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Ulta Magnificence sees model partnerships boosting make-up gross sales after Covid hunch

Inside an Ulta retailer location in New York.

Scott Mlyn | CNBC

Ulta Magnificence is banking on new model partnerships to spice up lagging make-up gross sales.

For the total 12 months 2021, cosmetics accounted for 43% of the retailer’s complete gross sales, the most important phase share by far however a slight dip from fiscal 12 months 2020. The corporate mentioned throughout its fourth-quarter earnings report that manufacturers like Olaplex, Fenty and Supergoop ought to assist push efficiency in its flagship phase.

Web gross sales rose 40% 12 months over 12 months in 2021 to $8.6 billion, and rose 24% 12 months over 12 months throughout the fourth quarter to $2.7 billion, matching Wall Avenue expectations for each intervals, based on Refinitiv consensus estimates.

CEO Dave Kimbell mentioned as gross sales have recovered from a 2020 hunch, the corporate’s make-up phase has confirmed extra unstable and lagged behind different classes. Make-up faces better fluctuations from Covid- associated modifications in procuring and rising costs for customers, he mentioned.

“As we take a look at the sweetness class, even with these headwinds, we stay constructive. The class is wholesome. It’s rising. It is emotionally essential and related to our customers,” Kimbell mentioned.

In August, the company opened its first mini shop locations via a partnership with Target. Ulta has opened greater than 100 retailers within Goal shops thus far, and hopes to add another 250 locations this year.

Executives mentioned the partnership has fueled membership of Ulta’s loyalty program, Ultamate Rewards, which added 4 million members in 2021 for a complete of 37 million.

The corporate’s rising rewards base lays a “basis for ongoing momentum as 2022 reopens,” based on Barclays Capital analyst Adrienne Yih.

“The mixture of accelerating model consciousness, the Goal partnership, and new model additions, reminiscent of Olaplex, N1 de Chanel and Fenty, are driving new buyer acquisition,” mentioned Yih in a analysis notice.

Ulta has additionally launched a diversity initiative to assist magnificence manufacturers by and for individuals who determine as Black, indigenous and other people of colour. Fenty, based by singer and entrepreneur Rihanna, is one in all a number of Black-owned manufacturers that the retailer has launched to cabinets in latest months.

“We’re not right here simply to get these manufacturers on the shelf. It is one factor to reach on our cabinets — it is one other factor to thrive. And that is how we’re measuring success,” Kimbell mentioned on the corporate’s earnings name. “We’re doing this to drive engagement with our company and we’re seeing it for our manufacturers. So we’re optimistic about magnificence – about make-up, and BIPOC can be one of many components that can assist us drive development going ahead.”

Waiting for the upcoming 12 months, Ulta expects full-year earnings per share of between $18.20 and $18.70 on income of between $9.05 billion and $9.15 billion. Analysts had forecast 2022 earnings per share of $17.84 and income of $9.14 billion, based on Refinitiv.

Shares of Ulta fell almost 3% Friday following the earnings launch and are up roughly 6% during the last 12 months.

Correction: Shares of Ulta fell almost 3% Friday. An earlier model misstated the inventory transfer.

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