ULTA Ulta Beauty

Kiley Rawlins Vice President, Investor Relations
Mary Dillon Chief Executive Officer
Scott Settersten Chief Financial Officer
Dave Kimbell President
Erinn Murphy Piper Sandler
Joe Altobello Raymond James
Oliver Chen Cowen
Rupesh Parikh Oppenheimer
Simeon Siegel BMO Capital Markets
Mark Altschwager Baird
Call transcript
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Greetings. And welcome to the Ulta Beauty Third Quarter 2020 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. pleasure your my Ms. now is to host, introduce It Investor Kiley President, Rawlins, Vice Relations. proceed. Please

Kiley Rawlins

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

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

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

afternoon with and remarks We Scott. will Mary begin from this prepared

call, question one us as to our Following scheduled follow-up to this one you your allow for questions the possible during questions. and we for many the would please accommodate limit we ask time as will open To call that hour comments, question.

and the Patrick any available questions always, will I be for follow-up after As call.

Mary. to Now I call will turn over Mary? the

Mary Dillon

and good and difficult want Ulta guests well our Ulta financial you, model how taking in of reflect demand. continued Beauty period proud very responding of this this reported of serving teams Thank through thank to agility, everyone. the care be navigating all trends and are I for and of consumer the to improving our to afternoon, I we during Beauty and Today, continue period. that each associates commitment our unprecedented other Kiley, results creativity their strength and

share. billion was quarter, GAAP third on $X.X sales we share. for Building momentum per EPS the net $X.XX diluted EPS and the were end the third was of the in through quarter the at For promotional last per Adjusted activity quarter comp saw diluted with by sales store continued comp decision impacted our X.X%. mid October second August we from The year. single-digit sales quarter experienced to declines declined not September, repeat certain $X.XX

owned, promotional to reopening events members Members of member-only also profitable call, Ultamate and we reinforce our Program. back process. Ulta our to to completed We Beauty, channels on executed We In the and Our amplified the and successfully Event competitive, compelling of To strong to to phase support we intended our several offers we and streaming accelerated to Beauty digital quarter, rewarded Rewards the improving earned welcome products. our and We engagement of ever earnings for and mass As drive approach Steals, our third services of value profitability. XX having our we Days that Love color We the greater sales. authority products. remain event to while last storytelling to length around working prestige optimize newness reducing reengage our and events a promotional include store care healthy while executed points and first our are first drove focused guest with across paid guests the event, we elevate to our and self-care discussed launched We most Rewards expanded makeup guests, hair, more brands. one excite our Gorgeous categories, events drive Hair migration engaging of exclusive event hair Haul productivity. reengage Beauty, to expanded through beyond And leverage the key strategic messaging Fall focus offers to further black-owned

launch in eye as positive and by brands by serums category routines to Now support we body skincare well delivered category, the growth and driving The innovation La increase beauty while First across opportunity their newness this Increased for major face as and expand Ordinary, a turning growth one most home self-care. growth consumer this categories, for creams into our as treatments, most form share market our trends also key we to Starting strategic Aid as interest know skincare or continue category. performance and Fragrance our increasing strongest prestige Roche-Posay. assortment, growth. From continue strong Leaning in treatments, driven newer these was market our of CeraVe, to of to categories. space expanding are in we like comp work, proprietary brands our bath increase category, our existing and marketing are TULA our enthusiasts skincare share and well like, Beekman insights as beauty maintaining XXXX, and benefited with from Fox and category Marc this Beauty like from continues responded Textured Beauty comp hair and strong with Ulta brands haircare, positive by well like as YSL Gifts driven to Within sales newness, brands, highlights of our we comp delivered Sales Fragrance Fragrance trends, growth from DIY double-digit month. established color Arctic innovation quarter Jacobs. unique Madison Pattern programs, growth growth. Hut. haircare programs. Reed. as and styling and program, newness exclusive this quarter, category tools and from Curlsmith of bath Collection and delivering Purchase beauty Guests to like deliver brands The well Crush ongoing Hemp, by R.E.M. delivered also introduced Ross Ulta Tree deliver Tracee our a hair strong Reflecting this to Truly, quarter. each growth, Grande Ellis Ariana continued brands fragrance by also Beauty exclusive also and growth our driven self-care favorite and fragrance which nice

