Brian Tunick – JP Morgan Neely Tamminga – Piper Jaffray Lizabeth Dunn – Thomas Weisel Partners Erika Maschmeyer – Robert W. Baird & Co., Inc. Samantha Panella – Raymond James Daniel Hofkin – William Blair & Co. Jillian Caruthers – Johnson Rice & Company [Henry Compellin] – Oppenheimer & Co. [Anthony Lebosinski] – Sidoti & Company

Before we get started I’d like to remind you of the company’s Safe Harbor language which I’m sure you are all familiar with. The statements that are contained in this conference call which are not historical facts may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual or future results may differ materially from those projected in such statements due to a number of risks and uncertainties all of which are described in the company’s filings with the SEC. We will make references during this call to the metric free cash flow, a non-GAAP financial measure. Free cash flow is defined as net cash provided by operating activities less purchases of property and equipment. A reconciliation of free cash flow to US GAAP equivalent has been provided in exhibit five of our earnings release which is also available on our website and has been filed with the SEC on Form 8K. Now, I’d like to turn the call over to Ulta’s President and CEO Lyn Kirby.

Thank you for joining us to discuss our second quarter fiscal 2009 results. On the call with me today is our Chief Financial Officer Gregg Bodnar. Following my opening remarks, Gregg will review our second quarter financial highlight and outlook. Then, I will provide some closing comments and turn the turn over to the operator so that we can answer the questions that you have for us today. We are pleased to deliver second quarter sales and earnings that exceeded our expectations reflecting a sequential improvement in comp store sales and earnings performance as compared to the first quarter. For the second quarter net sales increased 9.8% to $273.5 million. Comp store sales declined 1.7% slightly exceeding our guidance and following a 3.7% increase last year. So, on a two year basis comp store sales are up 2%. Comp customer traffic increased 2.2% and earnings per diluted share increased to $0.10 as compared to $0.06 last year. The economic environment stabilized somewhat in the second quarter and while our performance given the environment was good we are certainly not satisfied and we would expect to deliver strong results in a more robust economy. That said, we attribute our strength in this difficult consumer spending environment to the successful execution of the key strategies we outlined at the beginning of the year which included the development of exciting new customer propositions to entice consumers to make a trip to Ulta, the introduction of new brands and products, a reduction in expenses that will permanently impact our cost structure and cash flow management strategies including our planned reduction in stores. During the quarter we successfully reached existing and new customers and drove a 2.2% increase in comp store traffic through exciting events such as our back to school hair care leader sale,…

Our second quarter results were driven by better than expected sales performance due to the successful execution of our marketing and new brand introduction strategies combined with our continued focus on expense management and cash flow initiatives. Improved retail sales performance as compared to the first quarter and prudent expense management together have enabled us to exceed our second quarter targets in a challenging consumer environment resulting in earnings above our guidance range. Now, beginning with a review of the income statement, net sales increased 9.8% to $273.5 million from $249.1 million in the second quarter last year. Sales growth was driven by the addition of 50 new stores since the second quarter last year. Comp store sales decreased 1.7% which follows an increase of 3.7% last year resulting in a two year comp store sales gain of 2%. Comparable store sales included a 2.2% increase in comp store traffic offset by a 3.9% decline in average ticket. Our customer shopping trends remain consistent with what we saw in the first quarter. She is visiting our store more frequently but spending less per visit as she cut back on more discretionary items. During the second quarter we opened 13 new stores ending the second quarter with 333 stores and expanding square footage by 18% from last year’s second quarter. We continue to be pleased with the early performance of our 2009 class of new stores. Gross profit dollars in the second quarter increased 7.3% to $78.5 million from $73.1 million last year. Gross profit margin was 28.7% a decline of 70 basis points to last year. This decline was primarily driven by 130 basis points of fixed store deleverage resulting primarily from our new store program. The fixed store deleverage is net of 30 basis points of temporary rent relief…

In summary, we are pleased with our second quarter results although we still believe that in a better economy our results would be stronger, we are optimistic regarding our optimistic regarding our opportunities to drive market share gain, solid profitability and free cash flow during the second half of 2009. Longer term we expect the strategies and programs we are implementing this year as well as the significant opportunities we see for expansion in our store base and brands to enable us to increase our long term profitability. We continue to believe we are doing well navigating this difficult economy while simultaneously positioning our company for stronger performance when the economy improves. Now, I’d like to turn the call back over to the operator to begin the question and answer portion of the call.

