Photo: Michael Rivera, Wikipedia
Place – whether that be within a busy shopping center or an online site – is as critical to retail performance today as it has ever been. Consumers, we’ve been told, want to shop where and when they want. Retailers that meet those demands best are most likely to succeed. That conclusion appears to match Ulta Beauty’s position based on its first quarter earnings call last month and a recent appearance at Oppenheimer's 16th Annual Global Consumer Conference.
Ulta Beauty announced same-store sales were up 15.2 percent for the first quarter of 2016 compared to an 11.4 percent jump in the first quarter of 2015. (Includes locations open at least 14 months and its e-commerce business.) This performance was driven by an 11 percent increase in traffic, while the average ticket rose 4.2 percent.
Ulta, which has 886 stores, opened 13 new locations in the first quarter and is looking to increase its overall net number by 100 this year.
“Our growth and development team is now in the process of performing a detailed analysis to refresh our estimates of the store potential in the U.S.,” CEO Mary Dillon told analysts on the chain’s earnings call in May. “This analysis includes an updated assessment of the potentials for smaller and urban markets as well as how our small store format will fit into the future store mix."
Ulta Beauty CFO Scott Settersten, speaking at the Oppenheimer conference (via Investor’s Business Daily), said the chain looks for a "theoretical perfect co-tenant mix" when scouting for new store locations. Among the chains that Ulta likes as co-tenants are DSW, Marshalls, Target and T.J. Maxx.
Another place where Ulta is doing well is online. E-commerce sales were up roughly 39 percent in the first quarter, with mobile representing about 60 percent of site traffic. E-commerce represents just under six percent of Ulta’s total sales. Consumers who shop Ulta’s site and stores drive two-and-a-half times the sales of those who only go to its stores.