Not everyone has enough money to feed themselves these days, but enough people have enough money that Ulta Beauty saw its net sales go up by 16.8 percent, or $2.3 billion, in the second quarter of 2022, compared with the equivalent period the previous year. In turn, the country’s largest beauty retailer adjusted its full-year forecast upward, to $9.65–9.75 billion rather than $9.35–9.55 billion.
In an earnings call, CEO Dave Kimbell described how Ulta did it, citing the company’s success in providing consumers—hungry for new forms of self-expression, now that people are going out in person again—an expansive range of products that fall into the beauty category, and a lot of ways to discover and buy a lot of products.
New brands like Drunk Elephant, Fresh, and Supergoop!, as well as new products from existing brands, are giving customers plenty of options for spending their dollars. Ulta guided consumers to eco-friendly items by better highlighting its Conscious Beauty products. The company also has launched an accelerator program for BIPOC-led beauty brands as part of expanding the BIPOC beauty products on offer.
Ulta is also giving consumers more ways to buy, online, in person, and both, with “ongoing efforts to evolve the omnichannel experience through a connected physical and digital ecosystem.” It also is expanding its partnership with Target. Then in the fall, Ulta plans to “introduce a new layout in select stores to elevate key growth categories, unify the presentation of skincare and makeup, and enhance the store.”
This new layout will include merging premium skincare and makeup brands with those that have a more mass-market price point, within the same in-store displays. Previously, Ulta separated its products by price point, with more expensive makeup and skincare products on one side of the store, and cheaper products on the other. The new displays are designed to be more intuitive and “better reflect how a guest really shops.”
Ulta is one of the few beauty retailers to sell both mass-market and prestige products. Its recent shifts in strategy and plans arrive as more consumers are “trading down” in some of their shopping, due to inflation eating up more of every paycheck. The world isn’t always pretty, but beauty customers try.
Discussion Questions:
- Why do you think Ulta is doing so well, in such a tough economy?
- Do you think it’s a good idea for Ulta to merge prestige and mass-market products on the same display?
- What else would you advise Ulta do, to attract more consumer spending?
Sources: Ellen Thomas, “How Ulta Is Resetting the Mass Beauty Shopping Experience,” WWD, March 23, 2018; Tom Ryan, “Should Ulta Be Merging Premium and Mass Beauty Products in Its Stores?” RetailWire, September 9, 2022; Georgina Caldwell, “Ulta Beauty Q2 2022: Outlook Raised as Net Sales Jump 16.8 Percent,” Global Cosmetics News, August 31, 2022; Motley Fool Transcribing, “Ulta Beauty (ULTA) Q2 2022 Earnings Call Transcript,” The Motley Fool, August 26, 2022; “Ulta Beauty Posts Strong Q2 and 6-Month 2022 Results.” Global Cosmetic Industry, August 25, 2022; “Ulta Beauty Announces Second Quarter Fiscal 2022 Results,” businesswire, August 25, 2022