* Q1 EPS $0.08 vs est $0.05

* Sales rise 12.3 pct to $268.8 mln

* Sees Q2 EPS $0.03-$0.05

* Sees Q2 sales $264 mln-$272 mln

* Shares up 4 pct in trading after bell (Recasts; adds conference call details, updates share movement)

June 4 (Reuters) - Ulta Salon, Cosmetics & Fragrance Inc (ULTA.O: Quote, Profile, Research) posted better-than-expected quarterly results as traffic rose helped by promotions and loyalty coupons, and forecast second-quarter results in line with market estimates.

"We believe our investment in advertising... in combination with exciting marketing and merchandising was the right strategy for the first quarter," Chief Executive Lyn Kirby said in a conference call with analysts. Separately, the beauty products retailer said it reached a preliminary settlement in a class action lawsuit filed in December 2007, but did not disclose the terms of the settlement.

For the first quarter ended May 2, the company earned $4.9 million, or 8 cents a share, compared with $4.3 million, or 7 cents a share, a year earlier.

Sales rose 12.3 percent to $268.8 million.