Ulta Beauty sales grow by 25 percent

By Chris BARKER

- Last updated on GMT

Related tags: Ulta beauty, Percent, Marketing

Ulta Beauty sales grow by 25 percent
US cosmetics company Ulta Beauty has announced a 25 percent jump in sales in the second quarter of 2013.

The firm's total sales increased by 24.8 percent, from $481.7m in 2012 to $600.9m in 2013.

Comparable store sales and gross profits also boasted a significant increase. 

The firm attributes its good results to the success of its sales strategy, including the rapid growth of e-commerce business, and the introduction of new brands and product lines.  

CEO Mary Dillon commented “The Ulta Beauty team delivered a very strong quarter while moving our growth strategy forward.”

“Ulta Beauty added several new brands to its stores, we further expanded the number of Clinique and Lancome boutiques, we drove rapid growth in our e-commerce business and we achieved record membership in our loyalty program.”

Analysis

Virginia Lee, senior research analyst at Euromonitor, told CosmeticsDesign.comUSA that Ulta had put a great deal of effort into developing their full-service salon business.  

She also pointed out: "Ulta produces both mass-market and premium cosmetics, and they are able to offer a very open, friendly, no-pressure environment in their stores."

In 2012 Ulta's salon business generated approximately $120m dollars.

David McGoldrick, research associate at Euromonitor, said that Ulta was trying to turn their outlets into a "playground for women."​ 

Regarding Ulta's loyalty program, he said: "In 2013 Ulta added 1 million members to their loyalty program. In addition, around 50 percent of sales came from customers who were members of the program."

"They have introduced a points system in many stores to encourage women to shop more."

The program, a major part of Ulta's overall strategy, has grown to over 12 million members, an increase of 19 percent on the previous year.

Products and profits

The company's shopping website, Ulta.com, had a 72 percent growth in sales in 2013, validating the firm's focus on e-commerce. Mcgolerick suggested that the growth could be attributed in part to the launch of the company's mobile app and retooling of their website.

Ulta continued to add diversity to its ranges this year, with new product lines launched this year including IT Cosmetics, Mally Girl and Meaningful Beauty.

It has also launched a revival of the iconic Jane Cosmetics line, which was closed down when the original company went bust in 2009.  

A growing footprint

Ulta Beauty has made a big expansion in floor space in 2013, increasing square footage by 25 percent compared to the second quarter of 2012.

The company opened 33 new stores in 2013, bringing their total footprint to over 6 million feet. Going forward, Ulta will open 125 stores and remodel seven existing locations, improving its existing coverage by a further 22 percent.

The company plans to continue growing its locations by expanding to over 1,200 stores in the United States.

Gross profit increase

The company’s gross profit increased by 50 basis points to 35.3 percent. However, expenses as a percentage of net sales also grew from 22.0 percent to 22.4 percent compared to the second quarter of 2012.

 Comparable store sales also grew by 8.4 percent. 

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