Yahoo Finance Ulta Sales Surge As Beauty Consumers Start Shopping Again
In Mary Dillon’s last quarter as Ulta Beauty chief executive, sales soared nearly 66 percent.
The surge was driven by increased consumer confidence, government stimulus, and an easing of COVID-19 restrictions. On the company’s earnings call Thursday, Dillon said, “I am proud of what we’ve accomplished over the last eight years, and the amazing team and culture that we’ve built.”
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Dave Kimbell will transition into the CEO role next week, after Ulta’s annual shareholder meeting. Dillon will become executive chair of the board.
“[Dave’s] role as chief marketing officer, chief merchandising officer and president has given him a much better understanding of the category, demand creation and the needs of our guests than I had when I assumed the CEO role eight years ago,” Dillon said.
Kimbell said that Ulta was emerging from 2020 “as a leader.”
“We see this in our sales trends, market share gains, consumer sentiment, brand strength and most importantly, in our culture,” Kimbell said, adding that the first Ulta Beauty inside Target is on track to open later this summer.
For the quarter ended May 1, Ulta sales jumped 65.9 percent from the prior-year period, to $1.9 billion. Net income was $230 million, compared to a $78 million loss in the prior-year period. Ulta raised guidance and is now predicting between $7.7 billion in net sales for fiscal 2021, up from $7.2 billion to $7.3 billion.
“While we believe stimulus payments contributed to the quarter’s strength, we also believe the relaxation of restrictions, increasing consumer confidence and a desire for newness are positively impacting consumer spending in the beauty category,” Kimbell said.
Those factors are also positively impacting makeup sales, which were sluggish pre-pandemic and remained dismal as consumers stayed home and wore masks. But now, consumers are back in stores and starting to shop again, he said.
“Sales were strong across channels, with stores leading the way as consumers were increasingly comfortable with shopping in stores. As local restrictions lifted, we increased our operating hours and welcomed brand partners back to stores, and as store traffic trends improved, we adjusted staffing levels to support the increased demand,” Kimbell said.
Ulta saw strong sales in the mass channel, as well as in hair, where it has added new brands including Kristin Ess and Briogeo. In the salon side, Ulta has spotlighted different established brands, and has been able to recruit hair stylists with existing books of clients, Kimbell said.
In makeup, the eye category remains strong, but lip is starting to make a comeback, too, Kimbell said. Makeup is benefitting as “many are begging to adjust to reduced COVID-19 restrictions and look to refresh their stash,” Kimbell said.
“Although it remains difficult to predict the specific timing of a full recovery in makeup, we are seeing early signs that guests are engaging more with the category,” he said.
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