(Operator Instructions) Your first question comes from Brian Tunick – JP Morgan. Brian Tunick – JP Morgan: I guess a question for each of you, Lyn maybe talk about I know fragrance was a weak category last holiday, can you talk about are there any big fragrance launches that you see happening in Q4 of this year and have you changed your marketing or gift with purchase plans given what you think or see the department stores starting to do? Then maybe Gregg, can you talk about the number of leases you’ve already signed for next year and what are the lead times to be able to sign and be able to open a store so we can just get some idea if 45 or 55 or 60 could be the number of new stores next year.

Let me take the first part first, as it leads to the fragrance business we do have some exciting new fragrances for fourth quarter. We expect to be anniversarying the newness from last year as well as the continued flow through of some really exciting fragrances from third quarter this year going in to fourth quarter. So, we feel great about the newness availability. On the gift with purchase strategy we continue to see traction with that strategy for our customers. We continue to develop fresh new exciting gifts with purchases to continue to stay motivational to our customer base and have appropriately planned that in our fourth quarter.

Brian, on real estate we continue to see lots of opportunities that keep coming to us as we continue to diligently review those through the process and as you would expect we’re being certainly much more careful as we go through and evaluate each one of these. As we typically think of it in terms of the number of deals that we have approved at this point in time, we have about 26 deals approved at this point in time, we have a significant number that we’re going through as we speak and we also have a meaningful number that the deal makers are continuing to work on to get those ready to present to us. As far as the lead time goes, we usually have until early part of next year to get something finished and documented to still get it open in 2010. Brian Tunick – JP Morgan: If I could just ask Lyn, do you see the department stores being at all any more rational as we’ve come in to the back half?

When you say rational are we talking about the beauty business, the apparel business, just what aspect are we talking about? Brian Tunick – JP Morgan: More about the beauty and fragrance business.

As you may recall we did see some discounting in fourth quarter around the holiday season last year from department stores, the first time we had ever seen that as well as some specialty competitors. We continue to see that run through first quarter but it has absolutely diminished in second quarter. I’m not sure if that’s your definition of rationality but we have certainly seen less of that straight across the board discounting Brian.

Your next question comes from Neely Tamminga – Piper Jaffray. Neely Tamminga – Piper Jaffray: Just two questions, actually one real question and then a housekeeping one. The in store boutique strategy I think is a big picture longer term strategy for Ulta. If you go way back to the road show from the IPO to where you are today and where you will be for the next couple of years it’s not just about the stores you are growing it’s the productivity improvement within those stores. So, I was just wondering can we take just a moment to kind of review where you guys are maybe this year versus last year in terms of how you look at the store base ranging from the one brand in store boutique to in some cases up to four in store brand boutiques, how you’re sizing up the store that way. Then, maybe next year, if you’re willing, what that might look like in to the cap ex plan, etc. next year. Then, if I can get it upfront, just the housekeeping questions, Gregg so that I understand your bonus accrual practices that you were indicating for Q3 was that for just Q3’s performance or is that actually the full back half?

I’ll take the second one first Neely, as you remember last year this is the point in time where the economy really feel apart, the consumer went in to paralyze. At that particular point in time we would have adjusted our bonus expense last year reflecting where we thought we would have finished the year. Neely Tamminga – Piper Jaffray: So it covers the full back half.

Neely, on the boutiques middle of the year last year we had rough and tough about 130 doors with boutiques. At the same time this year we’ve got about 190 or so doors with one boutique and we’ve got roughly bout 80 stores with two boutiques and that of course is primarily the combination of Benefit and Bare by in large. We’ve got a very small handful of stores, some of our larger stores maybe roughly around 10 or so with multiple boutiques, so with three or four boutiques. As we look forward to next year we certainly will continue to roll benefits across the majority of our chain with that boutique strategy. Depending on the availability of other prestige brands, we certainly have a gain plan developed on how we would do multiple boutiques and more stores if that opportunity was available to us.

Your next question comes from Lizabeth Dunn – Thomas Weisel Partners. Lizabeth Dunn – Thomas Weisel Partners: I was wondering if you could update us on competition? We’ve seen from the drug store competitors some real interest in prestige as a category. How are you thinking about those? Also, competition from the Sephora inside JC Pennys?

In terms of the drug stores let me just to go the heart of the drug store competition right now which is on the [mass] business. We continue to see ourselves remaining extremely competitive on [mass] business and we are watching with interest some tests that Walgreens has been particularly public on as they reduce selection in their drug stores. So, at the very heart of our competition there we continue to watch that very closely. As it relates to a couple of tests that are going on in terms of expansion in to prestige from the drug stores, we are going to watch it very closely as I am sure you are. It’s at a very modest number at this point, extremely modest and I am not seeing too much indication that there’s going to be a rapid expansion. As I take a look at the brand selection that the drug stores have in those test stores, it is more the what I would call specialty brand selection and not at all department store brands at this point. Again, we will of course watch that very closely but we’re not seeing it as a significant threat at this point in time given the magnitude of what that test is. Sephore inside of JC Pennys we of course watch very carefully and continue to keep our eye on that. As you would know if you’ve done, as I’m sure you have checked, the selection of brand availability of the Sephore inside of JC Pennys is not consistent with what they have in their free standing stores. So, we certainly watch it, we’re obviously very familiar with JC Pennys real estate expansion strategy so that one we watch extremely closely but right now it is a different brand selection in those stores.

