Ulta's Strong Earnings Are Shelter In Retail's Storm

Ulta Reduces Store Openings

Beauty products and cosmetics aren't usually included in that elusive category of "recession-proof industries," but recent growth from makeup giant Sephora and emerging sales evidence could mean that a good foundation is a critical element of both retailers and makeovers alike.

Ulta released its Q1 2016 earnings results Thursday (May 26), and despite the tradition of burying disappointing news before a long holiday weekend, Ulta announced that its year-to-year sales had spiked 23.7 percent. Same-store sales shot up 15.2 percent, while online purchases doubled that figure with a 38.8-percent tally. These numbers beat just about every estimate Ulta and analysts had set for its quarterly growth, which isn't a common thing to hear in the world of in-store retail.

Ulta CEO Mary Dillon tried to give some context to the unexpectedly good news.

“We are off to a phenomenal start to the year, delivering excellent top and bottom line growth in the first quarter,” Dillon said in a statement. “Several positive factors are coming together to drive the momentum in our business, exemplified by the best comparable sales growth in our history as a public company. These include healthy consumer demand in the beauty category, our unique format and offering which are supporting sustained share gains, and effective collaboration across the enterprise to ensure strong execution of our growth strategies.”

Ulta and its other in-store cosmetics competitors seem to have found the effective balance between in-store experiences and checkout conversion strategies. Customer service may not have much influence when shoppers are hunting for apparel, but if Ulta, Sephora and others can maintain that aura of expertise with customers during product demos, they may get to enjoy this new normal a bit longer.



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