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People want to look good again. Ulta Beauty last week reported strong Q2 earnings—net sales increased 16.8% YoY to $2.3 billion while net income went up 17.8% to $295.7 million—signaling, perhaps, that consumers are ready to put their best face forward.
- All major categories exceeded the company’s expectations, as “consumer engagement with beauty remains strong, reflecting a deep, emotional connection with the category,” president Dave Kimbell told analysts Thursday.
- Ulta raised its fiscal 2022 outlook, now expecting net sales between $9.65 billion and $9.75 billion, up from $9.35 billion and $9.55 billion.
“The brand is also benefitting from a relatively strong position as physical events and work return, giving an added value and place for the products on offer,” Ethan Chernofsky, VP of marketing at Placer.ai, told Retail Brew in an email. “The combination of a strong brand, effective decision-making, and a beneficial environment all combine for a high-performing retailer that shows no signs of slowing down.”
Ulta’s strong quarter is reflected in foot traffic, as visits this year are outpacing 2021 and pre-pandemic levels, according to Placer.ai. In July, visits were up 6.6% YoY and 12.6% YoY in June.
- July visits were up 30.6% compared with July 2019, and visits in June grew 21.3% from June 2019 levels.
- Placer.ai attributes some of Ulta’s success to the “lipstick effect”—the idea that consumers will spend on small, discretionary purchases like lipstick to boost their spirits during difficult economic times.
- Ulta’s prestige and mass makeup delivered double-digit comp growth in Q2.
+1: The company is seeking to capitalize on that growth with a new store layout for certain locations that will unify the presentation of skincare and makeup. “Going forward, we really want to have a merchandise layout to magnify our differentiated assortment and really better reflect how a guest really shops with consolidated categories and intuitive adjacencies,” Kecia Steelman, Ulta’s chief store operations officer, said on the call.