Your next question comes from Erika Maschmeyer – Robert W. Baird & Co., Inc. Erika Maschmeyer – Robert W. Baird & Co., Inc.: I’m wondering if you can comment on comp trends quarter to date and also maybe comment on whether you’re still seeing prestige brands above the company average?

In terms of the prestige brands, prestige as I think we’ve mentioned before, still remains one of our highest growth categories and continues to remain that both as we expand brand selection as well as penetration with the customer base so that does remain an above average trend for us. In terms of the quarter to date trend, we are not going to speak quarter to date but we are certainly very happy with our business quarter to date but we really feel that it is appropriate for us to pull back from offering quarter to date trends on these calls. What I would suggest is what’s very indicative of how we feel our business is, is to take a look at the guidance range that Gregg gave and they certainly indicate a positive shift in the comp numbers versus the prior quarters guidance and that is the best indication of how we feel about the business quarter to date. Gregg would you have anything to add?

Erika if you look back over the last couple of quarters we tried to provide that information to give folks some further insights to the trends. We’ve seen two quarters of consistent trends. We’ve seen stabilization in our business and we’ve seen some slight quarter-to-quarter improvement and that’s reflected in the comp guidance we’ve provided for the third quarter. Erika Maschmeyer – Robert W. Baird & Co., Inc.: If you could just comment on your private brands, you sounded optimistic on them and it sounds like you’re adding additional categories. Are you increasing penetration there or is that still around 5% of your revenue?

Right now the 5% is a good number to be using but it continues to be a strategy for us longer term to continue to add to that and you can hear some of the additions that we have been making. But, given the growth factor of some of the other big categories in the business, the penetration is harder to shift than the actual growth rate so you know that math. Private label in the short term for us continues to be a great lever for us to pull to be driving profitable traffic to our store. It is part of our ongoing strategy to use that category to drive both traffic and unit penetration on the business.

The next question comes from Samantha Panella – Raymond James. Samantha Panella – Raymond James: Just to follow up on the comp guidance, looking at even the high end of your guidance it does appear that the two year trend would worsen from the second quarter, any reason to think that other than being conservative?

What I would say Sam is that we continue to evaluate the trends on our business. I think in this particular environment particularly given what we’re recycling the start of the volatility from last year, we believe it’s more relevant to look at the current year trends and to the stabilization that we’ve experienced there. We recognize that we’re jogging over slightly lower comps than last year but the comp guidance is reflective of what the current trends are which I think what is more relevant to look at as we go throughout the course of this year up until the fourth quarter. Samantha Panella – Raymond James: Then with respect to the temporary rent relief how many stores did you receive that and how long should that last?

It’s about a dozen and about half of those have been cured or are about to be cured so it will have a small impact on the third quarter.

Your next question comes from Daniel Hofkin – William Blair & Co. Daniel Hofkin – William Blair & Co.: A question about the launch of Benefit, obviously that must have been very successful so far. I’m just curious if you could maybe help quantify a little bit what type of a lift you think that you saw that came out around mid quarter as I recall or at least it started to. I’m just curious what sort of a lift you might have seen and I know you guys did not do incremental marketing year-to-year. Then I guess the second question would be looking at the free cash flow performance in the second quarter and your new full year expectation, what’s the main one or two sources of upset there?

I’ll take the first part, we’re not going to comment on an individual brand in terms of numbers or specific growth rates but we are certainly pleased with the Benefit launch so let me say that first of all. But secondly, I would remind you that we also continue to see really good strength in the core and existing business so in the quarter we did for example have a back to school leader event around our professional hair care lines. We had a very exciting private label event which was a buy two get two free which led in to some other brands and we have some of our existing brands like Bare Essentials where we offered a $15 discovery kit. We are pleased with Benefit but there is much more to our business than just an individual brand and new products. One of the great strengths we have of the business is multiple levers to pull depending on the trends of the business, the environment we see and it is one of our core competitive advantages.

Dan, on the improvement in free cash flow, I think as we’ve mentioned the last couple of calls we have a number of initiatives that we’ve been working on that have materialized. Kind of in priority order versus our last guidance on free cash flow, the drivers are rally improvement in net inventory, you’ve seen we moved down in this particular case our improvement versus last year on a per store basis from five to seven to nine. We’ve also seen some benefits in net inventory over and above the gross reduction. Tax planning is another key driver that’s going to benefit us both it did in the second quarter and the rest of the year. Earnings improvement versus our prior expectations as we’ve experienced in the second quarter and are now guiding to in the third quarter and then the last is really just fundamental working capital management and account receivables. Those are the four drivers.

