Ulta Lowers Number Of New Store Openings

Ulta revealed during its third-quarter earnings call that it is reducing the number of stores it will open each year.

According to Retail Dive, Ulta’s long-term brick-and-mortar strategy has been decreased to between 1,500 and 1,700 total stores. The news comes as a bit of a surprise, since the beauty chain has opened 100 stores every year since 2012. But executives noted that the high performance of new stores is the reason they decided to scale back on opening additional locations, lowering the number of openings to 80 in 2019, 75 in 2020 and 70 in 2021.

During the third quarter of fiscal 2018, Ulta opened 42 stores and closed three stores. The company ended the third quarter of fiscal 2018 with 1,163 stores and more than 12 million in square footage, representing a 9.7 percent increase in square footage compared to the third quarter of fiscal 2017.

The Q3 results also showed that the company’s net sales increased 16.2 percent to $1.56 million, compared to $1.34 million in the previous year. Comparable sales increased 7.8 percent, driven by 5.3 percent transaction growth and 2.5 percent growth in average ticket. In addition, retail comparable sales went up 4.4 percent, including salon comparable sales growth of 3.5 percent. And eCommerce sales grew 42.5 percent to $170.7 million compared to $119.8 million in the third quarter of fiscal 2017.

“Ulta Beauty’s strong performance in the third quarter reflects continued market share gains across all major categories, acceleration in our overall comp driven by healthy traffic, excellent new store productivity and robust eCommerce growth,” said Mary Dillon, chief executive officer.

The company added that its recent tech acquisitions would bring augmented reality capabilities in-house and launch future features faster.

While there was much to be happy about, Ulta did post a lower-than-expected fourth quarter outlook, which caused the company’s stock to dip. However, Dillon is still confident about the current holiday season, adding that the company is “lined up really well to be competitive and have a strong quarter.”