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Ulta Beauty Rises Above U.S. Economic Hardship

By: Leslie Benson
Posted: October 16, 2008
Outside Ulta on State Street

Ulta Beauty opened its first multilevel store on State Street in downtown Chicago with a celebration on October 15, 2008, that featured street performers who entertained the long line of customers outside, awaiting the grand opening.

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“We are fortunate to operate in a category that’s quite resilient,” Kirby said. “It’s affordable indulgence…. We have not yet met a consumer who doesn’t love the brand or our positioning in the market.”

According to a financial report posted September 4, Ulta remains an innovative retail concept, estimating increased net sales in the range of $259 to $263 million for the third quarter of fiscal 2008. Gregg Bodnar, Ulta CFO, said the company plans to expand to 1,000 total stores within the next five years. The expansion strategy comes on the heels of a 24.3% net sales increase of $249.1 million during the second quarter fiscal year 2008, up from $200.4 million in the second quarter of fiscal 2007. Despite the ongoing U.S. economic recession, Ulta reported opening 72 new stores in the past five months, ending the second quarter fiscal 2008 with more than 2.8 million sq ft of retail space across the U.S.—a 34.6% increase when compared to the second quarter fiscal 2007.

“We continue to deliver increases in customer traffic, which reinforces our ability to deliver growth,” said Kirby. “The increase was achieved without additional investment in margin, inventory or advertising.”

Under Kirby’s leadership, Ulta has transformed from the discount beauty retailer it was when it debuted in 1990 to the dual beauty superstore and specialty store it is today. Prior to joining Ulta, Kirby served as vice president of Avon Products Inc.; then vice president and general manager of new business for Gryphon Development, a subsidiary of Limited Brands, Inc.; and most recently, president of Circle of Beauty, a subsidiary of Sears. She has led Ulta into expansion since 1999. In 2005, Cosmetic Executive Women (CEW) recognized Kirby with an Achiever Award, and in 2007, Ulta received a Hot Retailer Award from the International Council of Shopping Centers (ICSC). In November 2007, under Kirby’s leadership, Ulta launched its new e-commerce Web site, featuring 12,000 SKUs and 11 microsites, which Kirby said could provide more than 10% of Ulta’s business in the future.

“We attribute our ongoing success in a difficult economy to our proven marketing strategy, solid operational execution and the beauty category, which is more resilient than many retail categories,” Kirby said.

For the full year fiscal 2008, Ulta estimates net sales in the range of $1.12 to $1.13 billion, compared to fiscal 2007 net sales of $912.1 million. The company’s long-term growth plan includes expanding store space by up to 25%, developing more strategic alliances with major salon brands and learning from the outcome of the new multileveled State Street store prototype.