Allison Malkin – Integrated Corporate Relations Lyn P. Kirby – President, Chief Executive Officer & Director Gregg R. Bodnar – Chief Financial Officer & Assistant Corporate Secretary

Lyn Walther – Wachovia Capital Markets, LLC Lizabeth Dunn – Thomas Weisel Partners Evren Kopelman - JP Morgan [Erin Murphy] – Piper Jaffray J. David Cumberland – Robert W. Baird & Co.

Greetings ladies and gentlemen and welcome to the Ulta Salon, Cosmetics & Fragrance, Inc. first quarter fiscal 2008 results conference call. At this time all participants are in a listen only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Allison Malkin of Integrated Corporate Relations.

Good afternoon. Before we get started I’d like to remind you of the company’s Safe Harbor language which I’m sure you’re all familiar with. The statements 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 future results might 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. With respect to each reference we make on this call to adjusted net income per diluted share as a result of the IPO a reconciliation of net income per share on a GAAP basis to adjusted net income per share has been provided in Exhibit Three of our earnings release which is available on our website and has been filed with the SEC on Form 8-K. And now I’d like to turn the call over to Ulta’s President and CEO, Lyn Kirby. Lyn P. Kirby: Good afternoon everyone. Thank you for joining us to discuss our first quarter fiscal 2008 results. On the call with me today is our Chief Financial Officer, Gregg Bodnar. Following my opening remarks Gregg will review our financial highlights and then I will provide closing comments and turn the call over to the Operator so that we can answer the questions you have for us today. We began the year solidly continuing our positive momentum from fourth quarter with first quarter earnings results excluding severance at the high end of our guidance range. We attribute our ongoing strength in a tough economy to our consistency in providing consumers with an approachable and enjoyable store experience as well as motivational marketing and a strong value proposition. Consumers are responding favorably resulting in increased customer traffic and positive comp sales growth. In total the quarter included net sales of $239.3 million increasing 23.3% from last year and diluted earnings per share of $0.08 excluding a severance charge of $0.01 and including incremental costs of $0.03 per share related to pre-opening expense and an added marketing event. This compares to $0.10 per diluted share last year. During the quarter we achieved balanced sales with both new and existing brands contributing to our comp sales growth and a continuation in strength of Prestige color and skin care which as you know is a key growth opportunity for us. The Prestige category continued its positive performance posting significant sales gains in the quarter. In addition we are also pleased with the strength in salon which is benefiting from increased traffic and from strategies in place to maximize productivity. And finally we are pleased with the addition of new brands. During the quarter we added several new brands including La Roche, Pureology, Oscar Blandi and Warren Tricome. We also continue to test prospective brands consistent with our strategy of having one new brand test and one roll out every six months. First quarter delivered a 3.9% increase in comparable store sales driven equally by traffic and average dollar sales. We were pleased with this result especially given that it follows a 9.2% increase last year and that we continue to execute our balanced long term real estate strategy including opening 30 stores in existing markets and 33 in new markets over the last 12 months. Regarding our store expansion we opened a record number of first quarter stores with 17 new stores and one remodel completed in the quarter. We continue to be pleased with the performance of our new stores which continued to deliver on our new store model. Our openings were also well balanced, two were in major metro markets, six in medium sized markets and nine opened in smaller markets. We entered 12 new markets and ended the quarter with 265 stores in 32 states. Some of you may recall that we originally targeted 14 new stores during the first quarter. However we had the opportunity to open three stores just ahead of schedule resulting in them opening in the last week of the first quarter rather than the first weeks in the second quarter. While the sales impacts were not significant to the quarter we are pleased to be slightly ahead of our annual opening schedule as we begin the second quarter and remain on track to attain our goal of 63 new stores and eight remodels for the year. We successfully opened and are operating our second DC. We opened our second distribution center in Phoenix in April on time and on budget. We were distributing to 24 stores from this location as of quarter end and we expect to be shipping to over 100 stores entering the fourth quarter 2008. Regarding e-commerce we continue to improve the functionality of our site. During the quarter we added 4,000 products and three new micro-sites, Smashbox, Bare Escentuals and Stila to the www.Ulta.com site. We believe we are well positioned to optimize this site during the remainder of the year. As we begin the second quarter we recognize that the retail environment remains tough. We are nonetheless optimistic about our ability to deliver the year and would point to four core drivers of this expectation. First, our sales have continued positively and we enjoyed a strong Mother’s Day holiday even against heightened promotional activity from other retailers demonstrating the increased preference for our Ulta shopping experience. Second, we have opened nine new stores so far in the second quarter, they are performing to our store model and we remain on track to open 63 stores and expand square footage by 25% this year. Third, our sales growth is balanced across new and existing brand categories and salon. We will continue to add new brands while maximizing our current opportunities. We are also encouraged by our strategies to increase salon productivity going forward. And fourth, in this tough economy our marketing machine remains flexible enough to respond to trends and our strategies to provide motivation and value will continue to drive traffic and sales always of course with a balanced item margin. So with that I’d like now to turn the call over to Gregg to review our results and guidance in more detail. Gregg R. Bodnar: As Lyn mentioned we are pleased with our start to the year. For the first quarter double digit sales growth and gross margin expansion enabled us to achieve earnings at the high end of