On Tuesday, Ulta Beauty announced its long-term growth targets and strategic priorities for the fiscal 2022-2024 time period. During a virtual investor conference call, Dave Kimbell, CEO, said the company expects total net sales to increase 5-7% (CAGR), comparable sales to grow 3-5% annually, and operating profit (as a percentage of sales) to increase 13-14%. Additionally, Ulta Beauty is expected to open 50 new stores in the U.S. per year, though international plans remain on hold. Diluted earnings per share are expected to be in the low double digits. The above projections used 2019 data as a base, though year-to-date sales for 2021 are 15% ahead of 2019 levels.
“Reflecting our understanding about how the consumer and beauty category are evolving, we have refreshed our strategic framework, and we are excited to share our vision for Ulta Beauty’s future. We have a long record of disruption, creativity and success, and we intend to build on this foundation and continue to lead the beauty category, seamlessly connecting physical and digital channels, expanding our market share, and increasing member loyalty,” said Kimbell in a statement.
Analysts like Jeffries’ Stephanie Wissink said financial targets were “appropriate, albeit a bit light,” with earnings per share about 10% below stretch expectations.
Though the financials for Ulta Beauty might appear conservative, growth is centered on three types of beauty enthusiasts: Gen Z, Hispanic and Black shoppers. Ulta Beauty found that 60% of its total beauty buyers (or approximately 70 million women) are considered beauty enthusiasts, and they account for 75% of its beauty spend. Meanwhile, Gen-Z consumers are that much more active in beauty and engage with the category two years earlier than past generations. To guide that shopper throughout the Ulta Beauty ecosystem, the team announced its investment in AI retail tech Business Adeptmind, with an aim to build the premier digital store of the future. At Ulta Beauty’s last investor day, in 2018, it announced the investments and acquisitions of AI and AR technology companies QM Scientific and GlamST.
Incremental revenue growth on the brand side is also key to Ulta Beauty’s long-term plans. The company announced the introduction of UBMedia, which will allow beauty companies access to first-party customer data. According to a spokesperson, the UB Media Network will launch in spring 2022 and allow brand partners to better connect with Ulta Beauty shoppers via a pay-to-play model.
Using Ulta Beauty member data, the retailer will design, deploy and optimize campaigns in its owned and external channels, such as its website, Facebook or Instagram. The network builds on Ulta Beauty’s existing Digital Marketing Partner Program, where brands have the opportunity to place digital campaigns with Ulta Beauty to better target audiences and understand results. Currently, more than 100 brands are actively participating in the Digital Marketing Partner Program — that’s almost double the companies that participated last year, given the rise of e-commerce in the pandemic.