including more styling popularity leader well Despite continued eye. be guests and above perform behavior newness to and continued shifts and Our also headwinds, brow sub-categories consumer delays and planned Makeup to given this as the business lashes, focus continued drove the and to different strong newness challenged, continue to one-step perform looks. innovation. quarter growth tools better, from these leverage that in tools achieve in Dyson options mask of in

with limited resonating with more Makeup nostalgic to like Harry collection while really be Potter collection, guests. to themes ColourPop’s important continues year, Nightmare Newness guests, Ulta well Revolution’s Pocus Before all Christmas Beauty than last Hocus and

shift, they has pandemic beauty consumer adoption results the continue to increased have of shop members channel accelerated physical our stores Although online our even and for that confirm shopping. to their as insights in prefer

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to now Services. Turning

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the XXXX and in continue teams day-to-day we manage our to growth foundation the in environment, are current also operations As beyond. profitable building for the

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Scott Settersten

dedicated We and keeping our you income operations time. safe will hope everyone. Beauty your reiterate difficult tireless all staying support safely appreciate afternoon, our the X.X%. serving with I thank I ones Ulta company and Mary’s Net comments during are good of declined for and declined smoothly comp in their guests will of for total associates and Mary, and running healthy. loved and your efforts sales our X.X% the this statement. begin and Thanks, quarter

performance, pandemic, our while traffic expectations. the softer are XX.X%. COVID-XX internal for from Average by Given the topline increase impacted primarily both pleased units increased better as challenges quarter continued results X.X%, we were be to declined this conversion to in transaction, experienced ticket very in an the with but channels, We than by per stores. nice transactions driven

growth relative growth strong continued to As versus expected, very year. slowed the to quarter, e-commerce second but last deliver

to of from the down XXX sales. XX% and of about increased to products haircare points XXX XX% down capabilities. the e-commerce quarter, points operations increase basis online, our XX% third styling From points delivered XXX basis Our XX% basis sales, collectively sales, this XX% to to guests about in strong e-commerce again penetration XXX perspective, sales, store of sales, the tools was advantage comp points pickup totaling for fragrance X% approximately Buy a was take was of while of in and last double quarter, mix continue of as omnichannel services skincare, makeup basis year. the a year, of category last increased quarter bath

our Channel continuing open improved to the merchandise shift As contributor COVID-related lower overhead offset the promotional largest channels. reduced that sales. The for second expenses stores. a margin benefits the activity, driver managed due decreased expense Store higher the stores $XXX.X stronger lower investments of and million quarter cost also our as support well compared year. store COVID-related reduced $XXX.X for an was to reflects also print, PPE efforts. to corporate headwinds Mary year-over-year, offset expenses gross to These corporate benefit and quarter, this were and entire overhead last since of traffic offset albeit decline to profit we digital we million, from These than to spend growth partially in more efficiencies third from than in constraints. ago. SG&A and partially benefits, increase experienced onset investment in quarter. in by also trend the about was Similar again basis was impacted lower quarter, deleverage as lower in was compensation our as or less trend. lower deleverage gross was year reductions capacity expenses. were last driven negatively which in primarily we by in higher by margin, increase indicated, EFG to I driver strategic what the as made largest payroll reflect was of points, primarily softer investments service large of labor note Marketing The Gross by second to reflecting margin as were in in a business the we initiatives quarter, the pandemic, XXX expense, the on and a to experienced to sales adjusted the demand. decrease XX.X% margin what lower fixed we offset continued seen a have to modest compared XX.X%, year. due by be growth of increase would

lower incentive well levels, financial was As of performance quarter reflecting third last as price. decreased below a compensation as the the prior expense targeted versus a in year, year, stock reminder, that

This a restructuring and quarter, for other impairment, $XX.X charge million recorded we of costs.