our guidance we provided which excluded severance costs that totaled $0.01 per share. Beginning with a review of the income statement net sales increased 23.3% to $239.3 million from $194.1 million in the first quarter last year. Sales growth was driven by a 3.9% increase in comp store sales which followed a 9.2% increase in comp store sales last year resulting in a two year comp store sales gain of 13.1%. Higher average ticket led by continued expansion of our Prestige brand assortment and customer traffic drove the comparable store sales growth. We continue to achieve a good balance between average ticket and positive traffic through the successful execution of our marketing strategy and overall consumer proposition. The additional marketing event in the quarter that we referred to in the last call was successful and helped drive additional traffic over and above already positive traffic results. We opened 17 stores ahead of our commitment of 14 stores as we continue to focus on balancing our new store program through the first three quarters of the year. We also closed one location and remodeled one store in the first quarter. We ended the first quarter with 265 stores which represents a 31% square footage increase from last year. Gross profit in the first quarter was $73.9 million or 30.9% of net sales as compared to $59.5 million or 30.7% of net sales last year. Gross profit margin increased by 20 basis points due to a 40 basis point increase in advertising allowances offset partially by a slight de-leverage of fixed store operating costs in line with our expectations. As you may recall advertising allowances partially offset our advertising expense which is included in SG&A. We also successfully opened our second distribution center with operating costs in line with our expectations. SG&A expenses were $62.1 million or 25.9% of net sales compared to $48 million or 24.7% of net sales in the prior year. Excluding severance costs SG&A was 25.6% of net sales reflecting incremental costs of $1.1 million related to the additional marketing event and an additional $0.4 million in stock compensation expense compared to the prior year quarter. Re-opening expenses were $3.8 million or 1.5% of net sales compared to $1.7 million or 0.9% of net sales reflecting the opening of 17 new stores and one remodel during the quarter as compared to seven new stores and three remodels in the first quarter last year. As a result operating income totaled $8.1 million or 3.4% of net sales versus $9.9 million or 5.1% of net sales in the prior year. Interest expense decreased to $0.9 million from $1 million in the first quarter last year reflecting lower interest rates from the same period last year. The effective tax rate for the quarter was 40.3% compared to 40.1% in the prior year. The resulting net income was $4.3 million as compared to $5.3 million last year. On a GAAP basis income per diluted share was $0.07 or $0.08 excluding the severance charge versus $0.10 in the first quarter last year. EPS this year includes $0.01 per share in severance costs for the previously announced management change. Adjusted income per diluted share was $0.08 which excludes severance and compares to adjusted income per diluted share of $0.09 in the first quarter of last year. Merchandise inventories at the end of the quarter increased 39.7% to $212.6 million compared to $152.9 million last year. Of the $59.7 million total increase approximately $44.7 million came from the addition of 62 new stores opened in the past year. $6 million for 12 of the 18 stores that are planned to open in the second quarter and $9 million related to bringing in inventory for our new distribution center. On a per door basis excluding the additional planned distribution center inventory average inventory per store was flat to last year which is consistent with our expectations. We are pleased with both the level and composition of inventories we began the second quarter. Capital expenditures for the quarter totaled $30.5 million. Regarding our outlook, we are introducing guidance for the second quarter and reiterating our full year fiscal 2008 guidance based on current business trends and the current retail and economic environment. For the second quarter of fiscal 2007 we currently expect net sales in the range of $248 million to $252 million compared to actual second quarter fiscal 2007 sales of $200.4 million. Comp store sales are expected to increase in the range of 3% to 5% compared to a 6.5% increase last year. Income per diluted share is estimated in the range of $0.04 to $0.05 which is impacted by expected additional pre-opening costs of $2.1 million or $0.02 per diluted share due to the increased number of new stores opening in the quarter as compared to the prior year. We plan to open approximately 18 stores and remodel five stores during the second quarter of fiscal 2008. in the second quarter of fiscal 2007 we opened eight new stores and remodeled four. For the full year fiscal 2008 we continue to estimate net sales in the range of $1.12 billion to $1.4 billion as compared to $912.1 million in fiscal 2007. Comp store sales are expected to increase by 3% to 5%. Income per diluted share is forecasted in the range of $0.52 to $0.57. We remain on track to open approximately 63 new stores and remodel eight stores in fiscal 2008. Capital expenditures are expected to be in the range of $115 million to $120 million. As a reminder our full year guidance does not include the $0.01 per share severance cost for the previously announced management change. As a reminder our long term annual growth targets which are unchanged include comp store sales increases in the range of 3% to 5%, square footage expansion in the 20% to 25% range and net income growth in the 25% to 30% range. And now I’d like to turn the call back over to Lyn. Lyn P. Kirby: In summary we continue to provide great value and 21,000 products all under one roof because that’s our business and we continue to provide an approachable experience that makes women feel confident and beautiful because that’s our passion. We are pleased with our start to the year and equally excited by the many opportunities that lie ahead. With our resources, talent and infrastructure we believe we are well positioned to attain our goals while advancing value for all of our stakeholders even in a tough environment. Our marketing machine is flexible enough to respond to sales trends, our team is disciplined to balance both sales and margin, our inventory position is healthy, our new stores are on time and on track with our sales expectations and we have a strong balance sheet to support our growth. So with that I would like to turn the call over to the Operator to being the Q&A portion of the call.

