Ulta Salon sets its IPO terms

Ulta Salon, Cosmetics & Fragrance Inc. has set the terms of its initial public offering.

Ulta, which filed for an initial public offering in July, expects to sell 8.5 million shares at $14 to $16 per share. At the high end the IPO could raise as much as $136 million in new working capital for Ulta, which will use some of the money to expand its e-commerce channel. JPMorgan Chase & Co. and Wachovia Corp. are the lead underwriters on the deal.

Through the first six months of the year Ulta posted net income of $7.5 million on sales of $394 million compared with net income $9.2 million on sales of $322 million for January through June 2006. Net income declined as a result of $3 million of planned accelerated depreciation and the installation of a new warehouse management system, the company says.

Ulta says it will do an extensive redesign of Ulta.com and launch a newly updated site by June 2008. Ulta, which operates 207 stores in 26 states, will relaunch Ulta.com with expanded features and functions, easier navigation and an enhanced online loyalty program.