While Ulta Beauty is still trying to right itself from the impact of the coronavirus pandemic, the beauty retailer reported improving sales trends in the second quarter.
Net sales decreased 26.3% to $1.2 billion in the second quarter ended August 1 compared to $1.7 billion in the second quarter of fiscal 2019 due to the impact of COVID-19. Comparable sales decreased 26.7% compared to an increase of 6.2% in the second quarter of fiscal 2019. In the second quarter, transactions declined 36.2% and average ticket increased 14.9%.
Net income was $8.1 million compared to $161.3 million in the second quarter of fiscal 2019. Diluted earnings per share was $0.14, compared to diluted earnings per share of $2.76 in the second quarter of fiscal 2019.
During the second quarter of fiscal 2020, the company recorded store impairment and closure related costs that reduced reported net income by $33.5 million or $0.59 per diluted share.
“We have navigated the disruption and uncertainty of COVID-19 with our associates and guests at the heart of every decision. After closing our stores in the first quarter, we reopened our fleet in the second quarter with Shop Safe Standards and new operating procedures in place to protect the health and safety of all. I remain thankful and proud of our teams for their response and leadership throughout this challenging time and for their grace, agility and commitment to serving our guests,” said Mary Dillon, CEO, Ulta Beauty. “While the pandemic continues to impact our business, we are encouraged by improving trends. Comparable sales trends improved significantly throughout the quarter, from decreasing 37% in early May, as we began reopening stores, to decreasing 10% in July, when most of our stores were re-opened. Notably, sales trends have continued to improve, with comparable sales down in the mid-single digit range for the first three weeks of August.”
“We believe the near-term operating environment will continue to be dynamic and challenging, but I remain optimistic and excited about the long-term opportunity for Ulta Beauty. We know beauty enthusiasts remain passionate and engaged with the category, and we have great talent, a strong culture, a differentiated operating model, and the right strategy to drive growth,” continued Dillon. “As we transition into the new normal, I am confident the Ulta Beauty team will continue to innovate, move with agility and efficiency, and grow as the largest and most admired beauty retailer in the U.S.”
In addition, during the second quarter of fiscal 2020, the company said that it would permanently close 19 stores. These previously announced store closures will occur during the third quarter of fiscal 2020.
In terms of the retailer’s outlook, Dillon added, “We are encouraged by the recent improvement in sales trends, but we believe it will take time to fully return to pre-COVID levels. Given continued disruption from the pandemic, new operational protocols, and near-term employment and economic uncertainty, we expect sales will continue to be challenged for the rest of the year. Longer-term, we are confident that beauty will recover and thrive, given continued strong engagement and emotional connection with the category.”