Ulta Q4 profit up 9.5%; to open 100 stores
Bolingbrook, Ill. — Ulta Beauty’s fiscal fourth-quarter earnings rose 9.5% on better-than-expected sales. The fast-growing beauty products retailer plans to add 100 net new stores, expanding square footage by 15% and remodel 12 locations in its current fiscal year.
“Ulta Beauty achieved excellent top line growth in the fourth quarter,” said Mary Dillon, CEO. “We delivered earnings growth consistent with our expectations and made significant progress with our key growth strategies.”
For the quarter ended Feb. 1, Ulta reported a profit of $70.7 million, up from $64.5 million a year earlier.
Revenue increased 14% to $868.1 million. (The year-earlier period include an additional week of sales.) Same-store sales rose 9.2%. E-commerce comparable sales skyrocketed 82.5%.
For the fiscal year, Ulta said it opened 127 new stores, completed four store relocations and remodeled seven stores.
“I am very proud of the team’s accomplishments during 2013,” Dillon said, “including the completion of the most ambitious store opening program in our company’s history; the addition of 25 significant new brands contributing to 7.9% annual comparable store sales growth; exciting growth in our loyalty program, now 13 million members strong; and rapid growth in Ulta.com, driven by major steps forward in our e-commerce platform and fulfillment capabilities.”
Although Ulta plans to open fewer stores this year, the company is increasing its capital expenditure budget to $265 million from $226 million last year.
“From a position of strength, we are making important investments to support the long-term growth and success of Ulta Beauty,” Dillon said. “We are building the right supply chain and systems to support 1,200 stores and a much larger e-commerce business, we are developing our customer loyalty programs and CRM capabilities, we are investing in brand awareness to drive new customer acquisition, and we are working to deliver a differentiated customer experience. All of these initiatives are designed to drive sustainable growth and create shareholder value.”
Not cool: Aeropostale’s mall traffic troubles
After a 15% fourth-quarter same-store sales decline, Aeropostale is looking to accelerate the pace of previously announced store closures, further reduce an already limited store expansion program and has secured new financial flexibility from a private equity firm.
Sales and traffic at the teen retailer’s roughly 1,100 stores were in free fall for much of last year. The fourth-quarter comp decline of 15%, on top of an 8% decline the prior year, followed a comp decline of 15% in the third and second quarters. Sales during the 13-week fourth quarter declined to $670 million compared to $798 million during the 14-week fourth quarter the prior year. Even revenues from the company’s e-commerce business declined, dropping 12% to $85.6 million, as teens shunned the brand online as well as at the mall.
The company reported a net loss of $70 million, or 90 cents a share, which included charges totaling 55 cents a share. In conjunction with the release of its financial results, Aeropostale said it signed a commitment letter with Sycamore Partners and one the private equity firm’s holding company’s for a $150 million credit facility and product sourcing services. Sycamore is already an investor in the retailer and if it exercises convertible preferred stock granted at $7.25 a share it could end up owning 12.3% of the company. In addition, Aeropostale will now begin using a company controlled by Sycamore, MGF Sourcing, to diversify apparel production. Aeropostale said it will continue to award orders through a competitive bidding process but also said as part of the sourcing partnership it is required to complete minimum merchandise purchases each year for ten years.
"We are moving aggressively and taking swift actions across all areas of our business that we expect will improve our operational and financial performance over time,” said Aeropostale CEO Thomas Johnson. “The commitment letter for a strategic partnership and financing that we announced today more strongly positions the company and provides us with the flexibility to continue executing on our strategies designed to reposition the Aeropostale brand."
In addition, the company said it had retained a real estate consulting firm to investigate accelerating the pace of 50 planned store closing and other opportunities to reduce occupancy costs. Further cuts were also made to the company’s capital expenditure budget which now stands at an estimated $22 million, down from guidance provided December 4, 2013of $35 million and a prior year expenditure of $84 billion.
As a result, the company said this year it will open approximately seven Aeropostale stores, down from 11 previously, and remodel, either partially or fully, approximately ten Aeropostale stores, versus 26 previously. Only one new P.S. from Aeropostale store will open this year versus prior plans for five P.S. stores.
"The results we generated in 2013 are not acceptable nor are they a reflection of the progress we believe we have made in transforming our brand,” Johnson said. “Having evaluated what we set out to do in 2013 and what we learned, we believe our strategy surrounding product, brand projection, process and growth is even more crucial to winning in today’s challenging retail landscape."
Sephora engages consumers with social shopping platform
Sephora has launched Beauty Board, a social shopping platform designed to engage clients through beauty images. Users will be able to post, share, browse and shop Sephora’s photo gallery directly on Sephora.com, the mobile site, iPhone and Android apps.
Users will also be able to upload photos, tag the products they use and give helpful tips on how they achieved the look.
"Our beauty lovers are gathering and sharing beauty tips across a variety of social properties like Instagram and Pinterest, as well as our blog and beauty community site," said Julie Bornstein, EVP, chief marketing and digital officer. "So we took what we admire as social users to the next level by developing and integrating our newest social site, Beauty Board, into our Sephora.com experience. Sephora shoppers can now share looks or hauls, and tag all of the products they used to make shopping easy for the entire beauty community. Best of all we designed Beauty Board to seamlessly connect with our clients’ other social platforms, providing an informative and social shopping experience for all."
Using their current Sephora.com account information or upon signing up for a new account, consumers will be able to create their own social accounts on Beauty Board. The Beauty Board will simultaneously launch on desktop and mobile at the same time, making it easy for users to upload their photos via their mobile devices.
The Beauty Board features:
- Filters based on interest: members can search across the site for inspiration from other users in a variety of ways, from newest and most popular, to categories like hauls and skincare, plus keyword and hashtag search.
- "Tag-able Beauty:" members can tag all the products they used in their posts, so others can get the same look and shop for any of the tagged products on Sephora.com.
- The ability to "Love" photos to be saved for later: love a look, but don’t have an occasion for it just yet? Save it for later by "Loving" it.
- Infinite inspiration: browse an endless amount of photos from multiple beauty evangelists, including Sephora Users, Stores, Beauty Pro Team, HQ staff and Brands.
- Share across your networks: any upload can be exported to the consumer’s social channels on Facebook, Pinterest, Twitter and Google Plus.
The Beauty Board already features Beautyblitz.com, Beautyhigh.com, Bellasugar.com, Byrdie.com, Temptalia.com and the Sephora PRO Team.