Ulta Beauty’s omnichannel retail strategy is working

The mix of aggressive e-commerce growth with an increased physical store presence continues to win for Ulta Beauty.

During third-quarter results on Thursday, the retailer announced that year-over-year net sales increased over 16 percent to more than $1.5 million compared to $1.3 million at this time last year. That puts Ulta at about $4.6 million for the first nine months of 2018.

“Ulta Beauty’s strong performance in the third quarter reflects continued market share gains across all major categories, acceleration in our overall comp driven by healthy traffic, excellent new store productivity and robust e-commerce growth,” said Mary Dillon, chief executive officer.

The company, which opened 42 stores in the U.S. during the third quarter of the year as part of its 2018 100-store strategy (it currently operates 1,163 locations), saw its online business grow significantly, by over 42 percent to just over $170 million from to $119 in 2017. E-commerce, which now accounts for 10 percent of the company’s sales, has been a big initiative for Ulta as it has invested in its online-only assortment more recently, with millennial-friendly brands seeking massive expansion, like Winky Lux, Storybook Cosmetics, Sugarbear Hair and Too Cool For School.

Of course, the buzziest news of note for Ulta has been the exclusive launch of Kylie Jenner’s Kylie Cosmetics at Ulta and Ulta.com on November 17, which caused stock shares to surge 20 percent after the news was announced in August. Jenner’s sister Kim Kardashian West’s KKW Fragrance line also landed in stores at the retailer on November 25.

Dillon expects Ulta’s play with digitally native brands to continue to grow through its new, internal emerging brands team that will be geared at targeting trends and brands online. For its part, Ulta’s recent investment in digital workflow partner Iterate is also meant to identify burgeoning trends in the beauty market. This speaks to larger consumer trends, as data platform Euclid reported earlier this year that 47 percent of millennials report they buy online and pickup in stores.

Prama Bhatt, Ulta senior vice president of digital and e-commerce, previously told Glossy, “We wanted to think strategically about where our customer was discovering products, and how to make her excited and not disappointed when she came to us online.”

While Ulta Beauty’s fourth-quarter forecast was weaker than many analysts predicted, with revenue between $2.09 to $2.1 billion, short of prior expectations of $2.12 billion, chief financial officer Scott Settersten reminded of the competitive landscape of the holiday season: Ulta is not just competing with beauty retailers like LVMH’s Sephora during the month of December, but the entire consumer products division.

Source: Glossy.co