Within the midst of a slowing magnificence market, Ulta Magnificence on Wednesday introduced new long-term targets for 2026 “and past,” which name for web gross sales progress of 4% to six%, working revenue progress within the mid-single digits and accelerated retailer openings. On the similar time, Ulta reiterated its steering for 2024, which has already been minimize twice this yr.
The corporate’s earlier targets, set in 2021, included hitting $10 billion in income, which it completed in 2022.
Ulta’s retailer opening plans characterize an acceleration from latest years however are slower than the sweetness retailer’s tempo in a lot of the 2010s. In every of the previous 4 years, Ulta has opened fewer than 50 shops, and previous to that the sweetness retailer was opening at a cadence of about 100 shops per yr.
With the brand new retailer opening plan, Ulta will open about 200 web new shops over the following three years, which involves about 66 per yr, and is focusing on a footprint of greater than 1,800 shops (the corporate presently operates 1,411 shops). The newest growth builds on a historical past of retailer progress, with Ulta’s retailer rely doubling previously 10 years, per executives.
Chief Working Officer Kecia Steelman mentioned in the course of the retailer’s investor day that the corporate’s new retailer openings are performing properly, regardless of competitors from the likes of Sephora, which ought to land in all of Kohl’s roughly 1,200 shops by 2025. Steelman famous that Ulta’s personal shop-in-shop tie-up with Goal is now in 500 of the mass service provider’s shops and is attracting a special type of buyer. The partnership can be driving customers to commerce as much as status merchandise.
One other of Ulta’s long-term targets is to develop its loyalty program to 50 million members by 2028, up from 43.9 million in its most up-to-date quarter, on the again of broader curiosity in magnificence. CEO Dave Kimbell mentioned in the course of the retailer’s investor day that the corporate’s definition of “magnificence fans” has shifted over time. In 2021, it included girls aged 18+, which amounted to some 70 million doable loyalty members. Now, males are additionally part of the definition, as are youthful generations, opening up a doable 140 million “magnificence fans” that Ulta may entice.
“In the present day, extra males — notably younger males — are participating in and keen about magnificence, together with skincare, perfume and specifically, the broad wellness and self-care phase. And we additionally see significant progress from youthful generations participating in magnificence,” Kimbell mentioned. “To youthful magnificence fans, it’s not about trying a sure manner or altering their look. To them, magnificence is enjoyable.”
Kimbell famous that every successive era that enters their teenage years is extra concerned in magnificence than the final, which was true for Gen Z and millennials, and is trending to be true for Gen Alpha as properly. Attracting extra loyalty members is a severe boon to Ulta’s gross sales: Presently, about 95% of the retailer’s complete gross sales come from members. Loyalty members which have related their Goal and Ulta accounts are additionally spending two instances what the common member does, Steelman mentioned.
Different priorities embrace making a “management place in wellness” by increasing its assortment and elevating its expertise within the area, investing in personalization and the in-store expertise, bringing on extra unique and rising manufacturers, streamlining the digital procuring expertise and reaching new buyer segments.
In response to Kimbell, magnificence customers are more and more seeing the class as a part of a broader wellness and self-care routine, which has pushed heavy funding from Ulta into wellness-driven assortments and joy-related well-being content material. A deliberate launch into Mexico in 2025 will even open the sweetness retailer as much as a brand new viewers, however Ulta will even should climate some more durable short-term tendencies.
“Whereas we count on 2024 and 2025 shall be transitional years as we handle by way of near-term class dynamics, over the long-term, we see further alternative to broaden our management place, delivering each worthwhile progress and compelling shareholder worth,” Chief Monetary Officer Paula Oyibo mentioned in a press release.
Kimbell expanded in the marketplace tendencies Ulta is seeing in his presentation. He famous that within the 2010s, the sweetness area was rising within the low-to-mid single digits within the U.S., however post-pandemic that progress price surged. In consequence, 2022 and 2023 noticed progress of 12% and 11%, respectively. Now, progress is slowing again down once more to a low-to-mid single digit price.
There’s additionally some variation between mass and status magnificence progress charges. Status magnificence, which executives mentioned makes up about 70% of Ulta’s enterprise, is presently outperforming mass, with gross sales within the first half of the yr rising 8%, per a report from Circana. That’s additionally the area the place Ulta faces stiff competitors from Sephora, whose transfer into Kohl’s shops has put the 2 in additional carefully aligned actual property positions.
