ULTA Ulta Beauty

Kiley Rawlins Vice President-Investor Relations
Mary Dillon Chief Executive Officer
Scott Settersten Chief Financial Officer
Dave Kimbell President
Adrienne Yih Barclays
Lauren Frasch Wells Fargo
Steven Forbes Guggenheim Securities
Michael Binetti Credit Suisse
Paul Trussell Deutsche Bank
Simeon Gutman Morgan Stanley
Steph Wissink Jefferies
Call transcript
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Greetings and welcome to the Ulta Beauty Second Quarter 2020 Earnings Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Kiley Rawlins, Vice President, Investor Relations. Please proceed.

Kiley Rawlins

Diego. you, Thank thank discussion and quarter joining today us fiscal Good Ulta you Beauty’s our of second results for XXXX. afternoon, for for of the Settersten, Chief Hosting Officer; Mary call Officer. Dillon, today’s and are Scott Chief Financial Executive the Dave session. Kimbell, Q&A us President, join will for

place The projected I’d are language. XXXX. differ with Private not constitute may reliance deemed contained we materially historical safe filings begin, are of forward-looking statements, forward-looking company’s from XX, conference to Act of such only on those results Reform of future in and described in to the the Litigation the risks to facts, SEC. number Securities of these uncertainties, like Before in meaning statements you which this remind the undue all today, speak a Actual harbor August to statements which which of We company’s of within due call be XXXX. as caution the statements not you may

obligation presented do Mary earnings We’ll of from prepared required view our to by store financial adjusted which website at and in our to We have measures you these afternoon the Investor certain begin as and reconciliation which of statements, closure comments, will us Scott. be Relations and this with our corresponding in A found expect the charges by been our discuss impairment measures of stores. costs diluted associated to forward-looking for permanent is with remarks our no operations XX including section we GAAP not has can available the release, adjusting non-GAAP should In law, to except today’s so. reflect measures, revise or of EPS, update ongoing

the As our the after team prepared any IR be always, Instructions] for the [Operator follow-up comments, available questions up call. for Following will call questions. open we’ll

to Mary. Now Mary? to I’d turn like the over call

Mary Dillon

afternoon, Thank and everyone. good you, Kiley,

where of we overview are today. an with start Let’s

center decision associates, distribution since challenging for proud crisis all creativity our of how beginning store we’ve our guests I’m and every of we period. of the navigated leadership thank period. especially that will I On the earnings this of commitment to center taking process. our this each our through early call, the responded I associates Beauty pandemic, want to team were And their and other and unprecedented the Ulta really our and associate made. agility, to care our at last of our with say and First, in my have the teams during serving reopening stages of guests

the than reactivated of of safety offerings salon to for quickly. reopen were measured complete. During XX% these of and furloughed retail approximately social limited standards, reopening shop stores stores accommodate regulations with services. service our operating been to XX,XXX who more June, to are of about operating to our services, in resume stores XX% our second guidance, medical physical services hours. To all end place expanded capabilities process was our pace. open guests, thoughtful retail, to safe consideration Ulta date, Reflecting available makeup and are but associates or we’re in of it’s new this closely of Beauty protocols resumed not able offered we’ve resumption for of select more quarter, for the a strong are and stores to all skin and balanced mid-July, with desire Today the and on our has by we fleet. local new and with stores capacity began the services reduced our reopened have relaunching curbside a in By with nearly safety the we’re when experts about that We’ve brow working XX% we work. associates In to distancing normal, services ensure appropriate return

experience to safe maintaining and for our committed guests. a associates our We’re

will guidance fluctuating monitor the determine cases, options to to local modify revert markets manage if COVID-XX different as near-term. we levels from we continue our authorities government As need transmission shopping to to as closures or and well in health

turning results. to Now our quarter second

For the comp net $X.X total second and XX.X% sales sales billion, GAAP share. was $X.XX were diluted EPS quarter declined per

stores the XX% May, sales July most costs in three August. impact to charges of for we the closures with and improved as share. quarter reopening Comp $X.XX down significantly continued impairment only Sales adjusted first down the diluted store the Excluding throughout have of per comps mid-single-digit have to range of in began with after in associated early improve previously trends was the EPS down the stores announced from XX% reopened. weeks

