Ulta Beauty reported a surprisingly shiny quarter amid recently appointed CEO Kecia Steelman’s turnaround efforts and continued consumer demand for beauty categories like fragrance.
On its earnings call, Steelman noted that there’s no indication consumers are trading down on beauty purchases, and its spend per member is “fairly consistent” across income levels, though value is “an increasingly important priority.”
“Many consumers indicate they’re leaning into beauty as a comfort and escape from the stress of macro uncertainty, and we expect this emotional connection will support the category’s resilience going forward,” she said.
Net sales in the first quarter rose 4.5% to $2.8 billion, thanks to a 2.9% increase in comparable sales and new store openings. Comp sales grew for the first time in a year, driven by a 2.3% increase in customer spend per visit, and 0.6% rise in transactions. The retailer upped the high end of its full-year net sales and comp sales outlooks as a result.
After introducing her Ulta Beauty Unleashed turnaround plan in March, Steelman said the company has “sharpened our execution” in Q1. That includes improvement in its in-store experience, with increased in-stocks resulting from additional in-store payroll hours. New marketing strategies, including its first Super Bowl campaign, a stint as the official beauty partner of Beyoncé’s Cowboy Carter tour, and its viral Ulta Beauty World, were also a factor. Its loyalty membership grew 3% YoY to 45 million in the quarter.
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The retailer launched 19 new brands including Milk Makeup and Tatcha in Q1. Across categories, fragrance continues to be a beauty highlight, and was the strongest category for Ulta in Q1, garnering double-digit growth. Skin care and wellness saw high single-digit growth, with body care, sun care, and wellness doing particularly well. Hair care was flat, though Ulta’s exclusive retail launch of Beyoncé’s Cécred hair care line contributed to growth. Makeup dropped slightly, though the segment saw its strongest performance since Q3 of 2023, Steelman said.
E-commerce sales jumped 10% in Q1, and Steelman said the retailer plans to launch a subscribe and save online replenishment option “really soon.” It’s also on track to debut its online marketplace announced in March, which she said has “driven meaningful brand interest,” in the second half of the year. Still, stores account for 80% of its sales, Steelman noted. Ulta Beauty opened six new stores in Q1, and its store openings in Mexico City, Kuwait City, and Dubai are slated for later this year.