- Ulta has more than recovered from a slow 2020, with annual sales surging more than 40% to $8.6 billion in 2021 and comps rising 37.9%. The company also posted a record fourth quarter, as net sales rose 24% over last year to $2.7 billion, according to a company press release.
- In 2020, by contrast, Ulta's net sales fell by nearly a billion dollars, from $7.4 billion in 2019 down to $6.2 billion. Prior to that, net sales increased every year from 2011 to 2019.
- The Target partnership remains a key part of Ulta's growth strategy going forward, with the retailer planning to open Ulta shop-in-shops in an additional 250 Target stores in 2022.
2021 was a big year in a number of ways for Ulta. The company launched a wellness platform to capitalize on growing interest in the concept, opened its first Target shop-in-shops and transitioned to new leadership as former CEO Mary Dillon passed the torch to long-time executive Dave Kimbell.
Looking ahead, Ulta is planning to build on those efforts. According to Kimbell, customers at Ulta's Target locations are shopping across categories and more than 1 million people have linked their Target and Ulta loyalty programs so far. In 2022, the retailer will expand the shop-in-shop concept to an additional 250 stores, and while Ulta gave few details about how the partnership was going, the customer response has been "really positive" and awareness is "strong," Chief Operating Officer Kecia Steelman said.
Compared to peer Sephora, which is expanding its Kohl's partnership to an additional 400 stores in 2022, Ulta's pace is slower. According to Steelman, that's in part because Ulta is timing its shop-in-shops to Target's store remodeling schedule. Sephora and Ulta have progressively encroached on each other's territory with Sephora's departure from the mall putting their stores in the same types of shopping centers.
Ulta is also experimenting with other elements of its store experience, including piloting a new in-store layout that centralizes all of its service offerings and testing out a smaller store format in some of the company's smaller markets. Ulta plans to open about 50 new stores and remodel or relocate about 35 this year.
In discussing the smaller format in October last year, Steelman stressed that these locations would serve a different customer than it does through its core stores or its Target deal.
"It's looking at tailored services along with the best curation of the data and analytics that we've had to build the best merchandising assortment in these locations," Steelman said. "So we do think it's really key and it's a white space that we can continue to drive not only new store growth but also this engagement with additional consumers that we're not reaching today."
Clouding Ulta's earnings results was the makeup category, which is decelerating again after a comeback in the first half of last year. While Ulta's chief merchant declared that "makeup is back" in the fall last year, Kimbell on Thursday said the segment's performance has been "volatile" and lagged others.