the excited about we’re seeing signals guests. from positive We’re

beauty the during of engage in social increased the managing we However, the of maintained connection strong in a large quarter, led of guests in channels. time Whether continuation very changing? our avoid have home, need awareness near-term rest limited social the adoption our ticket. and XX% seen average we expect reducing category. of realities as From the the passionate and guests of of beauty encouraged We to growth buy physical complexities range while to fully educating shopping, concerns embraces with from to connection working with to while see as need but mid option. perspective, delivering Despite and see enthusiasts thrive in XX% consumers safety And e-commerce advertising connection is higher shopping store diminished, well. Ulta unaided content And the total quarter, of levels Curbside we’ve about brand the an social greater the quarter, XXX%. to achieved promotional not beauty channel through XX%. have excess inspirational growth with really and our about with year, children, relevant coming the ongoing through fewer believe and return stores confident e-commerce having it as coping we’re the the be uncertainties. take pre-COVID and our our some beauty-to-go Beauty, digital orders, continue we’ll given trips, to mask recover pickup category driving in focus the we how employment the Health live has channels remain engagement our messaging And sales will strong record likely gatherings is and or and ongoing we’re back online aided meaningful and the were and to know with pickup during see wearing impact. and consumers COVID-XX. activity with will demand on disruptions touch economic to totaling beauty our suppressed Longer-term, guests awareness continue emotional for we online the through for to distancing, it’ll given

our brand and is to of Our social response the concerns to our brands this the dividends improvements Building very continue affinity strong and health pay connection, with safety we’ll tumultuous during long-term. reflecting our advocacy, consideration, and guests. over integrity time,

Now performance by category. our turning to

beauty, quarter, across reopen quarter. paced in full beauty of the the saw During our we reopening market our Reflecting we all across increased trend prestige second sales process, mass our share share most improving declined we categories comp categories as an and major stores. for major

shifts makeup improved and brow these and makeup reflecting than and services reactivation and and including brow hair July. Sales challenged the skincare, reopened better social category due measured of double-digit and decreased to newness categories to consumer for fragrance, categories. others, sales innovation limited be some quarter, sub in capacity growth with with As trends continues of to delivering headwinds, Even bath of PCA, stores behavior The in our lashes, limited comp due perform services in eye. distancing. the

pent-up for driven and services. color as As average reopened, particularly – increases salons in demand, saw sales significant we texture ticket by

in The last we’re as a Importantly, growth stylists by safe and Ultamate scheduling and of Rewards number year million program in future members our our focused the rebooking to experience of XX.X quarter seeing members. active deliver double-digit loyalty visits. X% compared strong decreased proactively on to second enjoyable rates

XX at in As who shopped months. members a us active members reminder, with once the are least last have

modest we levels. quarter, our growth platinum in the and diamond saw During membership

lower However, new rates and due closures promotional were growth of activity. member and levels store to and retention pressured marketing

expand continue members, historically productive members engage our members to us greater previously only per online times to only frequency. and New with X digital rates in-store guests. healthy with year Omnichannel and continue most see through store engaged we spending member acquisitions more are channels most at our than

to second the penetration this in of pleased see nearly setting members our quarter omnichannel for we’re last and trends improving, half the last same and while open in members shifting year, beyond. of our online the penetration year. expanding the strengthening the fleet So X.X% members, growth grew only in the in share XX% X.X to our And second the to the our times year. our XXXX market represented double that in quarter, With attention new normal and of foundation profitable also business we’re guest

the accelerating call, introduced share extend in on like racial gains update I’d competitive our advantages. But five inclusion give our strategic to you priorities last equality, like we’re our perspective our On I’d and efforts where each an first, on to we earnings market areas. share diversity. expand progress of and to these

worked and systemic our our us, more brand and forces our we sharpened in how from partnerships board actions a we have been that XX% are value, half team. and is focus values of the Beauty black hard of country by are. important the resulted. In wonderful core retailer this I’ve country and everything represent and as Ulta our who priority marketing is important women. proud we’ve the to has our and a seven I’m do the our elevated and communications certainly show racism the CEO, inclusion and the our diversity been diversity been as dialogue in up for and always brand years than that to we awakening have a As of new not but At recent part and to

people executive Our ever, women. black to and do. includes so And our this more of Ulta there we’re leadership is color are our space. team overall team associates XX% our more XX% working in of than said, much is to XX% XX% women. Today, Beauty accelerate That and

inclusive we’re diversity channels to for serving and of building owned as an black recognize We’re and roster authentic We inclusion guests, beauty, America. experience a committed but of our grow and corporate brands. journey, to a working in using an our we’re diverse voices our as this social creating workforce representative leader amplify black and firmly to

progress priorities. we’re Let me our the recap strategic five making now on

across Our us. first our been we’ve a unlock with omnichannel on connect to guests priority We’ve is and new to is and channels this This the physical business made journey expand more and years potential for for not footprint. progress. digital combined our of deeply priority several

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business. We continue a our fulfillment to to invest capacity support larger in e-commerce

and center, the higher demand holiday pull-forward this fast As we call, operational of fulfillment discussed in our support of Jacksonville on track season. earnings to we’re the be opening last levels e-commerce to

speed ship-from-store capacity our to program evaluate while support network expanding continue leverage a and we’ll we’re can stores store and shipping supply store also our inventory. growing to labor increase to guests, how addition, improve leveraging to Longer-term, to XXX and our In omnichannel infrastructure we determine business. chain to footprint

