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Ulta Beauty continues to see glowing results, as beauty proves to be largely resilient to a pullback in consumer spending, though the category might see more promotions this holiday, CEO Dave Kimbell said in a recent earnings call.
In the company’s third quarter, net sales rose 6.4% YoY to $2.5 billion, with comparable sales up 4.5% from the previous year. Its transactions were up 5.9%, while average customer spend was down 1.4%.
- The company’s digital channel sales jumped 10%, while its stores saw low-single-digit growth. Store traffic also increased in the high single digits, Kimbell said.
Ulta also announced that CFO Scott Settersten will retire after almost 20 years at the retailer and 10+ years as CFO. SVP of Finance Paula Oyibo will take over the role, effective April 1.
Category close-up: Skincare was Ulta’s fastest-growing category, with a double-digit boost across both mass and prestige, thanks to brands like Drunk Elephant and La Roche-Posay, while fragrance saw low-double-digit growth. Makeup sales were flat; a rise in sales for mass brands—benefiting from “newness and social engagement,” per Kimbell—offset a dip in prestige sales. The hair care category declined, mostly due to a drop in sales of hair tools, though brands like Not Your Mother’s notched growth.
- Ulta’s mass growth is outpacing the larger mass category, and while its prestige assortment has gained share in digital channels, it’s been challenged in brick-and-mortar, which Kimbell attributed to growing distribution for prestige beauty.
Still, Kimbell said Ulta remains “confident in the resilience and power of beauty and in our ability to drive market share and profitable growth.”
You’ve got sale: Kimbell also noted that “as the category normalizes and consumers navigate rising cost pressures,” the retailer adjusted its promotional activity in Q3 (it was still below 2019 levels, Settersten noted), evolving its 21 Days of Beauty tentpole sale along with new offers.
Despite the increased promotional activity in the beauty category, Kimbell said Ulta’s holiday season was “off to a good start…consumers are ready to celebrate, even as they navigate an uncertain economic environment.”