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How Ulta Is Accelerating Sales and Expanding Prestige Beauty

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Ulta had a brave marketing strategy in the United States, creating three unique shopping environments for mass, prestige and salon.

There's a reason why cult beauty brands are opening boutiques: if well executed, brick-and-mortar retail can boost sales and consumer engagement. Ulta has famously bucked the retail woes of beauty competitors, and its latest quarter and nine-month results prove out its focus on beauty enthusiasts.

While Amazon is expanding its dominance with shoppers, nimble retailers like Ulta are finding ways to deliver services and exclusive brands that keep them competitive.

Looking ahead, Ulta is forecasting full-year sales growth of approximately 13% to 15%, and an increase of total sales in the low twenties percentage range. E-commerce sales are expected to grow by about 40%.

Ulta is investing $80 million into prestige brand boutiques and enhancements to the Ulta Beauty Collection and fragrance fixtures in hundreds of stores.

Third-quarter 2016 net sales increased 24.2% year-over-year to $1,131.2 million, while sales for stores open at least 14 months and e-commerce sales increased 16.7% year-over-year. The rise was attributable to growth in transactions and average ticket.

In the third quarter alone, Ulta opened 42 stores, bringing the retailer's total to 949 stores.

Retail comparable sales for the period increased 14.3%, while salon comparable sales rose 10.3%. Salon sales increased 16.7% to $60.4 million, up from from $51.7 million in the third quarter of fiscal 2015.

E-commerce sales grew 59.1% to $73.6 million, compared to $46.2 million in the third quarter of fiscal 2015. Gross profit was 37.8%, compared to 36.9% in the same period of 2015.

Nine-month net sales rose 23.3% to $3,274.2 million, compared to $2,655.8 million in the same period of 2015. Sales for stores open at least 14 months and e-commerce sales increased 15.4%, driven by 10.6% growth in transactions and 4.8% growth in average ticket.

Retail comparable sales for the period increased 13.6%, including salon comparable sales growth of 8.7%. Salon sales rose 15.2% to $178.2 million, while e-commerce comparable sales grew 50.8% to $190.5 million.

Gross profit for the period reached 36.7%, compared to 35.6% in the same period of 2015.

Ulta opened 89 net new stores in the first nine months of the year, enhanced its store in Greenwood, Indiana, and opened distribution in Dallas, Texas. In the third quarter alone, Ulta opened 42 stores, bringing the retailer's total to 949 stores and square footage of 10,012,142, a 10% increase in square footage compared to the third quarter of fiscal 2015.

“Ulta Beauty’s top line accelerated in the third quarter, driving record sales and earnings performance,” said Mary Dillon, CEO. “Our associates continue to execute against our growth strategies, resulting in success across several areas: new brand acquisition, increased Ulta Beauty brand awareness, rapid growth in our loyalty program, improving supply chain performance and robust e-commerce growth.”

 

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