Ulta Beauty Weighs Strategic Store Growth Plans

As the coronavirus impacts the market, Ulta Beauty has completed its phased reopening process, while adjusting its retail footprint with a mix of new store openings planned and some store closures.

“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, CEO, Ulta Beauty. “In parallel, we are making decisions to ensure continued strength as an industry leader with an eye towards long-term growth.”

Ulta Beauty noted that it has completed its phased reopening process. To meet individual comfort levels, consumers can shop via curbside pickup, buy online pickup in store, on ulta.com, via the Ulta Beauty app and in Ulta Beauty stores. In addition to its Shop Safe Standards, Ulta Beauty will require all guests and associates to wear facial coverings when in stores. As different parts of the country manage rising COVID-19 cases, the company will maintain its close monitoring of government and health guidance as well as local case prevalence to inform nimble actions where necessary.

Mirroring its reopening approach, the company began welcoming back furloughed employees consistent with individual store operational needs. To date, approximately 50% of those furloughed in April have been reactivated.

“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,” continued Dillon. “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.”

Given the uncertainty and disruption created by COVID-19, the company continues to refine its near-term new store opening plans and expects to open approximately 30 new stores in fiscal 2020. New store activity was temporarily paused in the first quarter due to COVID-19; openings are expected to resume in August 2020.

As new store opening plans are finalized for fiscal 2021, the company anticipates opening additional new stores in the U.S. and in mid-2021, will make its entry to Canada with a number of stores. In addition, after evaluating its existing store portfolio, the company plans to permanently close 19 stores in the second and third quarter of 2020.