Ulta announces investments in deliveries and digital, disappoints with financial outlook

By

Robin Driver

Published
Oct 20, 2021

Bolingbrook, Illinois-based cosmetics retailer Ulta Beauty, Inc. provided a strategic update via a virtual investor day on Tuesday, revealing plans to invest in new delivery improvements and digital capabilities, but ultimately disappointing with a lower-than-expected outlook.

 
The company said that it expects to see a CAGR in its net sales of 5% to 7% from 2022 through 2024, while comparable sales are predicted to increase 3% to 5% annually. Ulta also reported that it expects CAGR in diluted earnings per share to be in the low double digits during the period.
 
As reported by CNBC, shares in Ulta plummeted more than 10% on Tuesday following the retailer’s announcement of its financial outlook. Investors had been anticipating more optimistic predictions in line with an anticipated uptick in demand for beauty products as consumers begin to return to social events.

Moving forward, Ulta highlighted the development of omnichannel experiences, the launch of community-focused initiatives and improvements in its environmental and social impact as key strategic priorities. Over the next two years, the retailer, which currently operates more than 1,300 stores across 50 states, is planning to open 50 new stores annually.
 
In terms of specific strategic initiatives, the company said that it will be rolling out same-day delivery for online purchases in select markets. It also revealed that it will be introducing “Beauty to Go,” a new commitment promising that buy online, pick-up in store (BOPIS) orders will be available to collect within two hours.
 
Furthermore, the retailer said that it will be launching partnerships with both Google and AI retail tech company Adeptmind. Ulta’s collaboration with Google will leverage the Ulta Beauty GlamLab Virtual make-up try-on tool with select brands via Google Search and YouTube, while the company’s link-up with Adeptmind will result in the development of a new personalized search engine for Ulta’s own e-commerce site.
 
The company is also establishing a $20 million Digital Innovation Fund allowing it to partner with beauty industry entrepreneurs and innovators.
 
“We are optimistic about the opportunities ahead and believe the power of the beauty category, paired with our proven business model, experienced leadership team, and values-based culture, positions Ulta Beauty to continue to deliver long-term value for shareholders,” said Ulta CEO Dave Kimbell in a release.
 
Ulta reported net income of $250.9 million in the second quarter ended July 31, 2021, on sales of $2.0 billion.