Ulta Beauty sees brand ties rising in make-up sales after Covid’s downturn

Inside an Ulta store in New York.

Scott Mlyn | CNBC

Ulta Beauty is focusing on brand new collaborations to promote delayed makeup sales.

Cosmetics accounted for 43% of Ulta’s sales in 2021, by far the largest share of the segment, but fell below the previous year’s period. The company said in its fourth-quarter earnings report that brands like Olaplex, Fenty and Supergoop should help boost performance in its flagship segment.

Net sales rose 40% year-over-year from Jan. 30 to $ 8.6 billion, and rose 24% year-over-year in the fourth quarter to $ 2.7 billion in fiscal year, in line with expectations for both Wall Street periods, according to Refinitiv’s consensus estimates.

Dave Kimbell said that as sales have recovered since the fall of 2020, the company’s makeup segment is more volatile and lagging behind other categories. The makeup business felt more ups and downs due to changes in Covid-related purchases and rising consumer prices, he said.

“When we look at the beauty category, despite the headwinds, we’re still positive. It’s a healthy category. It’s growing. It’s emotionally important and it’s connected to our consumers,” Kimbell said.

In August, the company opened its first small store locations in partnership with Target. Ulta has opened more than 100 stores within Target stores so far, and expects to add another 250 places this year.

Executives say the partnership has helped grow Ulta’s loyalty program, Ultamate Rewards, which added 4 million members during the year to a total of 37 million.

The company’s growing award base lays the “foundation for continued momentum as 2022 reopens,” according to Barclays Capital analyst Adrienne Yih.

“The combination of increased brand awareness, Target partnership and additional brands like Olaplex, N1 de Chanel and Fenty are gaining new customers,” Yih said in a research note.

Ulta has also launched a diversity initiative to help consumers and beauty brands identified as Black, Indigenous and people of color. Founded by pop star and entrepreneur Rihanna, Fenty is one of the Black properties that the retailer has introduced in recent months.

“We’re not here to put these brands on the shelf. It’s one thing to reach our shelves; it’s another thing to move forward. And that’s how we’re measuring success,” Kimbell said in the company’s earnings call.

“We are doing this to promote engagement with our guests and we are seeing that for our brand. So we are optimistic about beauty, about makeup, and BIPOC will be one of the elements that will help us drive growth in the future.”

Looking ahead to 2022, Ulta expects earnings of between $ 18.20 and $ 18.70 per share with revenue of $ 9.05 to $ 9.15 million. Analysts projected earnings per share of $ 17.84 and $ 9.14 billion in 2022, according to Refinitiv.

Ulta’s shares fell nearly 3 percent% On the Friday after the release of earnings, they have grown by approximately 6% in the last 12 months.

Correction: Ulta shares fell nearly 3% on Friday. An earlier version misrepresented the stock move.

Ulta Beauty sees brand ties rising in make-up sales after Covid’s downturn

Source link Ulta Beauty sees brand ties rising in make-up sales after Covid’s downturn

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