(Operator Instructions) Our first question comes from Lyn Walther – Wachovia Capital Markets, LLC. Lyn Walther – Wachovia Capital Markets, LLC: A couple questions for you, just a little bit more color on the comp, the older stores versus the newer ones, are you still seeing the new stores perform to the model that we’ve talked about the first few years really ramping up or is this moderating given the environment out there? Gregg R. Bodnar: Actually the new store model, first year model and the ramp for the next couple years of the model is performing consistent with our expectations and consistent with the model we published. We are not seeing a macro impact on the ramp from stores that are opened in the last couple years. Lyn Walther – Wachovia Capital Markets, LLC: Given the environment and all the pressures on the consumer what changes have you made to get her into the store? I know in Q1 you talked about adding additional marketing vehicle. What do you have planned go forward and then once she’s in the store, what are you doing to try and convert her? Is it getting more difficult? Lyn P. Kirby: Let me that the first part first, Lyn. First of all we do believe that we continue to have the momentum of that macro shift to our brand experience away from other channels of distribution so we always have that wind at our back. But specifically for first quarter as we have done with all other quarters and will for the quarters ahead we take a look at our marketing calendar at the beginning of the quarter, we shuffle it around where we believe it’s appropriate either relative to a trend that we’re seeing in the market or relative to some learning experience that we’ve had in prior year or the prior quarter. Then of course what we do is spend a lot of time coming up with some creative consumer propositions that are very motivational to drive her into the store and obviously offering a great value proposition and last but not least, we continue to search for newness into the store. And newness is not necessarily big brand newness although we are happy to do that at an appropriate rate, but just newsworthy new products, new line extensions that provide that E for entertainment for her as she comes into the store. It is really a business as usual approach for us just tweaked specifically to the most recent learning. Once she’s in the store again it is really again for us what we have been doing for a while. As I think you know it’s not a new startup company in early stages of maturity. We’re eight years into this journey and our store execution is excellent around the execution of both the marketing calendar as well as the execution of some of our newer strategies such as the events in the store around boutiques and just the great customer service in stores. It sounds a little like business as usual but that in fact is what it is. But the biggest different I think is just the continued search for creative motivating consumer propositions that get her up out of the chair. Lyn Walther – Wachovia Capital Markets, LLC: One just for Gregg, how should we be thinking about inventory at the end of Q3 given you’ll probably be stating some more for the DC as you ramp that up? Gregg R. Bodnar: The initial $9 million of incremental inventory that we put in at the end of the first quarter to open that DC was really just a transition of those new stores. So as we flow into the end of the second quarter including total DC inventory we expect it to be in line with our comp store sales growth.