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our Moving strategic priority. to on second

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also recover the to to same examples optimize opportunities taking optimization. the business, to time, and include few our at A actions addition we’re we’re looking near in at structure. the cost So store term stabilize

any We to always close decision portfolio. have with announced year store our and fleet profitable Last permanently this XX strengthen a we portfolio month, to strong bottom overall top as and there’s stores performers. our

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existing we growth plan to with balance year, the beyond upgrade to As for this will seek rents, we locations. opportunity lower opportunity

Second efficiency. example, promotional

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eliminated more limited example, and focused For this average is We These Jumbo leader hair Love discount participating significantly comp in our profit the promotional additional negatively the coupons. after brands, event, our stronger replacing we marketing more deliberate business despite for and event. event number eliminated a summer, category changes impacting and during the the of the it care. reduced rate core with hair

changes Another a store structure. labor manager This and service services, stronger create labor and management role guests create change roles model will new we customer a we’re manager labor and the will efficient example better store more cost of result model, responsible and This store with prestige for a eliminate fall, our retail. – linkage to events, It store in implementing will manager also single store prestige provide products expertise. model. and services and between our service

date, we XX,XXX comment associates, we’ve and model, brought additional one XX,XXX furloughed our associates. to about in labor Now back about April,

hours, the available, to part-time personal given will associates operating needs availability. reduced work know of our we Given our be all and not shifts able

to capacity limitations, take We will recover. demand about to and service that also realistic constraints, time want be likelihood the

furloughed new were of return These for the our few all environment. adjust taken this would associates not such, a to Beauty cost Ulta are our likely to that’s As year. examples structure

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outstanding diversity points and We service across and differentiated have business strong categories offerings. and model price with a

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Scott Settersten

good company XX.X%. XX.X% sales the increased and income Thanks, XX.X%, everyone. and Overall, declined were XX.X%. total e-commerce internal for the Mary, with afternoon, a comp and expectations sales the statement, declined a little sales stores with than stronger Average ticket from expected. softer Starting quarter for in line our with second little quarter while transactions declined

Mary due as As quarter the store quarter beginning experienced the we mentioned, the of in but to significantly closures, progressed. was pressured improvement the business

XXX% We pickup capabilities, are the omni-channel our comp and in-store. very pleased including curbside and our as operations, advantage exceeded online with expectations delivered of than of our the take guests to e-commerce continue quarter, a of pickup performance increase more which internal buy for

of expected triple was and As bath stores versus points to perspective, basis from categories XX% increased last of makeup continued three the points XXX but skincare, reopened, penetration fragrance slowed growth down last e-commerce From sales XX% as as mixed a digit collectively all to sales year. basis of year-over-year. deliver year, strong growth increased XXX

we the were in largest Similar we quarter, trends process. sales. driver through the quarter, a first for the the XX.X%, of down the was of XXX sales. quarter continued decline As points in was The fixed of points deleverage first of the all styling X% profit compared of store haircare reopening costs X.X XX% Many the what transitioned were ago. of at as to much to sales, and services sales, to year we a suspended flat category a was tools services saw lower margin quarter. due Gross significantly margin in basis about as percent saw of percentage XX.X% products second to

Although to not we apparent this margin store results in continue quarter, occupancy readily the gross overall reduce costs.

increased benefits EFG our long efforts, the to over higher is to curbside to less in-store real reflecting deleveraged we pickup also costs in In due gross shipping and efforts volumes. ongoing impacts margin market than a buy reduce occupancy will capturing negotiation first These us our COVID-XX. experienced pickup significant addition shift contributor estate the this term. from lease team was continue of albeit help our ongoing and efforts, online to Channel the quarter, large quarter pressure utilization of

As this gross quarter, more normalized shared on to we continue environment. we once magnitude return deleverage last would to not from operating of anticipate margin channel we shift a

experienced We also expense. salon deleverage in

stylists as salon our stores to of many furloughed we were continue and closed, managers elite pay our we While stylist.

as have as our by Mary and lower has mentioned, addition, salons guests’ In social in distancing, reopened, resulting safety capacity been constrained protocols sales.

inventory and discontinued and In addition adjust pressure The factors, to reserves quarter, turning makeup closed slow these we by the million $XX.X during permanently primarily well for in skews resulted the and changes seen as delays to by stores. increased sales consumer been makeup in quarters as over the exacerbated last has in has behavior, several have COVID-XX, which in newness innovation within we category.

