Ulta Beauty Has a New COVID-19 Strategy
Ulta Beauty's plan to navigate the impacts of COVID-19 involves having fewer physical stores in the U.S. and new physical stores in Canada.
The company gave a business update this week in which it said it plans to open approximately 30 new stores in fiscal 2020, lower than the "as many as 40 new stores" it had previously planned to open. New store activity was temporarily paused in the first quarter due to COVID-19; openings are expected to resume in August, the company said.
The company also plans to permanently close 19 U.S. stores in the second and third quarter of 2020.
“In navigating the fluid dynamics of COVID-19, we are keeping the safety of our guests and associates at the heart of every decision we make,” said Mary Dillon, chief executive officer. “In parallel, we are making decisions to ensure continued strength as an industry leader with an eye towards long-term growth.”
Ulta also said it will make its entry to Canada with a number of stores in mid-2021.
“Our differentiated operating model, strong brand, dedicated associates, and engaging guest experiences continue to reinforce our optimism in long-term opportunities to increase market share and expand our retail footprint over time,” Dillon said. “We anticipate COVID-19 will influence longer-term market shifts and create new real estate opportunities, supporting our ambition to ultimately operate between 1,500 to 1,700 Ulta Beauty stores in the U.S. To do so, we are proactively optimizing our real estate portfolio and have made strategic decisions to temporarily reduce new store openings and close a limited number of stores this year. Overall, our real estate portfolio generates healthy returns, and this limited and targeted approach to closing stores will position Ulta Beauty for even stronger financial performance in the future.”
Ulta Beauty has been hit hard by the pandemic as hordes of shoppers have turned to buying their beauty products on the Internet even though the retailer is offering curbside pickup and buy online pickup in store. When its first quarter ended on May 2, sales had declined 32.7% to $1,273 billion. The lost revenue caused the company to post a net loss of $78.5 million compared to a prior year profit of $192 million.
Last week the company said it will launch a sustainability initiative in the fall that aims to attract more sustainability minded shoppers, an increasingly sizable segment. Conscious Beauty at Ulta Beauty is billed as a holistic initiative to provide shoppers more transparency about products. The program will certify brands under five key pillars: Clean Ingredients, Cruelty Free, Vegan, Sustainable Packaging and Positive Impact. The pillars are "intended to meet guest needs and leave a positive legacy for our world," the company says.