Ulta Beauty, Inc. has posted a 6.4% year-over-year gain in net sales for the third quarter of 2023, totaling $2.5 billion, compared to $2.3 billion in the same period of 2022; drivers included new store performance and increased comparable sales. Net sales for the first nine months of 2023 increased 9.6% to $7.7 billion, compared to $7.0 billion. For the year so far, Ulta is experiencing an 8.7% increase in transactions and a 1.4% decrease in average ticket.
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As a result of the latest financials, Ulta has raised the floor of its full-year 2023 forecast from $11.05 billion to $11.10 billion. The company's forecast tops out at $11.15 billion.
Ulta Beauty has reportedly outperformed the mass market; on the prestige side, Ulta gained market share in the digital channel, though greater distribution of prestige beauty across many retailers has proven to be a challenge for Ulta's in-store prestige growth.
- Skin care: "Skin care was again our fastest-growing category, driven by double-digit growth in mass and prestige segments," said Kimbell. He noted that interest in moisturizers, serums and cleansers benefited brands such as Drunk Elephant, Good Molecules and COSRX. At the same time, dermatologist-backed brands also performed well, including La Roche-Posay, Cetaphil. and Dermalogica.
- Fragrance & bath: "The fragrance and bath category delivered low double-digit growth," said the CEO. Top brands included launches from Ariana Grande, Burberry and YSL, as well as prestige brands such as Valentino and Carolina Herrera and luxury brands Chanel and Dior.
- Makeup: Kimbell noted a different dynamic in makeup in which mass overperformed compared to prestige, the latter of which had strong sales last year due to the addition of Fenty. "Sales in the makeup category were flat, with mid-single-digit growth in mass makeup offsetting a modest decline in prestige makeup," the executive explained. Brands that performed well included newcomers such as Natasha Denona, Dior and Beautycounter, as well as new launches from e.l.f., Juvia's Place, M.A.C. and OPI.
- Hair care: The hair care category decreased in the low single-digit range, according to Kimbell, with declines led by hair tools. Top performers in the category included LolaVie, Shark Beauty, Donna's Recipe, Not Your Mother's and Ouai. Other strong hair care performers included key products from Redken and Biolage, as well as IGK and Mielle.
The company noted that, during the first nine months of fiscal 2023, the company opened 20 new stores, relocated five stores, remodeled 16 stores and closed one store. At the end of the third quarter of fiscal 2023, Ulta operated 1,374 stores totaling 14.4 million square feet.
“The third quarter represented another strong performance by the Ulta Beauty team, as sales, gross profit, and diluted EPS all exceeded our internal expectations," said Kimbell. "Our traffic trends remained healthy, our brand awareness increased, and we expanded our loyalty program to a record 42.2 million members. As we look to the future, the outlook for the beauty category is bright, and I am confident Ulta Beauty has the right plans in place to delight our guests this holiday season, expand our leadership position in specialty beauty retail, and deliver long-term shareholder growth.”
Meanwhile, CFO, treasurer and assistant secretary Scott Settersten has announced his retirement as of April 1, 2024; the executive will be succeeded by Paula Oyibo, who is currently senior vice president of finance.
Oyibo joined Ulta Beauty as vice president of finance for merchandise, marketing and e-commerce in 2019. She has held her current role since February of 2022, where she has oversight of the financial planning and analysis, treasury, and non-merchandise procurement functions. Prior to joining Ulta Beauty, Oyibo served in finance and controller roles at Whirlpool Corporation and in senior level auditing and consulting positions with PwC.
Kimbell said, “Scott has had a tremendous impact on Ulta Beauty as a key member of our leadership team and a passionate steward of our business for nearly two decades. From his early days of supporting Ulta Beauty’s initial public offering to his more than a decade as CFO, Scott helped guide Ulta Beauty through times of significant transformation and expansion. The impressive shareholder returns achieved throughout his tenure are a testament to his leadership and disciplined approach to driving profitable growth.”
“Scott is truly one of the best executives in the business," said Lorna Nagler, chair of Ulta Beauty’s board of directors. "He has helped Ulta Beauty navigate incredibly dynamic times and challenges, ensuring we continue to execute and deliver for our shareholders. On behalf of the entire board of directors, I want to thank Scott for his steadfast leadership and tremendous contributions to our company."
Settersten added, “As I reflect on my nearly two decades with Ulta Beauty, I am grateful to have had the opportunity to support the company’s growth and success. Nothing has given me greater joy in my career than leading and working alongside such talented and dedicated associates. I am immensely proud of the work we’ve done together, especially our recent efforts to modernize our infrastructure. I believe these investments will position the Company for future growth, and I am confident that Paula is the best person to help lead the organization forward.”
Of the incoming CFO, Kimbell said, “Since joining Ulta Beauty in 2019, Paula has established herself as a trusted partner and visionary leader, particularly as we navigated the pandemic, ultimately helping the company emerge in a position of leadership and strength. Her deep knowledge and understanding of our business, experience leading finance organizations, and strong commitment to nurturing talent and an inclusive culture make her the ideal person to serve as Ulta Beauty’s next CFO. Paula will be a valuable addition to our dynamic and diverse executive leadership team, and I look forward to partnering with her as we bring to life all the beautiful possibilities for Ulta Beauty and our guests.”
“I am honored and humbled to assume the role of chief financial officer for Ulta Beauty” said Oyibo. “I look forward to working with Dave and the rest of the executive team as we continue to build on our position as the leader in U.S. beauty retail and generate sustainable growth for our shareholders. I am deeply grateful for Scott’s mentorship over the last several years and wish him all the best in his well-deserved retirement.”