we move that we term, turning factors aggressively to slower believe these will to persist inventory levels. healthy the through maintain in decided makeup As short skews ensure we

credits promotional In to headwinds of promotional as close we of impact in that activity, will by the XX addition, related partially These offset wrote the many card the on million stores as lower the the pullback inventory $X.X million previously off compared leverage as quarter. to from announced third were benefits SG&A program. well decreased chose second our $XXX.X to credit $XXX.X XXXX, and to reflect payroll quarter, we in both quarter during million expenses of in store paid quarters. The first in recorded quarter, retention to portion to employee available in credits a mind lower last of but decrease the employee the to keep million due It’s for benefits. second retention important were decrease SG&A second and the CARES the taxes the $XX.X attributable year in payroll of under Act. is compared that also was credits to made large

for As much the of quarter. many furloughed store associates were

lower million for in $XX.X million closed We back yet that also much PPE impact reductions into significantly investments a COVID-XX were closure impairment, stores in our related quarter. made store overhead, in initiatives, while incurred reflecting of we and expenses material of of that channels. anniversary, of offset growth recorded on have expenses on the also than by investing reducing support These spend digital reflecting costs. XXXX were print the quarter. pulled Store marketing increase We many of corporate for not and impact charge other the $XX.X been other to and and the more

based long-lived As we on reviews circumstances quarterly lease earnings through the values or perform be not for quarter or on when discussed may remaining current flows indicate asset first basis, term. events our a on future that cash expectations recoverable on assets call,

market the than of the projected $XX.X there charges the of resulted stores quarter, contractual current This where property rent cash the are lower flows asset impairment relative in of million. to based value obligation were which on our XX balance,

strong and our result as quarterly environment additional productive operating impairments, stores, of may a have process. but testing in complete fleet the We dynamic we

charge the an recorded closure million also XX million Pre-opening was permanent of of $XX.X to $X.X announced a year stores. $X million expense ago. previously decrease quarter, in related We the impairment a from

a that represents open. reminder, control are rent pre-opening not As expense we associated expense with stores primarily yet

openings our the expense million $X.X the a during second to August We not of and million Given half store resumed ago. XX of to income are disruption drawdown any COVID-XX to stores Interest early track quarter. fiscal related stores new XXXX. open $X.X open new revolver related in totaled chose of we year to compared pandemic, interest the the on in to

impairment $X.XX of related was $X.XX ago. charges As quarter, diluted was per closures diluted adjusted adjusted $X.XX costs alluded, reported earnings compared share per store of share earnings $X.XX to year second per earnings for GAAP to year compared share and last earnings share other a excluding per to

and cash to cash on confident have operations sheet Moving quarter and ended we billion the in the with balance now our in to liquidity flow, future. equivalents and that sufficient fund $X.XX we the remain cash and

For needed to the quarter accordingly. year, Inventory inventory X% primarily last quarter, grew stores reopened closely XX second have and demand inventory decreased new per total compared stores. reflecting inventory store as the to monitored support net we adjusted as levels slightly

XXXX, this we’re to Turning rest not now an the earnings providing time. outlook at of

about the share the to want I of thinking you with However, rest how year. we’re

half. second we a stores, As since it to but approach Mary seen with pleased reopened to take performance have the is sales we cautious we we’re the prudent believe mentioned,

uncertainty, planning in a teens be of comps ongoing reflecting are second the number currently low double-digit we in mid range down factors. to the half, to Given the

believe we markets in our related continue near levels impacts economic challenging. seen as we on the containing transmission pandemic we Two, experience promotional and First, are dynamic And environment COVID-XX. profitability. higher term business of to like have be to relative back will local the drive to volatility and activity others, pulling our

stores, when watching Compared environment in less expect the stores be we as as we’re costs closely competitive season fixed and first but adjust this half, we level e-commerce We finally, to much mix our last traffic stores anticipate we year, expect saw our in half our improve, as by half. store Thanksgiving. in were And first than ongoing physical what well the from in lower concerns as holiday limited deleveraged first leveraged we for not the and will be to channel than closed. course, a health trends, experienced second sales and if half profit the to higher consumer the penetration needed. but close as normalizes margin decision impacted and we’ll capacity Of will gross

incur $XX related costs to and second and half. million PPE expect $XX We in between million in the COVID-XX

to operating the taking in As we organization right environment. actively new size Mary cost steps across the are structure our discussed,

new reduced store and We look international associates. moderated limited delayed our the merit have open marketing, and controllable reduced expenses capabilities. increases corporate build for We repurpose pace and and and other number of to our of travel to We salon hires investments positions.

