Dive Brief:
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Beauty retailer Ulta Friday reported a 12.5% increase in Q4 same-store sales plus e-commerce sales. Q4 e-commerce sales grew 44.2% year over year to $94.8 million from $65.7 million.
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For the full year, same-store sales (which Ulta calculates as stores open 14 months or longer, plus e-commerce sales) rose 11.8%, compared to 9.9% a year ago, driven by 8.4% growth in transactions and 3.4% growth in average ticket. Ulta also saw a 19.2% growth in its salon sales to $209.2 million in fiscal 2015, compared to $175.5 million a year ago.
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Ulta opened 14 stores in the fourth quarter, ending the year with 874 stores, a 13% increase in square footage year over year. The company said it plans to open 100 net new stores and remodel 12 existing stores this year.
Dive Insight:
The beauty segment is proving to be lucrative for retailers like J.C. Penney and Macy’s, delivering healthy sales numbers. Ulta, which operates stand-alone stores that tend to feature more less-expensive brands than rival Sephora, has been quietly building up its store fleet and raking in sales.
Like Sephora, Ulta sells beauty products in more accessible store setups compared to the department store approach. But Ulta's lower-cost makeup and beauty products bring in teens and others with less money to spend. A loyalty program launched last year also appears to be effective.
Ulta posted an upbeat outlook last week that includes expansion of its retail outlets and its successful salons; the company is aiming for a total of 1,200 locations, a goal looked at favorably by Cowen and Company analyst Oliver Chen, according to CNBC.
"We believe there could be upside to their current 1,200 store base target, given the success they've had in small markets and the opportunity for downtown/urban locations," Chen said.
But of course the space is highly competitive, with Kohl’s, Penney (which is expanding its concession partnership with Sephora), Sephora itself, Macy’s, Birchbox and others, all with plans to expand outlets and stores.
“Our fourth quarter results capped an exceptional year during which we made significant progress against our strategic imperatives, while achieving outstanding sales and earnings growth,” Ulta CEO Mary Dillon said in a statement. “We continue to benefit from the powerful combination of strong demand in the beauty category and Ulta Beauty’s highly differentiated offering that propels our business to transcend prevailing trends across the retail landscape.”
Ulta also announced an accelerated share repurchase plan that Dillon said “demonstrates our commitment to creating and returning value to shareholders.”