lease costs resulting million a severance. to related Canada, in mentioned $XX.X we impairments, planned and expansion charge asset Mary As earlier, termination our to long-lived suspended

the with the $X million effort salon million to year Pre-opening and XX now related from incur prestige elimination store recorded of wind the of to costs $X.XX $X.XX, third $X.XX $XXX,XXX the expect $X.X associated credits. totaled was restructuring we this million of We last third stores income compared in to stock continue also quarter, new In expenses the resumed interest of earnings decrease Canada for and and share down ago. $X.XX, million the roles, teams the ago, in severance impairment, between other was year termination a manager million, in $XX reported third ago. to per year exit a charges previously August which new expense quarter. GAAP XXXX. Our quarter, a XX related year manager compared excluding was in to early fiscal $X.X XX compensation Adjusted in a a announced diluted closure quarter, million we per openings share, lease and stores. revolver $X.X related to and costs earnings of recorded permanent other of compared to year��s drawdown and with excludes ago. expense million to $X.X opened to tax stores Interest Diluted compared $XX our

to and on Moving the balance sheet cash flow.

manage $X.XX stock and sufficient and have that increase outstanding liquidity measures confidence support adjusted the For program repaid per suspended core to receipts. $XXX edition facility to Reflecting ability and to decreased liquidity. $XXX.X authorization. our have billion have depending quarter, in remaining with we flow recent limited We into in are strong operating last our conditions. our and year-over-year, We stock third million as repurchase flexibility inventory and beginning cash billion of September investment We cash buyback current our quarter, this may total reduced leaning XX.X% more down to sets that the to precautionary the holiday currently to drew product. we buyback ended inventory our on $XXX borrowings on pandemic, $X under million and market remain decreased of on on generate quarter program we were we XX% and the priorities, million demand our At inventory the and quarter exposure resume confident as revolver our under compared the risk, year and store trends cash our operations reduced holiday Xnd. To maintain equivalents. we we

precision. difficult rest uncertain be environment are with business Turning EPS time. operating overall forecast providing and not Therefore, of now to we XXXX. to at guidance the to it continues The remains this our

However, I thinking we the want are to provide some fourth color on about quarter. how

by encouraged sales results for November. are the We

pandemic, demand the difficult to any and the restrictions environment may However, consumer it including how impact continues predict of dynamic the is operating rest the of effects quarter. to through be lockdowns or the

fourth we declines quarter range your now outs the mid-teen as our be models. think comp As of comps XX% earnings slightly to shared in you expectation such, to Two than XX%, the better down we expect about of call our last call. on

As structure our store a to store model. realigned Mary more efficient have shared, management we cost create

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million $XX we to the Second, quarter. we expect be year’s fourth in to the incur Overall, expenses expect in to million and quarter SG&A $XX fourth last levels. COVID-related will dollars of similar PPE

to plan. continue adjust capital spending We our

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

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

a but opportunity to reiterate expand long-term We are final comment. business. to and I want opportunity top potential still expect long-term to store remain to that next to this continue double-digit year, to One least Ulta our our in investors profitability plans of continue is fleet. at that confidence We finalizing Beauty new our for We is recognize XXXX. mind take in confident margin our open stores XX the with

is teams we improve assortment, margins return to as pandemic, margins to say through given to as we expand the when with as have and EFG visibility will environment of our our lack well To However, merchant merchandise start, stabilize will work uncertainty as enhance and recover margins. the double-digit it opportunities. to efforts operating continue negotiation both healthy we certainty product when from difficult and the to and

we will be return and fixed able to to costs. stabilize sales growth, leverage As

our lease renegotiation real team of capturing is significant In EFG us reflecting longer estate from market COVID-XX addition reduce ongoing efforts, the term. impacts benefits these to our over and efforts, will costs the efforts occupancy help

rate BOPIS, see expansion with Although, are of the be our EBIT size our as to impacts the increase to to in scale e-commerce guests continue we profitability headwind opportunities mitigate chain improving will supply e-commerce leverage margins, and through growth and additional future. of likely we network closer overall we utilization a get to and

across the on As to make are steps we to our session. over we our cost actively back capabilities. moderate in continue we to structure, And operating on also to we discussed opportunities optimize profitability the structure call promotions in our term, additional will right-size to of I to Longer to are while journey supporting the identify the the and new our the strengthen turn the working environment. near-term cost and progress taking investment Q&A earnings last enterprise effectiveness Operator our also to support growth now, call,


first question Murphy Piper Please Our Erinn Thank you. from with with your Sandler. is Instructions] question. proceed [Operator

