After closing the books on her most challenging year ever with better than expected earnings, Ulta Beauty CEO Mary Dillon told investors that she was also closing the books on her career leading the largest chain of beauty and cosmetics stores in the country.
Since taking the helm in 2013, the 59-year-old executive has overseen the exponential rise of the business by doubling the store count to nearly 1,250 locations, and more than tripling revenue to last year’s peak of $7.4 billion dollars and 45,000 employees — 90 percent of whom are women — all while growing the brand and having it become a $20 billion member of the S&P 500.
In a statement, Dillon and the Ulta board said her departure was a planned succession and that second-in-command, President Dave Kimbell, would assume the CEO role at the annual meeting June 2. In addition, Kecia Steelman, the current chief store operations officer, will assume the role of chief operating officer, and board Chairman Robert DiRomualdo will retire from the board after serving the past three years as chair and 17 years in total. Dillion will remain as executive chair for one year.
“These changes reflect a thorough and thoughtful succession planning process I have engaged in with our board of directors over multiple years, and are designed to ensure strategic and leadership continuity, as Ulta Beauty moves into its next chapter of growth,” Dillon said on the company’s webcast. “Today we are beginning to execute a thoughtful succession plan that ensures we continue to benefit from strong, experienced leadership for the next chapter,” she added.
Glad To Be Back In Business
Like most retailers that survived the pandemic, Ulta Beauty endured its own array of challenges and a boom-bust-boom cycle that saw the business go from flourishing to complete closure to reopening amidst a collage of costly COVID safety precautions.
“2020 was a difficult year, and I am proud of how our teams navigated the unprecedented challenges with agility and purpose,” Dillon said, noting that 2021 was seeing positive operational momentum and continued strategic investments.
In total, Ulta’s sales for 2020 were down about 17 percent and its net income plunged 75 percent. For the quarter ending Jan. 30, Ulta said its $2.2 billion in sales reflected a 5 percent decline from a year ago, with adjusted net income of $193.4 million.
The company also noted that it ended the year with $1 billion in cash and said it had budgeted for up to $250 million in capital expenditures, including plans to open 40 new stores.
All in, Ulta expects to grow sales by 15 to 17 percent with a full year target of at least $7.2 billion in revenue, which is approximately back to pre-pandemic levels and roughly in line with the average analyst expectation.
“We are encouraged by the momentum we are seeing in store traffic trends, although our visibility as to when demand will fully recover is limited, we are confident our business will continue to strengthen in fiscal 2021, as COVID-19 vaccines become more accessible,” Dillon said on the company’s earnings call.
The New Chief
Dillon and Kimbell previously worked together at US Cellular before she brought him over to Ulta as chief marketing officer in 2014. He assumed the role of president in 2019. Dillon described him as highly regarded in the beauty industry, results-driven, guest-focused and inclusive.
“Dave’s passion for Ulta Beauty, our guests and our associates is extraordinary and I believe there was no one more prepared, or better suited to lead [us] into the future,” she said.
As far as managing that future, Ulta said it saw a 10 percent decline in its base of 13.7 million loyalty members, two-thirds of whom continue to be in-store only shoppers. While the company’s omnichannel customer base nearly doubled to 23 percent of total members, its online-only members totaled just 12 percent.
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