Our next question comes from Lizabeth Dunn – Thomas Weisel Partners. Lizabeth Dunn – Thomas Weisel Partners: My first question is really to the distribution center, did I understand correctly that it didn’t have an impact on the gross margin in the quarter? And if not, are we not to expect one going forward? And then my second question relates to the salon business, you noted that it’s making progress. Can you provide any color on the best performing salons versus the worst performing salons, what sort of volume they’re doing and what strategies are in place that are driving that improvement? Gregg R. Bodnar: Liz, I’ll take the DC question and then I’ll take sort of part two of the salon question and I’ll let Lyn talk about strategy on the salon business. Distribution center startup this quarter was management of those costs in the startup was well within our expectations. You may remember last year this time we actually did have some incremental costs in our distribution center to do the conversion for the software for our first DC that allowed us to open the second DC. So we are actually comping that if you will in the first quarter this year compared to last year which is one of the reasons why you didn’t see a significant increase. But those costs were well managed within our expectations. On the going forward basis as we compare to prior year same quarters we still do expect to see about 20 to 30 basis points full year effect on gross margins as a result of the incremental fixed costs for the full year for the second DC. Lizabeth Dunn – Thomas Weisel Partners: At what point will we start to see leverage on that second DC? Gregg R. Bodnar: It starts to leverage next year. Because think about, we’re actually adding 63 new stores this year. Our existing facility last year was servicing 250 stores. So we’ll start to leverage from the startup phase this year, next year. And then as it relates to just the volume breaks on the salon we actually don’t break out the salon business separate and we really don’t comment on individual store salon performance, but I will let Lyn talk about the individual salon strategies that we use to macro level. Lyn P. Kirby: In terms of the strategy on the business there are a couple of components to it. The first is simply a continued drive for high quality headcount. Without the great stylists in the store we can’t drive our sales but then in addition to that we continue to focus on ways to improve the productivity so we have invested money in training in terms of different ways to drive that productivity and we continue to invest in more technical training that will continue to improve their ability in terms of their skill to deliver great service for our customer which benefits certainly the customer and the experience but also will continue to derive the retention of our stylists. Continued education and training for them is a critical piece of what drives their loyalty and their commitment to the company they’re working for. So that’s at the heart of the strategy that we have been working on for the last few years and it continues to deliver very nicely.

