Beauty Retailer Ulta (ULTA) Carves Profitable Niche

Specialty beauty retailer Ulta Beauty (ULTA) has carved out a unique space for itself amid offerings from department stores, drugstores and the ever-looming 800-pound gorilla, Amazon (AMZN), Investor’s Business Daily reported.

Conventional drugstore brands like Revlon and L’Oreal are featured at Ulta alongside edgier titles such as Smashbox and Urban Decay. Ulta also offers a full-service salon in every store and “brow bars” for eyebrow treatments at some of its almost 900 locations.
Ulta also has a rewards program, offering samples and perks in exchange for shopper loyalty. The Ultamate Rewards program membership has grown to over 18 million members, and those members offer the company precious insights into their shopping habits, including frequency of salon service use, spending patterns, favorite products and other data.

Ulta’s online sales, while a single-digit fraction of its overall net sales in 2015, have been growing at a heavy double-digit clip every quarter without weighing on same-store sales. In the fourth quarter, reported on March 10, Ulta’s e-commerce sales leapt 44.2%, while retail-only comps rose 10.4%.

And the company’s per-share profit climbed 25% to $1.69 on 21% revenue growth to $1.27 billion, both beating consensus estimates. Ulta also announced an accelerated share-buyback program.

ULTA is up 60% since it was recommended in Cabot Growth Investor in November 2014.

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