Ulta’s performance is a thing of beauty
Ulta Beauty posted record sales in the fourth quarter, pushing the chain’s annual revenues above $10 billion for the first time in its history. The retailer reported net income of $1 billion for the year, another first.
The chain saw net sales increase 18.2 percent during the quarter as beauty consumers continued to participate in the category even with price increases. Ulta said new brands and product innovations also played a role in helping it achieve a 15.6 percent gain in same-store sales on top of the 21.4 percent increase it posted in 2021.
“Sales of all major categories exceeded our expectations, and we saw solid sales momentum across both our store and digital channels,” said CEO Dave Kinbell, yesterday on Ulta’s earnings call.
Ulta achieved double-digit growth across all major categories and gained share in the prestige beauty segment, said Mr. Kimbell citing NPD Group data. Skincare, he said, was the strongest performer with the chain making double-digit gains in both the mass and prestige segments.
The beauty retailer grew membership in its Ultamate loyalty program by three million, rising to 40.2 million members in 2022.
“We continued to drive guest love, loyalty, and share of wallet, and our efforts created stronger, more emotional connections with our guests. Overall, unaided awareness grew significantly with meaningful gains among key audiences including Gen Z, Hispanic, and Black beauty consumers,” said Mr. Kimbell.
Ulta expects to invest between $60 million and $70 million in 2023, on top of $50 million last year, supporting its strategic initiatives, including expanded selection, personalized omnichannel experiences, scaling its retail media network, opening and remodeling stores, and building its distribution and fulfillment capabilities.
“Our physical footprint is a strategic advantage, and we plan to open 25 to 30 net new stores and remodel or relocate 20 to 30 stores throughout the year,” said Mr. Kimbell. “As we expand our physical footprint, we will also accelerate growth across digital platforms, supported by the completed transition of our digital store to a modern technology and architecture, as well as the expansion of our buy anywhere, fill anywhere capabilities.”
Ulta Beauty at Target has also been a win introducing new customers to the chain. “We intend to leverage our customer insights and CRM capabilities to continue driving additional member acquisition and bounce back to Ulta Beauty,” said Mr. Kimbell.
Ulta is looking for comp growth between four and five percent in 2023.