Greenberg: Best Part of the Ulta Story

Long before Ulta Salons' (ULTA) report of disappointing results Thursday, there were plenty of reasons to be wary: A revolving door of CFOs, including one who stayed just five weeks. A promotional CEO who left for something presumably better before his options granted -- and before the annual audit was completed. Ballooning inventory. And such things as concerns over aggressive accounting.

Now even the company is conceding that even the sweetest perfume can't hide the bad odor seeping in from under the numbers.

And I'm not talking about its revenue miss or surprising slice in guidance.

I'm talking about what I consider to be the best part of the story: A significant change in something CEO Mary Dillon said a quarter ago -- during her first earnings call after joining the company as CEO. "Ulta," she said, "has a differentiated format that resonates with customers; we have a solid long-term growth strategy..."

My, what a difference a quarter makes. Now, she says, the company is "currently conducting an in-depth and future-focused strategic planning process to align and prioritize our growth strategies..."

Typically, companies with "solid long-term growth" strategies don't need to do a deep dive into their strategic planning.

Sure, new CEOs often want to put their own imprint on a company, but this was a company that -- based on its poofed-up stock price -- appeared to be headed in the right direction.

What changed?

Hard to say with certainty, but as I noted on Real Money's "Columnist Conversation" earlier this week: Two weeks after Dillon's first earnings call the SEC came a knocking

The back-and-forth between regulators and the company just showed up this week. These reviews often focus on prickly matters.

In the case of Ulta, two issues in the spotlight were among those causing a stir among critics: The company's e-commerce disclosures (or lack thereof) and concerns over inventory (including the possible impact of a de-stocking issue by supplier Coty, which yours truly has mentioned in the past.)

Reality: Often these SEC reviews can shake up a company, leading to more conservative accounting and guidance.

Did that happen here? Or once the honeymoon was over, was Dillon surprised at how the company looked with no makeup? Or is this simply the beginning of a more profound reset at a company that may have simply grown too fast for the sake of Wall Street? If had to guess, I'd say all three.

-- Written by Herb Greenberg

>You can contact me at: herbonthestreet@thestreet.com.

Herb Greenberg, editor of Herb Greenberg's Reality Check, is a contributor to CNBC. He does not own shares, short or trade shares in an individual corporate security.

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