Ulta Beauty’s in-store ‘bounceback’ drives double-digit growth

The retail store is far from dead this holiday season as shoppers flood back to Ulta Beauty stores at the highest levels since before the pandemic, driving double-digit earnings growth. 

“Store traffic trends accelerated this quarter and exceeded pre-pandemic levels for the first time, representing an important milestone in our Covid recovery,” said Dave Kimbell, CEO of Ulta Beauty Inc, on its Q3 2022 results call.

By the numbers

• Sales transactions for the quarter increased 10.7%, primarily driven by strong growth from in-store transactions.
• During the quarter, Ulta opened 18 new stores, relocated one store and remodeled eight stores. The company expects to open about 100 stores over the next two years.

Upgrading the in-store experience

In-store traffic's bounceback has helped right some of the margin headwinds in the digital business, which reflect a wider slowing in e-commerce sales after the pandemic-era boom. 

“Stores are a critical part of our ecosystem. And while most of Ulta Beauty's transactions occur in stores, we know the guest journey often begins online,” Kimbell said, noting the importance of digital experiences and omnichannel strategies.

For example, click-and-collect sales have increased to 23% of e-commerce sales, compared to 20% last year. To assist guests along their digital journey, Ulta offers a suite of virtual tools, including Glam Lab, Skin Advisor and its hairstyle tool.

To bring shoppers back into brick-and-mortar stores, Ulta has focused on leveling up its in-store experience. Refreshed layouts, new product ranges and exclusive events create a flagship store experience that keeps beauty lovers coming back for more: 

• In-store ‘back bar’ events continue to drive product attachment and new guest acquisition for participating brands.
• New layouts to showcase categories better, improve navigation, enhance the services experience and create more opportunities for discovery.
• New beauty bars that offer brow and makeup services, as well as supporting in-store events.
• Dedicated space in the front of the store to feature brand and product launches across categories.