capabilities additional continue opportunities advantage optimize competitive our we identify growth. building forward, across support structure to future new to enterprise cost and also Looking to while the

cost efforts, to to plans. our continue management capital addition we refine spending In

and and $XX year million million stores, for for and new invest million, including million fixtures, store and chain about $XXX for is the million Our $XXX approximately other. between to remodels $XX plan merchandise and maintenance updated IT, supply for $XX

new stores expect XXXX open to We in relocate approximately five. and XX

XXXX, plans open still year, at XXXX. are as real for We stores many we in least finalizing do next in new our estate plan but as to

and growth to to turn have operator in evolving the in pace to And to we the over our While now COVID-XX fleet. to Q&A in our remain our response confident longer we slowed the market near session. the term moderate call back conditions, store expand continue new opening term I’ll opportunity


with Adrienne question. Thank your comes Yih you. [Operator Our from first Barclays. question Instructions] state Please

Adrienne Yih

the an want I to go existing see Good skew from broader brands? And go to back afternoon. the either but Thank to mall-based contracting wanted I you’re a distribution sort or now Scott, low nice given a some beginning all third prestige to mid-teen, the beyond to Mary, expand brands that prestige Dior? you very my of uncertainty you at is and brands are with non-traditional for third just And on contending opportunity through fragrance is year-on-year fourth newness with maybe are the two to there seeing of the channel, be quarter follow-up into double-digit quarter negative standpoint? back assortment we progress. the you taking my comment brands, of made similar if then question, in to coming on, clarification negative much. to quarter, Chanel the nature like you should the negative for running them Thank up than expect from or stronger mid-single-digit

Mary Dillon

So Adrienne, And lot QX questions. somewhat we’re than resets the with got start coming QX. There’s with launches say – directionally, we’ve we’d first. QX. second of maybe but right, start as expecting Because the one your so everybody I’ll a be to I’ll better of in for thank uncertainty knows, yes, you

just ways shopping cautious think holiday hours are and something think going new a about et about people I little to given is cetera. we’re available, more that all

So way. directionally that we’re thinking

Scott Settersten

stuff guys point to very sequence comp as at the looking of calendar, And lot the would track maybe as this is know I closely. concerned, far promotional you just a I

what right. we with last schedule trying third things, We types back things on over So did those of of quarters. And color you the year, comments. and can background about the of to some course our the being, we’re pull fourth in out talked

So the in that overall probably slightly balance overall. of fourth just the has place directionally, some volume quarter, taken on quarter of and the because sales weaker fourth activity promotional historically I of the would there say

Mary Dillon

you take you. would Dave, And the first part of Thank question? the

Dave Kimbell

absolutely. Yes,

Tarte a As of comes of for on grow relates that continuing dynamic a something yes, on an for on independent like we’re made we side, more see evolution seen to Decay prestigious side. we’ve your specific that, that, fragrance we we an assortment some Chanel. Kylie, while stores And where and in prestige we’ve it question brands. disruption marketplace, number and established And to and of makeup we’ve a that’s like across the Faced, in have line, a Too from business, specifically but our have of share the and Beauty those to all and certainly a been like rolled new different of exclusive exclusive with side luxury that Chanel the continuing out brands, about of advantage brands prestige strong launched advancements the innovation feel in brands categories and across have taken business. Urban all the small portfolio and types and we’ve And sure, expanded

we business all across our to expand share, So ways. multiple more and needs opportunity guests aspects see in of continued meet that capture assortment our


you. Thank

your question. next Boruchow Ike with comes from Our state Fargo. Please question Wells

Lauren Frasch

taking on for is Lauren Ike. question. Thanks for Frasch our Hi, This everyone.

taking bit does penetration how any new into seen Given XXXX, improve you margin for profile Thank might talk term And follow-up, that And the on longer in then current about overall of you. of as massive initiatives? margins in vision you e-comm we’ve to initiatives e-commerce that? in play online a the business? a be acceleration your that acceleration could the

Dave Kimbell

start the all that teams, the guess, question. by spectacular really with how we deliver, and year-over-year let to proud outcome work great But I people mean, support a distribution them. expansion, out e-comm just, first that’s digital store broad teams, centers, our outcome just that it like XXX% a a comp associates, was reiterating the overall. of Yes, a are I me our saying

average than Higher than the thought the at quarter, that, some the point quarter with higher for right? during being that’s With XXX%. the

So there. sharing very overall. of about, have mean, e-commerce the we very think time we that about is shy haven’t When business, outcomes been everybody, challenges of I we the over proud the we with aware that, rate.