Your next question comes from Jillian Caruthers – Johnson Rice & Company. Jillian Caruthers – Johnson Rice & Company: Could you talk about for the third quarter you’re looking for gross margin pressure of 20 to 30 basis points, can you talk about what’s driving that given you’re not expecting as much rent relief and what not?

If you look at it versus the second quarter, and we’ve talked about this before, part of the pressure we get on gross margin is deleverage from our new store program and the fixed store expenses. As we have slowed down our square footage growth this year we’re starting to diminish that amount. So, in the third quarter I’m expecting about 100 basis points of deleverage. We expect to see about 50 basis points of benefit from our supply chain initiatives and then the rest of it is improvement in merchandise margin. Jillian Caruthers – Johnson Rice & Company: If you could talk a little bit about inventory per store was down more than expected. You lowered your yearend targets. You quoted specific initiatives and places, could you add a little more detail around that?

A couple of things that we’ve been focused on, and this isn’t necessarily in priority order, we expanded our distribution network over a year ago now. We knew there was a greater opportunity to take the safety stock levels down and move inventory through our DCs faster. Along with our supply chain efficiency progress, we’ve made a lot more progress on managing distribution center inventory levels, so not in front of the customer. We’re very comfortable with the safety stock and lead times and the team continues to fine tune those to get some working capital benefit out of the company. The other benefit is really as we continue to fine tune the inventory levels that we put in to our newer stores from a safety stock level, the assortment is the same but we’ve fine tuned the amount of inventory or depth per SKU that we’ve put in versus a mature store and we’re continuing to make better progress on that initiative versus what we expect. So, no impact on consumer experience and in fact, a slight benefit to in stock levels because we can move inventory through our DCs faster.

Your next question comes from [Henry Compellin] – Oppenheimer & Co. [Henry Compellin] – Oppenheimer & Co.: Just had a question about the sequential improvement in same store sales, I wanted to know if that was also occurring in the salon business or was that disproportionately weaker than the sequential improvement in same store sales?

The answer is that the improvement was entirely from the retail business from first quarter to second quarter and by in large the salon business has basically remained stable in its negative trend. [Henry Compellin] – Oppenheimer & Co.: In terms of the average ticket decline, you said that that was 3.9% in the quarter. I wanted to know if you could just talk about some consumer trade down? I think previously you’d highlighted mineral based cosmetics as a particular category, I wanted to see if that was still the case?

Yes, that continues to be one of the factors that we see in terms of the average ticket decline. The other factors are also the fragrance category still remains the most discretionary category and therefore our sales are still lower than prior year although we are significantly out pacing the industry and taking market share in that category. The other category that has certainly been hurt by this economy is our high priced styling tools products, products that are north of $100 in terms of their price. So, that continues to run through the average ticket.

Your next question comes from [Anthony Lebosinski] – Sidoti & Company. [Anthony Lebosinski] – Sidoti & Company: I was wondering if you could talk about the expense savings that you’re now guiding to of $18 million versus $15 million, where is the additional $3 million coming from?

Two thirds of the improvement is coming out of our supply chain Anthony and the rest is coming out of our core store expense management strategies. [Anthony Lebosinski] – Sidoti & Company: As far as your real estate is concerned over here, could you talk about just sort of next year the openings that you’re looking to do are they mostly back fills or new markets? And also, has there been any change to the length of your lease terms?

In terms of the first part of your question, there’s very little change in the composition of the real estate program that we are expecting. The new to existing market ratio is about the same although you may have heard us stay before we’ve had a very slight uptick in the number of stores that we are opening in single store markets so there’s a very modest uptick. We have had a modest uptick certainly in the last six months between new and existing centers and we have seen a little bit of an uptick in existing centers since the impact to the economy but not a significant uptick from first quarter to second quarter.

Anthony, as we head in to next year, as we talked about, the opportunity really is in existing centers because by the time we get to next year, any of the pipeline that was built for new centers will have been opened so we don’t expect a big mix of our portfolio, unlike the balance in past years, to be in new centers. As it relates to the lease term, we still continue to have a similar structure than what we’ve done in the past. We typically do a 10 year initial lease term and multiples of two or three five year options that are our options for extensions.

There are no further questions in the queue. I would like to turn the call back over to Lyn Kirby for closing remarks.

Thanks again for joining us today, we look forward to speaking to you on our third quarter call in December.

This concludes the teleconference you may disconnect your lines. Thank you for your participation.