Erinn Murphy

brand Mary, well Thank Thanks. little the both process Good Great. question, I about Rewards is between hoping as Target Target, you. you Target perspective? and you at then for integrate And My could as more do bit you selection talk Ultamate Ulta? a from inventory afternoon. on intend the process a the partnership. was Program buying how the technology to

Mary Dillon

by fact about just the let start excited me we partnership. very, reiterating, Well, very the Great. are about Thank you.

strong growth we are of our really and got and excitement confident long-term and prospects, feel business growth start guests more partnership. very track to have with record course, thrilled Target to with We about even unlock a and our model for

DNA are it’s And out we fantastic got These Just retailer. the to CEO we inside loved Ulta that omnichannel and is retail will they amazing a XX understanding It’s two DNA. beauty of very think, strong category, Target of of Beauty we of of best-in-class Target, and at bring fantastic Cornell people brand strengths our well, by different equation I authority, Target very and Beauty loved the Target, capabilities. are millions recap, us scale a huge thrilled. our brands and for consumers of that it, Brian Ulta, the as certainly, for an is team. beauty Ulta discover concept course, the and from team their well a have the both are as to complementary nine as benefit

think, our are brand our I As in we negotiations and the we -- this brand early with process think bringing discussions. forward, about

enthusiasm, of optimistic and for very -- brands. that a new customers, I a I category who that. millions the lot about So growth we Target great own think, that and and a feel brands for new inventory discover so new and a publicly. about we positive, customers talked think lot of will of It’s as for platform have

will Ultamate their loyalty Rewards, in be relationships in they really integration points then loyalty the as Ulta the our well not the currently brand we to redeem that Ultamate technology, is will members earn start. able terms own to up, that at very what from of Early members of participate be for that able Beauty. that’s partnership of we Rewards and Ultamate important at if points, Ulta part Target is Target that’s in the those developed -- the a are and sign customers on if as -- So certainly but of that Beauty Rewards, part this earn

create think Ulta win, that’s that we creates guests win, works for as think flywheel the Beauty say, and win, a So to critical for a -- and I’d part the for really about we here way Target.

Erinn Murphy

All Great. best. That was very helpful. the

Mary Dillon

you. Thank


with Our from Raymond James. next your question. is with proceed Altobello question Please Joe

Joe Altobello

Good Thanks. Hey. afternoon.

So last from am did you promotion you promotion Thanks. expected, year. season? you in experience a first did had that different head you given Was you down a October, repeat question, holiday October what cause of little didn’t rethink I August, mid-singles saw into the that to curious guys we you of September comps fact and in as were in in the down mentioned the it bit a your guys and draft terms guys strategy that

Mary Dillon

adjust of comps a I it course, I the very say, we made mean, of specific to Yeah. -- pull promotion some and surprise. are back it’s without the promotion, not would decision even level stronger. wasn’t a

on our to important as it’s pullback profitable but make think we a just refine So it’s and them our continuing as promotion to be an strategies to not competitive. ultimately possible, very step be ability

early we the a holiday think to we people we early season to holiday robust throughout we constraints November, is the program get that right, capacity So start given because needed got have very season, and in that the started very competitive.

I the the we in And said so seeing. far, results good feel script, that we about as are

played out think I as So exactly had we expected. it

Joe Altobello

XX%. of November to fairly It like mentioned guide decent off does And QX, start. the was XX% a in sound for comp down terms you to the

help December? slowdown you why are assuming in So understand a significant us maybe pretty

Mary Dillon

the the momentum the that are -- back, just stepping Well, yesterday simple answer peak question, levels in signals started It’s did we we are strong of in we seeing unprecedented know, pretty demand Yeah. the November. pandemic hospitalizations feel U.S. in and we again, to we a good pleased you middle this are with about how in we are reached and as of your

Certainly, uncertain. up are it’s set So know we we well.