Our next question comes from Brian Tunick – JP Morgan. Evren Kopelman - JP Morgan: First question is on real estate, at the ICSC conference a few weeks ago we were hearing that it’s getting more difficult to finance and lease new development projects. Can you talk a little bit about what you’re seeing and if that concerns you regarding your square footage growth plans especially in some of the newer centers? Lyn P. Kirby: It’s pretty much a continuation of what we have been saying. When you take a look at that 2008 program there is nothing that will get in the way of us delivering our commitments for 2008. As we take a look at 2009 we’ve seen a little bit of slowing down at some anchors, larger anchors making commitments to the development community but programs in developments that had started earlier are going to be finished in 2009 so we’re not seeing lots of programs that there was already sign ups and commitments to. But we certainly heard at ICSC a little bit more of a slow down in the beginning of new programs and new projects. But the flip side of that as we have been saying for a while is that we do believe that there will be existing real estate that opens up on the flip side of that economic trend and that is what we are beginning to see and so we are not anticipating at this point in time a slow down in our 2009 commitment. But it will shift a little bit from new centers to existing. We have as I think you know often had a significant piece of our program in existing boxes. We don’t always get to build to suit, very rarely actually do we get to build to suit. So we’re very used to designing our stores into different footprints if that’s the trend that we end up riding. Evren Kopelman - JP Morgan: Secondly on a different note can you talk a little bit about if you’re seeing any differences in the competitive promotional environment and maybe comment a little bit on Mother’s Day and how that was versus your expectations? Lyn P. Kirby: Mother’s Day very much met our expectations so Mother’s Day we saw actually a continuation of the further trends we saw during the holiday season. We certainly saw fragrance a little softer than what it had been trending in third quarter last year but our fragrance sales at Mother’s Day were in line with what we saw during holiday which were significantly better than marketplace trend. Relative to the competitive activity in marketplace we certainly continue to see some heating up in the mask categories. We watch very closely and we have responded appropriately. As you know our marketing is on a fairly short lead time so as we see that heat up we do respond there and relative to the broader macro competition for traffic we did see some certainly heated up activity amongst some of the major department stores in some of the larger chains during Mother’s Day but not to the extent that we saw during the holiday season. So Mother’s Day was not as heated up during holiday. But nonetheless it was competitive and heated up from the trends at the beginning of first quarter. Evren Kopelman - JP Morgan: Finally on interest expense that was lower than what we were expecting for the quarter. What do you expect for the second quarter and for the year? Gregg R. Bodnar: Interest expense for the year, Evren, will be approximately $6 million. And then for the quarter you should be plan to be $1.5 million to $1.7 million second quarter.

Our next question comes from Erin Murphy – Piper Jaffray. Erin Murphy – Piper Jaffray: Just had a quick question actually, Lyn, for you to begin with on the Spring Beauty Event, how did that perform relative to your expectations? If you could speak a little bit about what you’re seeing from a customer shopping behavior perspective, whether it’s trend or just what you’re noticing about her when she’s in your store? And then I have a couple follow up questions. Lyn P. Kirby: The Spring Beauty Event is certainly one of the most significant events for us where we do offer some newness and excitement from both our existing brands as well as our new brands and we do events in our store where we pre-book for customers to come in for very specific education with the brand that they’re interested in and that combination effective delivered right on our expectations. We were very happy with it, we had not seen a slow down in our Prestige color and skin category to any significant extent. The category continues to perform at very significant comp growth and the event was pretty much on track but it is a combination I think of both what we’re offering in the marketing as well as the in store experience. Erin Murphy – Piper Jaffray: Then I had a quick question of what you’re seeing thus far in Q2. Are you seeing any impact from a comp perspective on the rebate checks? I know they’re still early in trickling in, but just thus far is there any impact from a traffic perspective? Lyn P. Kirby: We don’t normally comment on the quarter we’re in but on the rebate piece we’re not anticipating any impact from it. We haven’t seen anything yet. We’ll be delighted if it comes as gravy for us but it’s nothing we’re expecting or have planned. Erin Murphy – Piper Jaffray: So it’s not in your guidance? Lyn P. Kirby: No. Erin Murphy – Piper Jaffray: Gregg, a quick follow up question to actually Liz’s question earlier on about the full year impact from the second DC, the 20 to 30 basis points, are you looking for anything else to either offset that from a gross margin perspective or is that what we should model for gross margin overall for the full year? Gregg R. Bodnar: For the full year, Erin, I would model gross margins down slightly about 20 basis points and remember the other macro piece in there is as we add square footage we lose a little bit of leverage on the fixed costs and then gross margins, product margins will continue to improve with the penetration of Prestige which will offset that which leaves you a net impact from the DC.

