Cosmetics retailer Ulta Beauty wants to rev up its salon business to further boost sales growth.
The retailer’s salon business in the second quarter grew by 1.7 percent from the comparable quarter last year. Meanwhile, comparable e-commerce sales surged by nearly 38 percent, and physical same-store sales climbed by 4 percent.
“We’re very invested in the services part of our business,” said CEO Mary Dillon on a conference call with investors. “It’s a critical differentiator. That salon guest, any service guest, is really one of our best guests, because they shop and spend much more. They spend almost three times what somebody who is not using services does.”
The company is addressing the way it tailors its services business to best suit certain stores and trade areas — tweaking pricing, offerings and staff training to match local needs. Ulta’s salon business outperforms the overall market, Dillon says. The retailer is also adding 180 “skin bars” to its stores, at which customers can get quick skin treatments, including facials, from licensed experts, she says. Such skin bars are currently operating at 40 of the company’s 1,124 stores.
The company, which wrapped up the second quarter with $386.1 million in cash on hand, opened 19 stores during the quarter, roughly equal to the 20 of a year ago, and it closed two. “Our growth-and-development team has done a great job getting stores opened earlier in the year, with 53 stores opened in the first half, compared to 38 last year,” said Dillon.
The retailer has plans to open approximately 40 new stores in the third quarter, versus the 48 it opened in the comparable period a year ago, and remains on track to open about 100 for this year. All the stores hew closely to the company's 10,000-square-foot prototype. Ulta says it also intends to remodel and/or relocate 50 stores this year.
By Brannon Boswell
Executive Editor, Commerce + Communities Today