Our extremely e-commerce well. business performing is

and be I will as are stores a say terms great of to guess, we in holiday the Our job. doing for would happen, traffic get everybody. about I’d uncertainty But closer that there’s what true store

So meet about the the news but we guests ahead. where to just trying are are, this. is pragmatic Certainly, they difficult about the many weeks there’s positive, be vaccine

are So out we few that’s think weeks we but and several next being uncertainty in feel also good, the months. the cautious to about we going play

Joe Altobello


Okay. Thank you.


your proceed from Our Cowen. question. next from Oliver Please with Chen question is

Oliver Chen

from continues growth The Hi. but it amazing be Thank to prior quarters. e-commerce decelerated you. outstanding,

of details in in count number Rewards above are and areas that how control growth Thank also of you. business? and performance in just terms on at category more what would love under seeing what’s or trend XX.X%? the there that what’s and in Ultamate terms count happened keeping So different in your that I may of you member

Mary Dillon

to a to have E-commerce a we -- fact, and three because -- guests e-commerce pleased how and purchase best as somebody we I only. and pronged our Omnichannel up somewhat are are Dave And team very and question. back little people that’s -- as Sure. on Well, bit. spend like going. -- guests, open And times I they we top comp, stores that’s we with are it the as X traffic will much in maybe we stores, would that seen. expected will That’s moderate Oliver, impressive. coming that. add It’s really as who store obviously, historically, what tag

stores, moderation we up it’s to opened still as e-commerce see of up So demand expected last XX% but quarter. some

about good we feel So very that.

to question be I category at of, three the then happy think end we second the part was terms Dave will your performance In the and on get which can Rewards take e-comm, question. Ultamate of into and pronged just about

Dave Kimbell

Yeah. performance the Oliver, that the we script. mirrors really e-comm highlighted on performance total company in category

So and although exceptionally strength some across continued challenges, bath, bright haircare, strong spots skincare, fragrance, makeup. in

that. outside business versus are makeup with about store category, strength standpoint our the different with so e-commerce coming our a nothing real growth of from So category and pleased we

is remain best continue all our we retail some what relates will challenges of highly loyalty are -- one really the believe proud to program. in the of in we know and this that we As I the year, love engaged of loyalty the just with even it saying, start to our are with faced program, we of guests incredibly program. programs They

Our partners lot that value by get that they in program. brand and continued engaging of insights the to the a find access through

arsenal yes, have and it on closures. it’s with this did still as we those have our Our to It seen it guests. program least due of bit high majority very some at store in decline year and we always primarily have been a those glad That have as unprecedented been tenured still part to base particularly guests, that a this our are also working know, and certainly our have engage hit e-commerce, a have we a the guests hurts store-based retention lease and and e-commerce because our significant guests, at new a highly this face -- we retention, diamond level, impacts our elite happy user year, loyalty platinum engaged. is of you while increase member guests, we growing as of the member that and But, are conversion is business we see our penetration really we we a to of times. glad non-elite

of as guests, the mentioned with I remains seeing and performance most our very diamond, in that. in Mary retention Importantly, tenured we a think platinum strong our and are script, lot the strong,

and program engaged those on guests we months. with do with reminder, calculate So, our our members, continuing guests, strong number we elite engagement XX it’s -- feel very over million to of But still guests. are loyalty focused like as we are the loyalty drive strong XX -- we a nearly rolling reactivating and

the months. goes -- period pre-COVID as a are And this next still each so month several by, through lapping we through

to the weren’t our where period we are be lapping facing we store particularly our working So, in continuing fleet. are reengage challenges, hard but guests, a we to

we So, our with out in emerge focused while, we anticipating guests them little strength and challenges some for but retaining as seeing a on are of less this tenured XXXX.

Oliver Chen

Congrats target. on you. Best regards. Thank

Mary Dillon

Thank you.

Dave Kimbell

Oliver. Thanks,


Oppenheimer. Parikh proceed Rupesh next with Please from is question from Our your question.

Rupesh Parikh

for afternoon. my Good Thanks taking question.

for for environment related going So the curious, can you in promotional you guys if to to and what commentary guidance for of you And back get of just sense was just that the maybe takes are want margins? right then holiday provide that, season? puts I gross I guess, during some the seeing the QX. provided Scott, I to now a

Scott Settersten

Rupesh. All Thanks, right.