business. So when to part years of in about heavy trying we’re now, time cycle we’ve cost. our we what to the And in And with versus worked and really balance think we’ve is point that speed pivot in about our of this it’s versus recent to crisis talked change dollars been consumers. support right investors to rate investment and advantage

to as years what that’s in So business. been doing the going for very well. happy future be support to trend we’ve And obviously that recent the

what future, guide our to XX to be about a continue again, to is, space. When time going historical in headwind. that’s we’ll this and there. it that, profile be it basis point margin focused think So we was the not in XX Obviously, the overall was

try to We’re we go on And improvement as sequentially can saw happy e-commerce with in levers, from And space. we that we deeper mitigate the that the moderate of quarter, working right? rate continue XXXX. we expect specifically pull sequential collectively the other we’re thinking to some into to and to first headwind

profile overall. that about again, have better that are and typically, those we’ve margin to transactions curbside available ticket been So and us. BOPIS, things we talking higher And now like

are then optimization. about of And DCs Mary other pointed right? headwind. of business, helps to we’re Our the more some operating efficiently thinking now, so cost parts that that offset

business, overall it. the of of e-comm e-commerce the not So of to overall piece help It’s else optimize not at just looking for more what margin the the it’s enterprise profile we question. are just

So team to framing healthier there, And entire now, marching focused a doing how the margins. XXXX, result we that. the start up on financial back best and is lot and we’re deliver operating of work a overall


you. Thank

next comes with Our your Please Guggenheim Steven question Securities. Forbes from question. state

Steven Forbes

Good for evening. Mary, maybe you. a question

right you more could omni-channel of of We’d I discuss sort has potentially how right, the pieces? group. love in about consolidation like the trip You repeating how new remarks spend of that their given just omni-channel all doubling mentioned to the penetration Or members. if the factor you – members sort consolidating rate, Curious hear categories? the doubling just Are think among of legacy prepared quarter. compared shopping the behavior with the about they think the to these right, this

Mary Dillon

they’re in-store mean, our I to but early times too you think guests. of who’s of parse their where engaged really as it’s three most I it’s kind And Well, exact only. this, But probably somebody know guests, like behavior. out as they omni-channel said spend Yes. early, shopping this dynamics heading. much historically we the I

So get folks this more migration to and a this. was sort forced of into

started online adding just we as we can us. online they and what started of they shop so similar our sort the value customer guests only margin spend that And to the total strong in-store this historically know significantly become, incrementally impacts most pretty categories have be and tended And at basically similar. of then quite debate keeping with because, of buying triple, while to and were you the were saw store their is

who back we’ve mean, people of folks And would our that we’re up we stores opened So pleased saw we in but to stores. people with back, certainly right. lot got coming a it’s coming a now traffic was, it line, where as behavior first started the and except similar expect the I pace isn’t

of both they I to idea good continues just things. of think that enthusiast, kind like the digitally, it get both support of things that premise, physically and out beauty shopping of those

their as email saw have them the now us we that loyalty to opportunity this also into also we So members, the who we people I lot convert a mentioned that, new with shopping program. rewards weren’t of have

mean, So is place showed good. the increase all perspective. this A, swift just that e-commerce the its I I that’s mean, that isn’t own. happened that, e-commerce on seeing that from we were think happening in business I right an

with on that awareness lot great focused what people done out digital terms we a we in like a doing of things traditionally that. to people’s were So in self-care of was really things was of time of drive, understanding minds, social pivoted channels and and would have sure on right? where and driving of mind make team job and guests there Our a top we’re connecting staying at

continue was think we strategically to will it’s think, watch a but for our and closely, it I we great pivot thing it good So a business.


you. Thank

question. Suisse. with state next Credit your Our Please comes from Binetti question Michael

Michael Binetti

taking a Nice thanks the I question. promotions half somewhat pullback for it’s in our plan I quarter. guys, found it job in back Hey the guess of on little maybe counterintuitive. the on

a good to unprecedented obviously it have that stores that’s been market grab there’s you. me I that share. closing numbers around an seems guys opportunity And department really think to of you for

you would You that half a I back customers’ those go walk seem opportunity, away doors and share. are to then have path – to new like to a apparent willing you that if I ahead. see the do in they be for from close customer mean, start

Mary Dillon

question, All you’ve part two being okay. asking

doing to Let I’d that said of opportunities can with you do Maybe high on Having But as targeted driving add we’re about market that, me level, gains start is Dave, say, just and we there. one. we’re there’s let’s can course, focused to out it. share how all be that. and strategic saying, as

beauty time. even We with while gaining we’re less that – have at are, I cadence mean, prestige, so a know in through we’ve this share had and and been we entire we competing well would than of pandemic, promotional that somewhat kind

becomes we at there’s we that sticky. we of like that will. efficient really we know or opportunity the especially mean, times And to program. holiday, we’re more the our we – get certainly, well with compete things to see strategic And for work how this. do be do if understand promotions and people opportunities just not to, is more So need to still idea as us very loyalty an we that into I convert aggressive convert, peak

add would that but think there a to it. we’re to this, didn’t So you think Is Dave, keeping way I a it’s good hit about obviously balanced eye on I or… on close anything that

