In this clip from "3-Minute Stock Updates" on Motley Fool Live, recorded on July 29, Motley Fool contributors Ryan Henderson and Toby Bordelon discuss a few highlights from Ulta Beauty's (ULTA 11.75%) most recent earnings presentation.
Ryan Henderson: The buy online, pick up in store solution. I really liked that. That is traditional retail companies leveraging their retail footprint to help with their online strategy. I really like that. I like the companies that have built that out. That went from 4% of online sales to 21% over the last two years. There has been a big uptick in people that like to buy online and pick it up at the local location. Also, 30% of Ulta stores now offer same-day delivery through its partnership with DoorDash. You can buy something on Ulta and you can pick, all right, I want it delivered this day, assuming you're one of the 30% of Ulta stores in the area, and then DoorDash will be basically the conduit or the middleman in that transaction.
Also they've almost 38 million Ultimate Rewards loyalty members. That's a staggering number for me. I can't believe that they have that many loyalty rewards members. If I'm not mistaken. I think that might be more than Starbucks. Maybe don't quote me on that. But I thought it was, I thought I remember seeing a number that was lower for Starbucks. Then the last thing, they're trying a lot of AR stuff, which is cool. You can go in and they've got this machine that you see in the picture where it gives you a skin diagnosis or skin test. I don't know how much I would trust the results just like the cynic in me, but kind of a cool machine I guess. And then the mobile app allows you to try on different makeup products, different hair solutions with basically your personal avatar, so your face. It's implemented all these things so it's just more and more accessible and people can get a look at different products within the Ulta's store.
Toby Bordelon: Yeah, we're we're about out of time here, but I think real quick, I just wanted to ask you, you think that DoorDash partnership is a lasting one and I know it's been an issue with restaurants whether the fee is in margins on margins, do you think they're going to have issues with that or you think it's going to work out?
Henderson: I'm not sure. It's, it's definitely more costly for them to build out their own delivery team. However, if it increases the average order value enough that even if margins dropped a little bit, if it increases the average order value enough that gross profits still grows more than it would, I think it's worthwhile. The costly part is the delivery. If DoorDash is willing to do that at a reasonable price, I think it's worthwhile for Ulta.
