Ulta Beauty Inc. CEO Dave Kimbell told investors the retailer continues to appeal to customers to try alternative delivery options for ecommerce orders.

Kimbell said on a quarterly earnings call with analysts that Ulta’s “ecommerce channel returned to more normalized growth, delivering mid-single-digit comp growth for the quarter.” However, he and the company did not disclose the percentage of total sales from ecommerce.

Stores fulfilled more than a third of digital orders for Ulta Beauty, Inc. in its fiscal second quarter ended July 30, 2022. During the quarter, buy-online-pick-up-in-store (BOPIS) sales increased about a third (32%) and represented 25% of Ulta ecommerce sales. 

That’s up from representing 20% of Ulta ecommerce sales in the comparable year-ago quarter.

BOPIS, same-day delivery and ship from store accounted for more than a third of Ulta digital orders that stores fulfilled, Kimbell said. 

He said Ulta also ended its quarter with 38.2 million active members in its loyalty program. That’s 10% above the second quarter of last year.

“In addition to converting new members and reengaging lapsed members, we are maintaining healthy retention rates, especially among our Diamond and Platinum members,” Kimbell said. 

He said that increased trip frequency and higher average order value (AOV) drove an overall spending increase. Channel metrics remain steady, he added, with in-store-only members totaling 76% of members and omnichannel-only members totaling 17%.

Kimbell also said Ulta continues to enhance and expand its partnership with Target. The company opened 59 Ulta Beauty and Target shops, ending its fiscal second quarter with 186 locations. 

Ulta Beauty ranks No. 47 in the Top 1000, Digital Commerce 360’s database of North American e-retailers sorted by web sales. Target ranks No. 5.

Ulta sales in Q2

Ulta’s net sales for the second fiscal quarter increased 16.8% to $2.297 billion from $1.967 billion in the previous year’s second quarter. It’s also up 87% from $1.228 billion in Q2 2020.

Comparable sales increased 14.4%. The company identified comparable sales as being for stores open at least 14 months plus ecommerce sales. Ulta opened seven new stores and relocated four stores in its fiscal second quarter and 10 in its first fiscal quarter. Ulta now has 1,325 stores as of the quarter ended July 30.

Chief Financial Officer Scott Settersten said an 8.3% increase in transactions and a 5.6% increase in average ticket drove the 14.4% increase in Ulta comparable sales.

Ulta had $1.67 billion in inventories at the end of its second quarter. That’s up 13.4% from $1.443 billion at the end of the previous year’s second quarter.

The increasing inventory is part of a trend of retailers ending their fiscal second quarters this year with more stock than at the end of comparable quarters in 2021.

Double-digit growth in supply chain costs persisted into the second quarter, Settersten said. He said that increased freight costs and higher wage rates in distribution centers drove that.

“Strong top-line growth enabled us to mitigate the gross margin impact this quarter,” Settersten said. “But as sales growth moderates, we continue to expect that higher supply chain costs, including fuel costs, which are expected to remain above last year, will be a larger headwind to gross margin in the second half of the year.”

Ulta sales in the first half of 2022

Ulta’s net sales increased 18.9% to $4.64 billion in the first half of 2022. That’s up 18.9% compared to $3.91 billion in the first six months of fiscal 2021. It’s also up 51.7% from $2.40 billion in the comparable period in 2020.

Comparable sales increased 16.2% compared to an increase of 60.9% in the first six months of fiscal 2021. A 9.2% increase in transactions and a 6.4% increase in average ticket drove that increase, the retailer reported.

For the fiscal second quarter ended July 30, 2022, Ulta reported:

• Ulta net sales increased 16.8% to $2.30 billion. That’s up 14.4% from $1.97 billion in comparable sales from the previous year’s second quarter. It’s also up 53% from $1.23 billion in Q2 2020. 
• An 8.3% increase in transactions and a 5.6% increase in average order value.
• Ulta had $1.67 billion in inventories at the end of its second quarter. That’s up 13.4% from $1.44 billion at the end of the previous year’s second quarter. 
• Ulta opened seven new stores and relocated four stores.

For the fiscal six months ended July 30, 2022, Ulta reported:

• Ulta net sales increased 18.9% to $4.64 billion in the first half of 2022 compared to $3.91 billion in the first six months of fiscal 2021. It’s also up 51.7% from $2.40 billion in the comparable period in 2020.
• A 9.2% increase in transactions and a 6.4% increase in average order value.
• Ulta opened 17 stores, ending with 1,325.

Percentage changes may not align exactly with dollar figures due to rounding.

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