Dave Kimbell

approach idea our promotional strategic this reinforce, we towards promotions. to not pulling, more in optimization. all But much Just eliminating being are of just yes,

Days fact, year. a event. and first of it introducing but strategic example biggest our call one be a events of many a the our of – has brand. more new It in driving promotional, an the is In most Beauty, times we good role strategic of important a to mass it’s this guests And for of what migration, XX will time Sunday prestige starting program

more direct just to will pinpoint effective that efficient activity, personalization like that to know to promotional and spend in the it optimizing more that target – marketplace. activities programs more with ultimately specifically focusing be and we like respond our So people direct loyalty that, program, efforts allow us in

Michael Binetti

follow-up, help mean, If to to you. could margins ask think a in the the I connect you us as progression multi-year. Got I that

heard was I today labor model. incremental, what think, efficient I it more more promotions, heard I efficient

online efficient. be should have coming coming back more or again, You so e-comm online Jacksonville

other the we’re XXXX to I should talked as we’re orient here. looking since rent several think about try reasons for guess ESG you I XXXX think some margin forget initiatives. What and about we headwinds be trying ourselves. at would offset are negotiations, that about we

Scott Settersten


to looking business in looking we’re at So throes of embedded costs when mean, it I right plan now, at Michael, – overall. operating new the XXXX and headwinds the we

might historically some of like the headwinds us. and we’ve some be payroll new, So mix things headwinds and store implications and how cost that talked with channel long about around PP&E

in which the minimum lots levers us We of there’s for pull for ones part operating to to base a that’s to focused on model. now, that so there’s focused And out we���re this double-digit And right of still the business. on. year. making team the speak to oars just of we’re trying Again, for the kind now, the of we’re focused it. going We think got on pull So decisions on push margins, over operating margins margins, is financial operating the threshold And healthy as lot water, overall of and next longer-term. results. we’re overall squeeze still best product our

further to year. more along have say on we’ll this So we get as that


you. Thank

Deutsche Our Paul next Trussell question Please question. comes Bank. state from with your

Paul Trussell

the job about to good Wanted in and afternoon ask quarter. stores. Good

of You reopened, your cadence digits. fleet? Canada? we different basis of remain store opening you going and the approach in on about strong target online to productivity the annual should an the store your in And up forward openings while triple mentioned do both stores U.S. How the your remains that think intact, view any still and very potentially as profitability long-term

Scott Settersten

Well, I guess, I’ll start.

the basic in back, our stated program, that we this for runway for So on in as obvious the And you’re right? so year range store we opening moderated just store pulled in XXXX. build-out So years XX of reasons, landlord got remarks we working at sure again, Working you new partners, looking and space now, co-tenancy next year, kind the advance, lining with you’re leases the mix the because making up we’re right there. right? on right way it

kind down of So are the far these decisions. road

more feel some So least good our pandemic maybe for and next of new across the right on the in U.S. about stores hopefully, impacts we depending at other now. XX how retailers centers year

opportunity So looking Again, to for we us, white stores have that right So if think fleet good. now we paper incremental at and got top optimal offering just mentioned in number sure versus the a we the of the omnichannel then and long-term right? footprint, feel would on still digital of making we’re the remarks we the the the sheet sales fleet had work for with we well. sales I want, as the with right that we layering of

make want sure that optimal, So again, is today, of with it’s it year. on in like So later to X,XXX midst X,XXX to more that’s we’ll that to now something that a and we definitely we’re mean, comfortable share feel feel have right? we range. just in looking at we that still good I the and the work


you. Thank

question. comes Gutman next Stanley. Simeon from question your state with Our Please Morgan

Simeon Gutman

Hi, follow-up is you’re My everyone. financial related. and Hope one in good. question

inclusive And about the as they’re that then talk as that the what XX we or leverage mix you result per mentioned was able pure And can you to channel business to to can business. the so something to They like that in Scott, going or e-commerce overall costs business? got that that impact Are quantify asked penetration happening to or First, up, number the exclusive a related to overall basis lower. earlier, fixed of went margins hit. store? sound sense. was was was Was forward? understand, was going that Hopefully points to the the that that that made store deleverage increased, XX channel even comment only the you

Scott Settersten


we’re about question of first question, as second But Simeon. the So the there. thinking part far your as

already. we cost focused a of for overall years that on been fixed is couple have something So

real in about talk do is growth or there. work estate a EFG, we we the that pillar efficiencies core when So for

when not future stores. again, we’re thinking further individual out the overall and whole with to looking into or portfolio just So economics landlords, those on reposition on renegotiate stores and stores the opportunities about dealing renewals

