Ulta Beauty Shows Record Performance With Sales Up 40%, Profits Up 461%

Ulta Beauty released its full-year financial results showing a net sales increase of 40.3% for fiscal 2021. The company stated it had record performance for both the fourth quarter (Q4) and the full year. Net profit was $985.8 million compared to last year at $175.8 million, up 461%. Executives discussed the company’s ability to leverage fixed costs, improvements in merchandise product mix and the hybrid shopping model with customers shopping in physical stores, online and through other digital channels.

The gross margin was 39% for the year compared to 31.7% last year. All merchandise categories had strong performance compared to 2020. Merchandise inventories were up 28% ending fiscal 2021 as compared to the previous year, primarily due to the addition of 44 net new stores, inventory to support new brand launches, along with added products to meet consumer demand.

The Q4 performance was up 21.4% for comparable sales reaching $2.7 billion for the quarter. Gross margin was 37.6% compared to last year in the same period of 35.1%.

Ulta Beauty at Target

The strategic partnership with Target continues to be a strong part of the omnichannel process for Ulta Beauty. In 2021, 100 Ulta Beauty at Target stores were opened and the plan is to open over 250 more in 2022. Dave Kimbell, CEO of Ulta Beauty, discussed the importance of this partnership and stated that the partnership with Target has been very strong.

In addition to having Ulta Beauty stores inside Target, both companies agreed to integrate their loyalty programs — Target Circle and Ultamate Beauty Rewards. Kimbell stated on the call that so far over one million members have linked the two loyalty programs. Ulta Beauty has 37 million rewards members as part of its program and Target has 100 million loyalty members.

The six-pillar strategy

Kimbell discussed the six-pillar strategy that the company will continue to use over the next year to drive revenue and meet its financial objectives. The pillars include (1) driving growth with new assortments, added brands, a focus on conscientious beauty programs, (2) expanding its omnichannel ecosystem, (3) expanding and deepening its presence across the beauty shopper journey, (4) driving operational excellence and optimization, (5) continuing its efforts to make Ulta Beauty a great place to work and (6) expanding its environmental impact initiatives.

Stores continue to be a strong part of the Ulta Beauty strategy

The company opened 48 new stores, remodeled 9 stores and closed four stores in 2021. At the end of fiscal 2021, Ulta Beauty operated 1,308 stores.