Our next question comes from Daniel Hofkin - William Blair & Company, L.L.C. Daniel Hofkin - William Blair & Company, L.L.C.: Just a couple questions either for Lyn or Gregg, if you could just maybe clarify a little bit what drove the better gross margin rate performance in the first quarter? I think you had expected flat to down slightly. Was it greater ad spending in there for the rebate helping the gross margin and impacting SG&A or was it something else? Second, if you could comment a little bit on the composition of average ticket, whether that’s more average unit retail which it sounds like it is, or number of items per basket? Any additional color on that and then with regard to the second quarter, obviously you had not previously provided guidance on that, but can you indicate generally the guidance that you’re providing right now has that changed at all internally relative to what you might have expected going into the start of this fiscal year? Gregg R. Bodnar: I’ll take them one at a time here Dan. As it relates to gross margin, gross margin was up 20 basis points during the quarter. As we mentioned, about 40 basis points of that was driven by advertising allowances which partially offset our advertising costs. As we expect for the quarter and the full year, we also see some deleverage in fixed store occupancy costs. Our original guidance anticipated and we did a much better job of managing distribution center costs for the start up of the second DC, so that’s the primary difference there. As it relates to composition and increases in average ticket, you are correct, it is mostly average unit retail price growth driven. And then the third point on second quarter guidance, this is the guidance that we feel is prudent and appropriate at this point in time based on the current business trends. Daniel Hofkin - William Blair & Company, L.L.C.: Can I read in to that last comment that would have changed internally even if not at the EPS level in terms of the line items or any color you can add on that? Gregg R. Bodnar: I really can’t comment any further on that Dan.

Our next question comes from J. David Cumberland – Robert W. Baird & Co. J. David Cumberland – Robert W. Baird & Co.: Lyn, can you elaborate on some of the new brands you added in the quarter? You talked about La Roche on a previous call, how do you see Pureology and the other two fitting in to your assortment? Lyn P. Kirby: Actually all three of them are great fits. We have not seen any significant shift away from higher price point to lower price point in the mix shift of the business. As I said, our higher price point Prestige color and skin care brands continue to grow very strongly and Pureology has also opened very strong as well so we’re not seeing any price resistance if that’s what you are thinking. And, there’s plenty in the room in the portfolio for all of these. Pureology is a brand that has different product performance versus some of the other brands that we have in our hair portfolio so we’re seeing very nice incrementality from it and similarly over in the color and skin we continue to see as we add brands to that whole category mix that there is significant incrementality. I think as we continue to add brands we further strength our positioning as a great destination for selection in that category so all of these brands are absolutely incremental. J. David Cumberland – Robert W. Baird & Co.: Then one for Gregg on the increase in advertising allowances. What caused that level of increase in the quarter? Gregg R. Bodnar: David, as we’ve talked about in the past, the structure of our vendor terms does allow for some allocation of gross margin, if you will, to support our advertising strategy. So, as we see some incremental advertising costs during a particular quarter we work with our vendors to help support advertising their brands and that results in typically some additional advertising allowances which get recognized in gross margin. So, it’s a function of advertising.

At this time there are no further questions. I would like to turn the floor back to management for closing comments.

I very much look forward to seeing many of you at the upcoming investor conferences. The dates and locations will be posted on our website. And, I look forward to speaking with you on our next quarterly conference call. Thank you very much for your time today.