Ulta Magnificence sees model tie-ups as make-up gross sales enhance after Covid stoop

Inside an Ulta retailer location in New York.

Scott Mlyn | CNBC

Ulta Magnificence is banking on new model partnerships to spice up lagging make-up gross sales.

Cosmetics accounted for 43% of Ulta’s whole gross sales in fiscal yr 2021, the largest section share by far, however they dipped from the year-earlier interval. The corporate mentioned throughout its fourth-quarter earnings report that manufacturers like Olaplex, Fenty and Supergoop ought to assist push efficiency in its flagship section.

Internet gross sales rose 40% yr over yr within the yr ended Jan. 30, to $8.6 billion, and rose 24% yr over yr in the course of the fiscal fourth quarter to $2.7 billion, matching Wall Road expectations for each durations, in accordance with Refinitiv consensus estimates.

CEO Dave Kimbell mentioned as gross sales have recovered from a 2020 stoop, the corporate’s make-up section has confirmed extra risky and lagged behind different classes. The make-up enterprise felt higher fluctuations from Covid-related adjustments in buying and rising costs for customers, he mentioned.

“As we take a look at the wonder class, even with these headwinds, we stay constructive. The class is wholesome. It’s rising. It is emotionally essential and linked to our customers,” Kimbell mentioned.

In August, the corporate opened its first mini-shop places through a partnership with Goal. Ulta has opened greater than 100 retailers inside Goal shops so far, and hopes so as to add one other 250 places this yr.

Executives mentioned the partnership has helped spark development in Ulta’s loyalty program, Ultamate Rewards, which added 4 million members in the course of the fiscal yr for a complete of 37 million.

The corporate’s rising rewards base lays a “basis for ongoing momentum as 2022 reopens,” in accordance with Barclays Capital analyst Adrienne Yih.

“The mixture of accelerating model consciousness, the Goal partnership, and new model additions resembling Olaplex, N1 de Chanel and Fenty, are driving new buyer acquisition,” Yih mentioned in a analysis notice.

Ulta additionally has launched a range initiative to assist magnificence manufacturers by and for customers who determine as Black, indigenous and other people of colour. Fenty, based by pop star and entrepreneur Rihanna, is one in every of a number of Black-owned manufacturers that the retailer has launched in current months.

“We’re not right here simply to get these manufacturers on the shelf. It is one factor to reach on our cabinets — it is one other factor to thrive. And that is how we’re measuring success,” Kimbell mentioned on the corporate’s earnings name.

“We’re doing this to drive engagement with our visitors and we’re seeing it for our manufacturers. So we’re optimistic about magnificence — about make-up, and BIPOC shall be one of many components that can assist us drive development going ahead.”

Waiting for fiscal 2022, Ulta expects earnings per share of between $18.20 and $18.70 on income of between $9.05 billion and $9.15 billion. Analysts had forecast 2022 earnings per share of $17.84 and income of $9.14 billion, in accordance with Refinitiv.

Shares of Ulta fell practically 3% Friday following the earnings launch and are up roughly 6% during the last 12 months.

Correction: Shares of Ulta fell practically 3% Friday. An earlier model misstated the inventory transfer.

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