues: The beauty retailer opened 34 stores and closed one in the quarter, ending with 1,107. But the company overall continues to post robust sales, bolstered by a revamped loyalty program, and new store productivity continues to be "very healthy," CEO Mary Dillon said, according to a transcript from Seeking Alpha.

Its Ultamate Rewards loyalty program has 28.6 million active members, up 17% year-over-year, executives told analysts Wednesday. "Results from the newer elements of our loyalty program, including the Elite Diamond Tier and our credit card program, continue to exceed our expectations, our gift card sales increased by 45% in the first quarter, driven by strong sales in all channels, including rapid growth through third-party distribution," Dillon said.

Dillon, while noting that the segment is very competitive, shrugged off concerns about department stores' redoubled dedication to the beauty segment. Macy's, for one, having already established a foothold with its stand-alone Bluemercury stores and launching a subscription Beauty Box, is now turning its attention to flagship stores, with beauty advisors who advise across all brands and categories, as Ulta and Sephora do.

"[W]e're not perfect and we're not complacent, but a relevant model," Dillon said. "We focus on a segment of shopper that we call the beauty enthusiasts, and that shopper is a large and growing segment of beauty. And she is really focused on exactly what we offer, which is, a lot of newness and excitement and experiences and like to shop in the way that we serve out the shopping experience."

Dillon noted that Ulta's customer base includes key demographics like millennials, teenagers and Hispanics, and said Ulta's model " ... is actually more relevant than ever for them, and our job is to really continue to innovate, think about what the shopping experience needs to look like 10 years from now versus today," she said.