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Ulta’s E-commerce Growth Spurt Isn’t Over

Ulta’s e-commerce growth spurt isn’t over

Dive Brief:
Ulta Beauty reported Thursday that net income rose 29.9% to $148.3 million or $2.46 earnings per share, compared to $114.2 million or $1.83 earnings per share in the year-ago quarter, according to a company press release. That beat expectations for earnings of $2.41 per share, according to MarketWatch.

Net sales increased 15.4% to $1.49 million in the second quarter, up from $1.29 million in the year-ago period, while comparable sales increased 6.5%, compared to an 11.7% increase in the second quarter of last year. Retail comparable sales increased 4%, per the release.

E-commerce sales in the quarter increased by 37.9% to $132.8 million, the latest in a series of massive growth spurts for the beauty retailer’s e-commerce business. The company also opened 19 stores in the quarter, but missed analyst expectations for its third-quarter forecast for earnings of between $2.11 and $2.16 per share.

Dive Insight:
Ulta’s earnings show signs of a strong beauty retailer that continues to dominate in a popular, yet competitive, market. While Ulta has differentiated itself from other beauty retailers by selling both mass and prestige products, CEO Mary Dillon noted in a conference call with analysts that both its prestige and mass categories are experiencing “rapid growth” — marking a potential threat to rival Sephora, which operates primarily in the prestige space.

Dillon also reported that Ulta’s high growth was driving “significant market share gains across categories,” according to a transcript from Seeking Alpha. Beyond that, the beauty retailer’s loyalty program also saw growth in the quarter, expanding to 29.5 million active members — a year-over-year increase of 15.5%, according to Dillon.

That’s good news for Ulta, as loyalty programs have been a big draw for beauty retailers in the past. Indeed, Sephora recently added new features to its own loyalty program, hoping to make the already-popular program even more successful.

Those moves could also help the specialty retailers protect the ground they’ve carved out for themselves as both drugstores and department stores make efforts to win back some lost territory. From CVS’s new store concept and Walgreens’ expanded beauty departments to efforts by Macy’s and Saks Fifth Avenue to include more technology and tailored services in their respective departments, more and more retailers are trying to claim a piece of the lucrative beauty market.

Ulta’s continued success, not least of all demonstrated by the continuation of a plan to open 100 stores per year, bodes well for the specialty player moving forward.

Source: Retaildive

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