Ulta Beauty, like every retailer in the U.S., is currently dealing with the coronavirus crisis.
On the company’s fourth-quarter earnings call, chief executive officer Mary Dillon listed a series of steps Ulta is taking to address COVID-19, including increased sanitation and cleaning efforts and the temporary suspension of brow, lash and skin services. “We’ve posted signage in stores directing guests who want to try a product to find an associate who will sanitize testers on-demand,” Dillon said. “We’re implementing a no-touch approach when it comes to assistance like shade-matching.”
Ulta has seen “some impact on store traffic this week, but it really varies by market,” said Dillon, who noted that on the flip side, e-commerce sales are up as consumers are avoiding unnecessary store visits.
In more positive news, Ulta is planning to open 75 more stores in fiscal 2020, but did not specify where.
The news of the new store openings come just a month after Sephora announced it plans to open as many as 100 new stores in North America in 2020.
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In addition to the new stores, Ulta plans to remodel or relocate some 15 stores and complete some 42 store refreshes.
Plans for international expansion are continuing to move along, Dillon said. “In 2020, we’ll ready our systems and processes and begin hiring and training new associates with the goal of offering an omnichannel experience for Canadian guests in 2021. Dillon considers the Canada expansion to be a “long-term growth opportunity” and “the first step” in making Ulta a global beauty brand.
Net sales increased 10.1 percent to $7.4 billion in fiscal 2020. Net income increased 7.2 percent to $705.9 million. Diluted earnings per share increased 11.1 percent to $12.15, which included a 30 cents per share benefit primarily due to income tax accounting for share-based compensation and federal income tax credits.
In the fourth quarter, net sales increased 8.5 percent to $2.4 billion, while net income increased 3.7 percent to $222.7 million. Diluted EPS increased 7.8 percent to $3.89.
Ulta’s fourth-quarter results came in “at the high end of our expectations,” said Dillon, “despite ongoing challenges in the U.S. makeup market.”
Prestige makeup sales were down in the low-single digits for the fourth quarter. The decline was offset by growth from brands such as KKW Beauty, Kylie Cosmetics and Grande Cosmetics. Clinique also grew.
Skin care delivered the strongest growth for Ulta in the fourth quarter, with sales up in the double digits. Hair-care sales grew in the high-single digits.
Dillon acknowledged increasing demand for clean beauty, and said in 2020 Ulta will focus on building its assortment and a framework to help guests navigate the category.