So mind first, I what it��s to guidance think keep in with fourth quarter, sales important is. the

talking with to to going drivers to deleverage sales are similar of that we pivot of same compared through I seen that primarily SG&A softer last as many guess We in in have to inherent the a we couple the well. in of as expect margin with So cost long we volumes the and QX. leverage pressure, in to QX gross So across QX topline chain, offsets to what stores QX comes some last right? quarters, merchandise I will the trends, I over margins Again, fixed have versus then with again, supply anticipate we similar am QX. speaking. year’s improving on saw that’s generally about nice margin lower and margins, as just levels,

Just cost call related in from payroll, the from to going shift the manager goods sold to the the we reminder, as SG&A. in made of down services comments have right, about some a

more to deliver COVID payroll we little -- increasing in versus season make sure So bit your with then as we labor primarily deleverage And that’s in you being we more due store and the do holiday some something so again QX store the excellent store expect up guest to during and costs. just as we QX, there, pressure SG&A from keep expenses in ramp update and benefits color experience mind model. and the a expect PPE-related

the advertising in side, Lastly or this year. I’d on there, talked a was the We shift. earlier marketing about there say

as opportunistic year. holiday. in marketing going the view to We in what quarter the go into as is spend So we earlier we that be fourth versus saw heavier

Dave Kimbell

on Then the promotional your for question holidays.

course, for categories very Of beauty as about, is competing gift-giving always retailers, promotional timeframe we as a it as every other other retailer. against the just holiday before not And really we have but occasions. competing talked see as for well

So promotionality. we an increase in see naturally,

-- around seeing activity manage to opportunities as We promotional competitive. mentioned as occasions. their it well gift-giving see that personal we to more a store spread in give as and guests pulled we we and are more both to the Overall, as bit promotions have in to up also, have across online cadence Mary feel the shopping category our comfortable and effort more changed

bit We have be promotional. competitors a more seen some

brands and aggressive we dramatic bit limits wouldn’t as time DTC. some offers I the in always, that as have in in very or a radical classify We are a promotionality, watching closely. more market their shift seen

post-holiday efforts as both have like have feel of season, effective have through implemented far quarter We then so the we leading this rest up promotional got in confident that place. the are tools we We Christmas this have great in holiday been we plans and the and well.

and basis. good about it a the feel on So certainly we managing daily and position monitoring

Scott Settersten

Rupesh, deleverage. to did I mean And just want clarify, I

QX in QX deleverage SG&A. margin same versus gross with So

Rupesh Parikh

Great. the holidays. Okay. best luck and you Thank of for

Dave Kimbell



Capital with question. Please Markets. next your is Siegel Simeon with proceed question Our BMO from

Simeon Siegel

in us then share hope So shrinking everyone. maybe online potentially DTC I where weird department Target guess, but pandemic how have historically? terms level, customer a told safe you had beauty, a your higher how wallet -- Mary families the maybe big brands, might cetera. pandemic? about or And views post little Target are you time you might be any just ask holiday selling landscape on thinking and versus growing weekend. thinking where of you the stores, change your have you box, Hi, and Dave, Maybe about a nice to but this, I are Thanks. of et

what changes of did year? any And expect save from there? you you. are seeing you say next you Canada Just Thank to the Scott, then,

Mary Dillon

Okay. Thank you.

Another in of shopping, about back many behavior, winners losers on we we were Starting right? would three strategic shakeout looking environment, Looking the things format. pandemic retail terms pronged has question. e-commerce in happening thinking with coming future, about channel certainly, in terms of horizon shakeout in and bit that. accelerated There’s physical corners, always long-term a the who disruption are question say, a broader increased -- what’s no some competitive think mode, and and will around no the The behavior, behavior. maybe there’s with shopping, that the is planning at anyways, I be accelerated which the consumer of surprise, a

growth curbside, customers for So we for ways to part of the is new strategy big there us shipping is we disrupt accessing where partnership great BOPIS, time e-commerce, and that’s opportunity disruption already, they opportunities through in Target for capabilities, guests which meet And new do it’s be. is that going whether another way. accelerate at us to we new in tools. omnichannel -- omnichannel what drive capacity, of certainly are is to has what a with think But part about and -- we to the so us can happening them new really digital a a that increasing how new channels, formats been meet our

that in have certainly, it’s We overall, segment been will than forward. DTC think as pulled it So bigger brand, there’s been well. would strength be e-commerce

