Ulta Beauty sees brand tie-ups as makeup sales boost after Covid slump

Ulta Beauty sees brand tie-ups as makeup sales boost after Covid slump

Within an Ulta keep place in New York.

Scott Mlyn | CNBC

Ulta Attractiveness is banking on new brand partnerships to improve lagging make-up sales.

Cosmetics accounted for 43% of Ulta’s full product sales in fiscal year 2021, the most significant segment share by significantly, but they dipped from the 12 months-earlier time period. The enterprise claimed for the duration of its fourth-quarter earnings report that brands like Olaplex, Fenty and Supergoop need to enable force effectiveness in its flagship phase.

Net revenue rose 40% yr around year in the yr ended Jan. 30, to $8.6 billion, and rose 24% 12 months in excess of 12 months throughout the fiscal fourth quarter to $2.7 billion, matching Wall Avenue expectations for each durations, in accordance to Refinitiv consensus estimates.

CEO Dave Kimbell reported as gross sales have recovered from a 2020 slump, the firm’s make-up segment has confirmed extra volatile and lagged powering other groups. The make-up business felt higher fluctuations from Covid-similar alterations in shopping and climbing prices for consumers, he claimed.

“As we glance at the magnificence class, even with these headwinds, we keep on being favourable. The group is nutritious. It is escalating. It really is emotionally critical and connected to our people,” Kimbell mentioned.

In August, the business opened its very first mini-shop locations by means of a partnership with Concentrate on. Ulta has opened much more than 100 retailers inside of Focus on merchants to date, and hopes to increase another 250 spots this year.

Executives said the partnership has served spark progress in Ulta’s loyalty program, Ultamate Rewards, which extra 4 million users all through the fiscal yr for a full of 37 million.

The firm’s growing rewards base lays a “foundation for ongoing momentum as 2022 reopens,” in accordance to Barclays Money analyst Adrienne Yih.

“The combination of escalating model recognition, the Focus on partnership, and new brand name additions these as Olaplex, N1 de Chanel and Fenty, are driving new purchaser acquisition,” Yih reported in a investigate note.

Ulta also has introduced a range initiative to assist splendor brands by and for consumers who identify as Black, indigenous and persons of color. Fenty, launched by pop star and entrepreneur Rihanna, is 1 of a number of Black-owned makes that the retailer has released in new months.

“We’re not below just to get these makes on the shelf. It truly is 1 thing to arrive on our cabinets — it’s yet another point to prosper. And that is how we are measuring success,” Kimbell said on the company’s earnings connect with.

“We are executing this to travel engagement with our visitors and we are observing it for our manufacturers. So we’re optimistic about elegance — about make-up, and BIPOC will be just one of the elements that will aid us travel growth heading ahead.”

Wanting ahead to fiscal 2022, Ulta expects earnings for every share of involving $18.20 and $18.70 on revenue of between $9.05 billion and $9.15 billion. Analysts experienced forecast 2022 earnings for each share of $17.84 and revenue of $9.14 billion, in accordance to Refinitiv.

Shares of Ulta fell nearly 3% Friday next the earnings release and are up about 6% in excess of the past 12 months.

Correction: Shares of Ulta fell practically 3% Friday. An before version misstated the stock go.