Ulta shines in first quarter

The challenging environment many retailers have been experiencing was no match for Ulta in the first quarter of 2017. The beauty retailer is off to a strong start, with sales growth fueled by product newness and better-than-expected earnings growth, even excluding the significant tax rate benefit.

Comp sales grew 14.3% on top of 15.2% in the first quarter of last year, maintaining the more than 29% two-year comp trend Ulta achieved in the previous couple of quarters. CEO Mary Dillon credited the company’s exceptional financial results, in part, on its differentiated and compelling assortment, the experience and nature of its stores and the strength of its loyalty program.

“During the first quarter we acquired $1.1 million net new loyalty members, bringing the ultimate rewards program to 24.5 million active members. This represents growth of 26% year-over-year, driven by continued strong execution by our store teams were passionate about converting new members and healthy traffic in our stores, supported by our merchandising and marketing efforts,” Dillon said.

Regarding the retailer’s merchandising efforts, Ulta has continued to gain share across every major category, with particular strength in prestige cosmetics, as well as in skin care in both the mass and prestige categories. Its Ulta Beauty private brand was among the best performing brands for the quarter, delivering high private label margins and offsetting the generally lower margins delivered on the mass side.

E-commerce delivered growth of 70.9% in the first quarter. This was the highest quarterly growth rate for the company’s e-commerce business since the first quarter of 2014 when the base was only $17 million. This sales growth contributed 340 basis points to its total company comp, driven almost entirely by transaction growth.

 

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