Ulta Beauty announced it is establishing a marketplace operation as part of a plan to drive growth, and the company is requesting through its website applications from third-party sellers who want to get on board.
News of the Ulta marketplace comes after the specialty beauty retailer said it added shops in 100 Target Stores in 2024 in reporting fourth-quarter financial results that included comparable sales and per-share income advances.
Net income was $393.3 million, or $8.46 per diluted share, versus $394.4 million, or $8.08 per diluted share, in the year-earlier quarter.
An analyst consensus estimate from Zacks Investment Research called for earnings of $7.10 per diluted sales and revenues of $3.46 billion.
Ulta pointed out its fiscal 2023 fourth quarter included an extra operating week, which generated revenue of $181.9 million. Diluted earnings per share gained a 46 cent benefit due to the extra sales week in the fourth quarter and year past, according to Ulta.
Comparable sales in the fourth quarter increased 1.5%. Net sales were $3.49 billion versus $3.55 billion in the year-before quarter. Operating income was $516.3 million versus $517.1 million, in the year-previous quarter, the company reported.
For the full fiscal year, Ulta net income was $1.2 billion, or $25.34 per diluted share, versus $1.29 billion, or $26.03 per diluted share, in the year earlier.
Comps increased 0.7%. Net sales were $11.3 billion versus $11.21 billion in the year before. Operating income was $1.56 billion versus $1.68 billion in the year previous, the company indicated.
In a conference call, Kecia Steelman, Ulta president and CEO, said 2024 company highlights included the opening of 60 net new stores and 100 new Ulta Beauty at Target shop-in-shop locations as well as improvement to digital functionality.
Paula Oyibo, Ulta CFO, noted that comp sales in the hair category increased in the low-single-digit range primarily due to newness and product exclusives in hair tools as well as solid guest engagement with key promotional events.
Steelman said, “The Ulta Beauty team delivered stronger-than-expected revenue, profitability and diluted EPS in the fourth quarter. I am incredibly proud of our team’s collective impact on the business and the care they showed our guests throughout the holiday season, positioning us to finish fiscal 2024 ahead of our expectations. I am incredibly optimistic about the future of Ulta Beauty, as I believe we have the right elements to drive our success: a strong business model, an ambitious long-term plan and passionate associates who bring our brand to life for our guests every day. Fiscal 2025 will be a pivotal year as we make purposeful investments to fuel our future growth and move quickly to optimize our business. While it will take time to see the impact of these efforts, we are confident these investments will help reignite our momentum and unlock sustained growth and long-term value for our shareholders.”
In the conference call, Steelman said that the marketplace is part of a larger initiative designed to boost the company’s momentum at a time when tough competition is creating challenges.
On the website, Ulta asserted the marketplace will give third-party sellers access to 44 million loyalty program members as well as the gamut of shoppers who regularly visit Ulta website. The company noted that it would provide tools and technology to manage and grow seller e-commerce businesses and dedicated support from an Ulta marketplace team that can help third-party participants help reach their online goals.
Ulta stated the marketplace launch is slated for the fall and will roll out as a curated platform that can connect sellers with passionate beauty shoppers.
Steelman noted the beauty sector has fundamentally changed, with consumer expectations rising and the pace of evolution accelerating. With the competitive environment across the sector intensifying, Steelman acknowledged that, for the first time, Ulta lost beauty category market share in 2024.
She added how Ulta has operated must change to ensure that it capitalizes on available opportunities as the company moves forward. As such, the retailer has put together a plan called “Ulta Beauty Unleash,” developed around three main priorities, to drive core business growth, to realign the company’s foundation for the future and to scale new accretive businesses.
The marketplace initiative falls under the new accretive business pillar of the plan, allowing Ulta to expand its e-commerce presence and offer a broader array of beauty and wellness products while giving the company the ability to build its international presence.
Steelmand said the new marketplace will give Ulta a chance to expand beyond programs it currently operates with vendors, opening up its online platform to wider and deeper third-party cooperation. Ulta loyalty program members will be able to earn points from marketplace purchases and return items purchased on it through the company’s stores.
