Ulta on Wednesday said it has decided to furlough "many" of its store and salon associates, effective April 19, as the coronavirus outbreak forces stores to stay closed for the foreseeable future.
Furloughed associates are eligible for unemployment benefits and will continue to receive any benefits they're currently enrolled in. Ulta noted it has "every intention of bringing its workforce back when it is safe to do so."
At the same time, CEO Mary Dillon announced she would forgo her salary "indefinitely," according to a company press release. She has also donated $500,000 to the Ulta Beauty Associate Relief Program, which gives grants to associates facing hardship, and the rest of the executive team and board of directors will also make personal donations.
Like many companies, Ulta has taken increasingly drastic steps in response to the coronavirus outbreak, starting with suspending its in-store services, followed by shuttering stores and now furloughing staff.
Usually a high flier in the beauty space, Ulta said last week that the outbreak has caused it to pull back on expansion plans. The retailer had anticipated opening 75 new stores in fiscal 2020, and 70 in 2021, on the back of several strong years of store openings, but that is no longer expected, at least for the current year.
As the retailer works on a new growth plan, it will also have to tackle the challenges of being in a high-touch space during a time that calls for fewer physical touchpoints. Beauty as a category will also inevitably face some slowdown from the fact that consumers aren't going out, which lessens the need for makeup products.
Cosmetics as a category was already in a downcycle, but a report from NPD Group noted that in the fourth week of March — when impacts from the coronavirus outbreak were well-established — total beauty sales fell 58%. However, Vice President and Industry Advisor of Beauty Larissa Jensen said other segments have seen a rise, even as consumers are stuck at home.
"[I]n this week of double-digit declines across nearly every segment in prestige beauty, products like body oils, home scents, nail care, and hair color all posted sales growth, and some in the double-digits," she wrote in a report emailed to Retail Dive.
Predictably, online sales have also seen growth. While online is usually 20% of total prestige beauty sales, that grew 47% to account for almost 90% of total industry spend last week, Jensen said.
Ulta is not alone in facing challenges. Competitor Sephora has also closed stores and laid off an undisclosed portion of its part-time and seasonal store workforce. Notably, Sephora began opening stores this year as part of its largest North American expansion to-date. If Ulta is any indication, those plans may be in jeopardy, at least for the time being.