Ulta Beauty Faced Headwinds In Q1

Ulta Beauty is looking to regain its footing after the coronavirus impacted sales and earnings in the first quarter, and the retailer continues to ramp up its store reopenings.

Net sales in the first quarter ended May 2 decreased 32.7% to $1.17 billion compared to $1.74 billion in the first quarter of fiscal 2019 due to the impact of COVID-19. Comparable sales decreased 35.3% compared to an increase of 7% in the first quarter of fiscal 2019. The 35.3% comparable sales decrease was driven by a decline of 38.6% in transactions which was partially offset by a 3.3% increase in average ticket.

Operating loss was $101.5 million compared to operating income of $237.5 million in the first quarter of fiscal 2019. Net loss was $78.5 million compared to net income of $192.2 million in the first quarter of fiscal 2019. Diluted loss per share was $1.39, compared to diluted earnings per share of $3.26 in the first quarter of fiscal 2019.

“Fiscal 2020 started off well, with good growth in comparable store sales, market share, and our Ultamate Rewards loyalty program through mid-March. However, the rapid escalation of COVID-19 resulted in significant disruption to our operations. For much of the first quarter, Ulta Beauty operated as a digital-only business, and while e-commerce sales exceeded our expectations, it was not enough to fully offset the impact of our store closings,” said Mary Dillon, CEO, Ulta Beauty. “As we have navigated the pandemic, our priority for every decision has been to protect the well-being of our associates and guests, and I am incredibly proud and appreciative of how quickly our teams adjusted to the dynamic environment.”

Dillon added, “With safety continuing to guide our decisions, we have begun to reopen stores, and today more than 800 stores offer curbside pickup and more than 330 stores are open to guests. While it is still early, we have seen stronger-than-expected sales in reopened stores, and we’re seeing great engagement with our salon services, where available. At Ulta Beauty, we have a strong, differentiated operating model, a brand that is known and loved, and passionate and optimistic associates, and I am confident we will emerge from this crisis well positioned to accelerate our market share gains and extend our competitive advantages.”