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03/11/2022

Ulta Beauty posts strong year as quarterly, annual sales soar

Dan Berthiaume
Senior Editor, Technology
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Ulta Beauty storefront
Ulta Beauty’s fiscal 2021 net sales jumped 40.3% to $8.6 billion.

Ulta Beauty turned in better-than-expected fourth-quarter earnings and revenue as its sales jumped amid increased consumer confidence, government stimulus payments and the easing of COVD-19 restrictions.

Looking ahead, the beauty giant said it sees consumers becoming “increasingly resilient” to COVID-19 surges and global uncertainty and that it expects “the recovery which began last year will continue in 2022 as consumers maintain their self-care routines and engage more in social activities.”

Ulta plans to open about 50 new stores and remodel or relocate about 35 this year.  On the company’s earnings call, CEO Dave Kimbell said Ulta will test a smaller-store format in select smaller markets this year. It also will continue to expand its shop-in-shop concept with Target to at least 250 more locations by the end of 2022.

“In our Ulta Beauty at Target location, customer awareness remains very strong,” Kimbell told analysts. “Guests are shopping across categories, and more than 1 million members have linked their Ultimate Rewards and Target Circle accounts. Building on this foundation, this year, our focus is on accelerating new member acquisition, optimizing the guest experience, and continuing to amplify marketing as we scale.”

The beauty giant’s net income increased to $289.4 million, or earnings per share of $5.41, for the quarter ended Jan. 30, compared to $171.5 million, or earnings per share of $3.03, in the year-ago quarter. Analysts polled by FactSet expected adjusted per-share earnings of $4.58.

Net sales increased 24.1% to $2.73 billion, topping estimates of $2.69 billion. Comparable sales (sales for stores open at least 14 months, including stores temporarily closed due to COVID-19, and e-commerce sales) increased 21.4%, driven by a 10.4% increase in transactions and a 9.9% increase in average ticket. Compared to the fourth quarter of fiscal 2019, comparable sales increased 15.4%.

For the full fiscal year, net sales increased 40.3% to $8.6 billion. Comparable sales increased 37.9% compared to a decrease of 17.9% in fiscal 2020, driven by a 30.0% increase in transactions and a 6.0% increase in average ticket. Compared to fiscal 2019, comparable sales increased 12.6%.

Net income for the full year increased to $985.8 million from $175.8 million. Adjusted net income for fiscal 2020 was $264.0 million.

“Our fiscal year ended with better-than-expected performance, reflecting excellent, enterprise-wide execution against our fourth quarter plans as well as stronger consumer demand and the strength of Ulta Beauty’s differentiated model,” said Kimbell. “The beauty category is healthy and growing, and we are confident the recovery that began in 2021 will continue, as consumers maintain their self-care routines, become more resilient to COVID surges, and engage in more leisure and social activities.”

Ulta, which ended its fiscal year 1,308 stores, is projecting between $9.05 billion and $9.15 billion in sales for fiscal 2022. The retailer’s partnership with Kohl’s will continue

“Our outlook for fiscal 2022 reflects our expectations for beauty growth as well as the challenge of lapping exceptional performance in fiscal 2021, ongoing wage and supply chain cost pressures, and investments in new capabilities to support future growth,” Kimbell said. “Despite the expected challenges, I am more excited than ever about the opportunity for Ulta Beauty to grow and continue to lead the Beauty category. We are emerging from the pandemic as a stronger, healthier business, we operate in an attractive and growing category, and we have an exceptional team in place to execute our ambitious plans and deliver for our guests, associates and shareholders.”

On March 7, 2022, Ulta’s board of directors approved a new share repurchase authorization of $2.0 billion, which replaces the prior authorization implemented in March 2020. 

During fiscal 2021, the company opened 48 new stores, relocated seven stores, remodeled nine stores and closed four stores.

On the company’s earnings call Thursday, CEO Dave Kimbell outlined Ulta’s plans for future growth, which include an investment in New Voices, a venture capital fund set up by Richelieu Dennis.

“This year we plan to continue to amplify underrepresented voices through media investments with multicultural platforms, the expansion of our music platform and increase brand marketing support for Black-owned, Black-founded and Black-led brands within our assortment, build an ecosystem to support the pipeline of BIPOC [Black, Indigenous and people of color] brands, including the creation of an accelerator program focused on early-stage beauty brands to educate, inspire and support brand participants to prepare for retail,” Kimbell said.