America loves Ulta Beauty as sales skyrocket 65%

Ulta

ULTA
Beauty, the largest beauty retailer in the United States selling cosmetics (makeup), perfumes, skin care products, hair care products and salon services, continues to resonate with the market US with sales up 65.2% in the first quarter (Q1) of 2021 compared to last year. Net sales were $ 1.9 billion for the quarter, mainly driven by a 53% increase in transactions and an almost 9% increase in the average ticket (how much a customer spends). The beauty retailer is on a growth path exceeding 2019 sales by 7%.

According to the Ultra Beauty earnings call, the increase in net sales was mainly due to the favorable impact in the United States of improving consumer confidence, government stimulus payments and easing. COVID-19 restrictions. Mary Dillon, CEO of Ulta Beauty, said: “The Ulta Beauty team has had an exceptional start to the year, with sales and profits exceeding FY20 first quarter and fiscal 2020 levels. fiscal year 2019. ”

Mary Dillon hands over helm to Dave Kimbell

Dillion will step down as CEO in June and move to a position of executive chairman of the company. Since his appointment as CEO eight years ago, the compound annual growth rate through 2020 was 15.7%, an impressive performance. In the traditional style of service leadership of Mary Dillion, she said, “I want to thank my leadership team for their collaboration, agility and commitment to our associates and guests. And I want to thank all of you in the investment community for your interest and support. “

Succession plans have been in place for some time as Dave Kimbell, president of Ultra Beauty, will step up to CEO. Kimbell has been described as an inclusive and results-driven leader and has been part of the Dillon team since 2014 when he joined Ulta as Chief Marketing Officer. A year later, he was appointed director of merchandising and marketing before being elevated to president in 2019. Kimbell noted Dillion’s accomplishments as CEO, saying, “Under your leadership (of Dillion) , Ulta Beauty has established a winning and engaging culture, has become the largest in the United States. beauty retailer, has joined the Fortune 500 and tripled its market capitalization. “

Kimbell discussed the first quarter performance, saying, “We came out of 2020 with strong momentum in our sales trends, market share gains and consumer sentiment.” Kimbell is confident that the company is positioned to continue to lead the beauty category, adding, “Increased consumer confidence, the easing of restrictions and the desire for novelty will drive increased engagement in the beauty category.”

Dave Kimbell will make a great replacement and has been planned for the succession for the past seven years so an understanding of the client and the culture has already been established. His former career with PepsiCo

DYNAMISM
, Seventh Generation and US Cellular will be helpful in his new role.

Soaring corporate profits

Gross margin increased 148% in the first quarter compared to a year ago due to higher sales, leverage on fixed costs, improved margins on merchandise, lower trade show expenses and favorable channel mix changes. Skincare, hair, perfumes and bathing were higher than last year, while spending in the cosmetics (make-up) category declined. Kimbell was optimistic about color cosmetics, saying, “Engagement with social media platforms like TikTok is bringing new life to the color cosmetics category, engaging younger audiences, boosting trends and invigorating consumers. testing and use. ” These engines and the expanded pipeline of new products in the second quarter will bring a positive pace to the make-up category.

Salon services, which accounted for 4% of total revenue in 2020, fell to 3% this year in the first quarter. Salon services were down before the pandemic, with sales in 2019 accounting for 5% of total sales, up from 6% in 2018.

Net profit was a loss in 2020 due to the closure of many stores throughout the pandemic, however, the first quarter of 2021 was 20% higher than 2019 levels, making a significant return from the year last. For the quarter, online orders collected in store (BOPIS) increased to about 16% of total e-commerce sales, up from about 4% last year.

Wide appeal for many buyers

Ulta Beauty currently offers more than 25,000 beauty products from 500 suppliers, including its own private label, and resonates with a diverse group of buyers by selling a wide range of products and prices. Ultra Rewards’ over 32 million memberships continue to grow, and the brand will soon have access to over 75 million Target.

TGT
The members of the Circle as part of the Ulta and Target strategic partnership announced last November by the two companies. Ulta Beauty stores will open at the end of the summer at Target.

Ulta Beauty invests in physical retail

Real estate activity in the first quarter of fiscal 2021 included 28 new stores, an increase of 2.3% in square footage compared to the first quarter of fiscal 2020. Ulta Beauty will begin to deploy its concepts of Target and Ulta Beauty stores later this year. Currently, Ulta Beauty operates 1,290 retail stores in 50 states and also distributes its products through its website, which includes a collection of tips, tutorials, and social content.


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