Ulta Beauty benefited from a beauty category that has shown resiliency throughout the year as … [+]
Courtesy of Ulta Beauty
Ulta Beauty ULTA sales increased 17.2% in the third quarter (Q3) and 18.3% year-to-date. The company posted a 27.5% third-quarter earnings increase, building on its already strong performance in 2022. Ulta Beauty’s total earnings for the nine months ending October 29, 2022 increased by 29.5%. “Amid a challenging macro environment, the Ulta Beauty team delivered another outstanding quarter, with strong bottom-line and bottom-line results and growth across all major categories and channels,” Dave Kimbell, chief executive officer, said on the earnings call.
Beauty category and brand loyalty remain strong
The company benefited from a beauty category that has shown resilience throughout the year as consumers have continued to spend and focus on wellness. New brands and product innovations continue to generate interest in the Ulta Beauty assortment. “The holiday season is in full swing, and with Ulta Beauty’s assortment and marketing initiatives, the company is positioned to deliver another strong holiday season,” said Kimbell.
Ulta Beauty’s loyal members are emotionally connected to the brand and highly engaged. “Loyalty members have a higher frequency of shopping visits and spend more money,” Kimbell said. The third quarter ended with 9% more loyal members than the same period last year. “We had record-breaking loyalty members reach 39 million as we continue to curate all things beauty for a deeply engaged customer base,” Kimbell commented. While it remains to be seen if consumers are trading lower during this challenging economic environment, the wide range of products at a variety of price points allows the company to meet the needs of many demographics and income levels.
Factors that contributed to the strong performance include store design and display changes, early arrival of holiday stocks and key categories that drove demand. “Skin care is one of the fastest growing categories as consumers continue to invest in their skin care,” said Kimbell. The company added a Skincare We Love Wall in stores that showcased key products and brands that performed well and resonated with customers. Also highlighted were holiday fragrance gift sets available early in the holiday season. The makeup category had compensating double-digit growth driven by heavy marketing events during the quarter, including 21 Days of Beauty and Fall Haul. The new makeup products created a fresh variety that resonated with consumers.
omnichannel ecosystem
Ulta Beauty continues to invest in the stores, and Kimbell discussed introducing a new layout to improve the shopper experience: The stores moved skincare to the front, grouped products by category, and installed new accessories to make it easier for shoppers identify products and buy. the store. The store front also has a designated space for new products and brand launches. Ulta Beauty opened 18 new stores in the quarter.
“While store traffic is one of the most important aspects of business, we know that customers often start their journey with us online,” said Kimbell. According to Kimbell, shopper visits to stores exceeded pre-pandemic levels, and online purchase and store pickup sales increased 18%, representing 23% of total e-commerce sales.
Accelerated profit margins
The company’s gross margin topped 41% in the quarter compared to 40% last year. As Scott Settersten, CFO, Treasurer and Assistant Secretary, explained, Ulta Beauty benefited from supplier partner price increases for products purchased at a lower cost, resulting in better cost-of-goods performance. “While the average ticket increased 3.5%, fewer units were sold per transaction,” Settersten said. The higher average ticket was mainly due to price increases that occurred in the quarter.
Ulta Beauty may reach $10 billion in sales by the end of the fiscal year
“Sales trends through Thanksgiving, including Cyber Monday, have shown positive results that demonstrate the resilience of the beauty category,” Settersten said. Based on current business and higher expectations for the holiday season and fourth quarter, the company raised its guidance for the year, projecting 2022 annual sales of $9.9 to $10 billion. At the end of the third quarter, the company operated 1,343 stores totaling 14.1 million square feet.
Source: news.google.com