Ulta on Wednesday postponed its planned expansion into Canada in order to "prioritize growth of its U.S. operations," the company said in an SEC filing.
The beauty retailer cited the current operating environment in its choice to temporarily abandon those plans, but noted that Ulta "continues to believe international markets provide a long-term growth opportunity for the Company."
Putting its international expansion on ice won't come without a price, though. As a result of lease obligations and early-stage infrastructure buildout for some planned stores in Canada, the retailer expects to incur costs between $55 million and $65 million.
In a rare step back for Ulta, the retailer is postponing its Canada expansion plans, first announced in 2019.
In place of international expansion, the retailer is prioritizing investments in certain parts of its U.S. business, including omnichannel capabilities, guest experience and discovery, loyalty and personalization, store openings and pursuing market share growth in key categories. Even in the U.S., the pandemic caused the retailer to pull back on its store openings, moderating its original intentions for 75 stores down to 30.
The beauty retailer also took the health crisis as a catalyst to shutter 19 stores, with the aim of capitalizing on other opportunities COVID-19 opens up.
"We anticipate COVID-19 will influence longer-term market shifts and create new real estate opportunities, supporting our ambition to ultimately operate between 1,500 to 1,700 Ulta Beauty stores in the U.S.," CEO Mary Dillon said in a statement at the time. "To do so, we are proactively optimizing our real estate portfolio and have made strategic decisions to temporarily reduce new store openings and close a limited number of stores this year. Overall, our real estate portfolio generates healthy returns, and this limited and targeted approach to closing stores will position Ulta Beauty for even stronger financial performance in the future."
When those store closures were announced in July, however, the retailer was still planning on moving into Canada. Ulta doesn't shy away from reining in its ambitions when executives see a better path forward elsewhere, though. In 2018, the retailer lowered the number of stores it aimed to open to the current goal of between 1,500 and 1,700 because of how well its stores were performing.
It marked a slowdown in the company's annual store openings as well, which had been moving at a pace of about 100 per year since 2012, and were brought down to 80 in 2019, 75 in 2020 and 70 in 2021. Those plans will have to be redrawn now that the pandemic has more than halved the retailer's 2020 goals.