Big-box retailer Ulta Salon, Cosmetics, & Fragrance (NASDAQ:ULTA) delivered a great quarter, proving CEO Mary Dillon's mettle and affirming management's five-year plan to scale Ulta's business on a solid foundation, but can it keep up those results going forward?
The company accomplished its goal of getting all customers on track in one loyalty rewards program, and while doing so increased expenses for the quarter, it should pay off in larger basket sizes and more frequent transactions going forward for the more than 13 million Ultamate rewards members.
Ulta also added more than 20 new stores and is on track to build 100 net new stores this year. With fewer than 700 total stores and management's goal of 1,200, Ulta clearly still has room to run. Online sales increased by more than 70% this quarter, which is good for several reasons, not least that online sales are higher margin, it's easier to increase basket sizes with online coupons and free shipping minimums, and customers who shop in stores and online are likely to spend more at Ulta overall.
Stock Advisor analyst Sara Hov talks about what's ahead for Ulta, including how it will hold up against the tough competition.