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Ulta to open 50 stores annually; promises faster delivery, invests in AI company

Ulta plans to open 50 U.S. stores annually.

Ulta Beauty laid out its strategic priorities and long-term financial targets for fiscal 2022 through 2024 at its virtual analyst and investor conference on Tuesday.

The beauty giant is launching same-day delivery in select markets, and introduced “Beauty to Go,” a commitment that buy online, pick-up in-store orders will be ready for pick-up in two hours or less. Ulta rival Sephora recently said it was rolling out a new, proprietary, same-day delivery service.

Additionally, Ulta Beauty plans to open 50 new stores in the United States per year. The retailer will also test smaller format stores, something it had previously tested years ago. International expansion plans remain on hold.

“Our vision is to create a 5,000-square-foot Ulta Beauty store that can serve as a beauty discovery destination in smaller markets with tailored assortments and services,” Ulta COO Kecia Steelman. said during the event. “Our learnings from these pilots will inform how we scale these experiences beyond 2022.”

In other initiatives, the retailer is launching a partnership with Google to leverage Ulta’s virtual try-on tool for lipstick and eyeshadow with select brands within Google’s Search and YouTube platforms.

Ulta also announced a strategic investment and partnership with Adeptmind, an AI retail technology company, to power a new personalized search engine for the retailer’s “digital store of the future.”

“The new digital store is where we seamlessly merge content with commerce to help guests find what they are looking for, and introduce them to products and services they didn’t know they need,” said Prama Bhatt, Ulta’s chief digital officer, at the meeting. “We will have an unmatched source of personalized beauty information and use each opportunity to anticipate their beauty needs. It will make shopping and exploring for beauty online even more fun and functional, and with our new design system, we can create culturally relevant and inspiring content and experiences at the speed of beauty.”

The company is also launching a new business called UBMedia, a retail media network which Ulta’s brand partners can use to place ads on the retailer's e-commerce site and app, and outside sources such as Facebook and Instagram. 

“We will provide closed loop reporting and insights on their return on investment, which is not something most media solutions can provide,” Ulta chief marketing officer Shelley Haus said,

For fiscal 2022 through 2024, Ulta expects total net sales to increase 5%-7%, comparable sales to grow 3%-5% annually, and operating profit (as a percentage of sales) to increase 13%-14%.  Capital expenditures (as a percentage of sales) are pegged at 4% to 5%.

“Reflecting our understanding about how the consumer and beauty category are evolving, we have refreshed our strategic framework, and we are excited to share our vision for Ulta Beauty’s future,” stated CEO Dave Kimbell. “We have a long record of disruption, creativity and success, and we intend to build on this foundation and continue to lead the beauty category, seamlessly connecting physical and digital channels, expanding our market share, and increasing member loyalty.”

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