Ulta Beauty is delivering bargains and luring customers.
During an earnings call with investors Thursday (Nov. 30), CEO Dave Kimbell shared that the retailer experienced strong foot traffic, both in physical stores and online.
Additionally, he expressed expectations for a more promotional holiday season in the beauty category this year.
Kimbell emphasized the positive start to the season. He noted that stores are well-stocked with a diverse array of products appealing to both value-conscious and indulgence-seeking customers.
“Our insights suggest that consumers are ready to celebrate even as they navigate in an uncertain economic environment,” said Kimbell on the call.
In the third quarter of fiscal year 2023, net income was $249.5 million, a decrease from $274.6 million in the third quarter of 2022. Net sales increased 6.4% to $2.5 billion year over year, primarily due to increased comparable sales, new store performance and growth in other revenue.
Comparable sales, which includes sales for Ulta stores open for at least 14 months and eCommerce, demonstrated 4.5% year-over-year growth.
Throughout the quarter, there was an uptick in customer visits to Ulta’s physical stores and website, but it seems customers were bargain hunting because the cash register’s cha-ching was a bit softer as the average ticket declined by 1.4% compared to the same quarter last year. However, transactions increased by nearly 6%.
Kimbell also highlighted that in the third quarter, virtually every category experienced growth. The skin care sector was Ulta’s fastest-growing segment, achieving double-digit growth year over year, he said. The fragrance and bath category also exhibited growth in the low double-digits.
Although sales in the makeup category remained flat, the mid-single-digit growth in mass makeup brands offset a decline in prestige makeup, according to Kimbell. In the hair segment, sales declined in the low single-digit range, mostly because customers decided to trim down on their purchases of hair tools.
During the call, Kimbell underscored the strength of the beauty sector in diverse economic conditions. Specifically, he cited Euromonitor data illustrating sustained growth in the U.S. beauty category, consistently registering in the low- to mid-single-digit range for more than a decade, except during the Great Recession and the pandemic.
He also said customers are incorporating beauty into their wellness routines.
Ulta Beauty’s third-quarter results follow a discussion PYMNTS had in June with Nicole Bernhardt, who heads Ultamate Rewards at Ulta Beauty. During the conversation, Bernhardt noted that Ulta Beauty’s sales were rooted in loyalty.
Bernhardt told PYMNTS that the Ultamate program not only monitors consumer shifts but also allows Ulta Beauty to engage consumers in meaningful ways. It provides a consistent avenue for offering value, a crucial aspect for consumers. Moreover, it empowers Ulta Beauty to deliver personalized experiences in terms of discovery, checkout and promotions.
She said 95% of Ulta Beauty’s sales are linked to the program.
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