E-commerce fuels overall Q1 sales growth for Ulta

June 18, 2014 12:02 PM

A redesigned web site, new functionality and expanded inventory all contributed to first quarter growth for Ulta Salon, Cosmetics & Fragrance Inc. In addition to the site re-launch last year, the beauty products retail chain added an Ask Ulta feature to its web site, enabling shoppers to query Ulta staff about products and beauty tips, CEO Mary Dillon told investors on Ulta’s recent earnings conference call.

Other web site upgrades include “brand stores” in partnership with product manufacturers such as bareMinerals and Urban Decay, and services such as the Benefit Brow Bars, where shoppers can locate stores that offer eyebrow grooming along with other services, view pricing and make appointments, Dillon said according to a transcript of the call from Seeking Alpha.

“We continue to invest in omnichannel capabilities, like the newly launched feature called Find in Store, which enables guests to check the availability of many popular SKUs in their local stores,” Dillon told analysts. “We also continue to increase fulfillment capacity to support the rapid growth in our e-commerce business.” Ulta has about 25 million SKUs available online.

Ulta, No. 227 the 2014 Internet Retailer Top 500, added e-commerce fulfillment to one of its three distribution centers last year and plans to open another in 2015. The company did not disclose how many of its distribution centers are used for e-commerce fulfillment.

The merchant plans to invest $50 million for I.T. systems, including e-commerce and $45 million for supply chain projects in 2014, chief financial officer Scott Settersten told analysts on the earnings call.

For the first quarter of 2014 ended May 3, Ulta reported:

  • Total sales of $713.8 million, up by 22.5% from $582.7 million in the first quarter of fiscal 2013.
  • Comparable-store sales, which include e-commerce, were up by 8.7%. Ulta did not break out web sales in dollars, but Dillon said “continued to see strong sales momentum in the first quarter, with top-line comp growth of 72.3% contributing nearly 2 points of comp to our same-store sales.”
  • Net income of $50.0 million, up by 19.6% from net income of $41.8 million in the first quarter of 2013.

Ulta is seeing a lot of cross-purchase activity between stores and the web, chief marketing officer Dave Kimbrell told analysts. Shoppers are “visiting both stores and e-commerce and that’s certainly something that we’re encouraging as we continue to leverage e-commerce as a way to drive customers back into our stores,” Kimbrell said.

Average order value is higher for online purchases at about $50, compared with about $35 in stores, Settersten said.




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