So a of underway time. that’s for been now period

really we’re we’re – in got process good so we’ve about the embedded feeling business And an doing. and we’re

put So that steroids kind the near-term. of on COVID-XX just in here

drive the had, retailers like other see things. Behind better so We’ve got they’ve you again, of a lot choice got about for feel a one we’re many landlords, to same retailer beauty to the we’re talking we relationships, of doing strong So challenges add of we a mix centers. a to traffic being healthy scenes, category a the process. we’ve the lot and

we to best a position like make deals. plan. we’re good sure we That’s long-term our So be economic the feel that in get part will something overall of

getting will over up that the scale benefits continue And We’re now. we long-term. to

historical XX leveraging we’ve reacting As five that mean, to and that’s been three months the basis and to on far that’s the points optimize overall impact has to – call here been trying turned XX as I over it, again, the our in – there. the and page headwind last guidance.

I business times. efficiencies as and to think, throughput scales Xx I mentioned better getting the Xx up earlier, DC are

that the the U.S. network in here the shipping mean, you’ve there on here out of seen overall. surcharges from I We are are headwinds, operations the of are of coming some efficiencies the getting reports some news

item PP of we a I That’s the put smaller and we’re the it together some smart of a now what the we’re say of to into things again, But gross able whether when about long-term too specific compared all long-term. to here all overall in best dealing But other little that’s puzzle the bit answer headwinds again, against. margin chain. pieces they costs, XXXX. here margin And that’s that scheme it’s got this with impacts card dealing that kind we’ve putting it’s a mosaic that a big team early of other with business, or supply headwinds digital So that to another in the operating quantify the with, impact things, great we to the of would we’re thinking wild up really of kind can. come the PP&E try the were in is. in be of balancing on to the over

Simeon Gutman

Thank you.


Please Jefferies. state with Wissink Steph question. from comes question next Our your

Steph Wissink

Good you. everyone. afternoon, Thank

First if us question unpack you just a transitory I’m of the those. margin. can to I’m the elements. curious, if on you quarter, Scott, for help SG&A. us had you some on back-half you’re is wondering, gave In great part detail the for willing some us few direction gross give

I mentioned retention credits, you million. around think $XX

Some us just about of first Dave versus And if Maybe your second? as on and about think semester the store staffs are then you still for furlough. related that you to marketing. takes think puts help and Mary

I pulling unaided despite think was Mary, you back your awareness mentioned that marketing. pretty on significantly stable

better how selected on wondering about spend forward. brand, you’re the how going today. And to marketing if that Thank if you’ve been Ulta you. you’re you much thinking saying in that reshaping, I’m the known So you’re that’s if need past, changes better and you marketing think

Mary Dillon

made wasn’t that’s thought comment, I’m probably I I thrilled had question. sure one, that because start I’ll logical marketing a I when that with a

it maintain that, means is equity say unaided retain through am, the make the would I’d over able I Dave that to advertising. to I there’s I like to time. investments great Now consistent brand think, aided being awareness, media, you say and I kind and strong things but guess, like lens well, awareness closer notion of than of have of

use. and team amazing do day every maybe we really that maximize pieces on marketing looking need But the investment there ability we that job to kind pulled at of leverage of improving just what create because So didn’t do our back, and here constantly the does we have return demand. have some to we to an

efficient I So marketing continue more investments wrong, think to over It’ll time. so. do I’m if our tell gotten, me

Scott. okay, So,

Scott Settersten


half million the back year, Act PP&E costs the in primarily for $XX – quarter right. was costs. million, you’re costs The the $XX SG&A SG&A in to won’t of a million half and PPE that’s so then in thing recur But of back So half the have $XX CARES year. it the second one-time the the of back we’ll the kind

of lot the stores in metering and the think safe making of people When to labor. out a you it you the got heard about and guiding that. about of store of few sure cleaning payroll So and practices then stores is all of some talk them item. we’re Mary, and and related supplies changes the SG&A to line Store we’re us largest bucket benefits is you in here, a Directionally making the mentioned those. shopping

lower was lower half. so as were versus half that the in versus And not Marketing year, half second low last last those by taken. the of actions some but year it in as the first second in

growth to year. versus And there’s yet year be some in putting half. be Overhead really made the second the some – because Some first full Television through some got then the are about. advertising, investments expenses those half going anniversary new we – in so to still we’re excited great advertising growth of last some we’re of and We’ve come here, would out when bucket. last we pulled right? the investments be we get

Mary Dillon

Thanks joining today. So, for thank us everybody you.

and are report quarter we with in speaking again ones I all I want just associates to Thank all as And appreciation We’re results. efforts, navigate you colleagues my to December when we forward their our environment. Beauty our time. out can to that look third of this healthy. loved you express unprecedented well see sincere you. and of and safe Ulta hope your for through they we your just of


may you Thank disconnect. parties for your you. Thank This concludes participation. today’s conference. All