I we that. still in future as of now that all the we very store think immediately way so, tools now. would know of we future customer I also of that’s we and GLAMlab digital wants makeup like. happy what frankly, really about exciting try-on are for experience that look shopping to see and But this for like very skincare experience am us, pivot thinking category helpful virtual is that that a kind to had and And the in-store always our available the right in

shifts. don’t I are aren’t done. shifts the we think well-positioned the given think I So,

and assume to look new we to corners think have we for just around that? shifts of that do continue I have add wallet, you opportunities. want to Share to

Dave Kimbell

we Yeah. really question, we are I’d watching you of disrupted in to dynamics is talked gaining discussions, measure it’s as side, haircare. closely share said so are the previous this, share across share we just to makeup, time and within calls and know skincare, about categories do say, think, prestige, we wallet. continue we What on, your prestige -- gain in a on and to try certainly, consumer I

have seen We that consistently.

in some we share as our mass As shut in -- earlier side. the remained of the And we calls, previous wallet. confident business we open, were hit lost really strengthen a QX on But we in well competitors performed like talked seeing of our in pandemic lost a and in stores which imply mass are so feel share and bit short-term would that. we that

What well-positioned said, share of momentum the continue wallet. going the we gaining dimensions. settle There’s is disruption. and on impact think to fully think Mary But share across driving we we price share into accelerate to growth across very strength of to this wallet, categories dust gaining of are out model, do quite assess So strong. our share, know We we been as and to customer are for this path XXXX wait pandemic we growth. the of all and of gaining real and really with came points, is

Scott Settersten

Canadian over then, been about have any the last on really talking of element the expansion we of couple haven’t here we finally, And Canada quantified the plans piece, years this.

back that. disruption light of, days. was question priorities are But our with Mary’s comments, a investment in So where obviously, that’s typically we during stepped That by these phases. avoid deleverage it lot focusing next we to a what that. not early it’s away from start-up like that I so be we dealing of the moving I is that that the all highest not along and we with ahead some of other reason were comes -- why the with mean, there the should and wasn’t just efforts suffice a will it -- to say, year, things

Simeon Siegel

holiday Great. season. Thanks and happy so much guys

Mary Dillon

Thank you.

Dave Kimbell

Thanks Siegel.

Kiley Rawlins

time one Operator, more I have think, we for question.


from our with Baird. questions. question be Please proceed And Altschwager last your Mark Sure. would with

Mark Altschwager

successful, I next just Great. most I a to the related are the opening you Maybe Thanks factors where to Hi. perspective, just back the two-pronged is to respect and could today mean, taking a just guess, mean, I the change to final scenario related first prior one store for is, there part Target. XXXX you are a would with is does year, view on then And store mentioned it From that longer-term store get impact closer at considering for the stores. XX plans, for that if what my second cadence? Target questions. something least your to you Ulta? partnership plan Thanks.

Scott Settersten


So the I to last guess maybe will piece that of I go first.

and that have doesn’t really last the been outlook So, on reaffirming few we our years. over it that about change no, range talking

doable that’s recently. So, here comfortable announcement feel X,XXX that, even Target in stores We to U.S. range the still the X,XXX new very with

on you estate to competencies. our in drive thinking us changes being just front to. of as future about imagine, core and burner, might the one This -- So has real can what this growth the been how well store impact the

we with big don’t see swing So that. pendulum any respect to

our move will something we we down that’s with as eyes Although the Target pathway right, the team. on, keep

to leases. our as at I partly know cadence, mean, least yes, markets And you XX these ability lot next work our the so so, related stores, with to of landlord partners. year, a as far

and in We are forward are to certain there leases commitments So advance, projects. right? working move with signed years

very just make the the in. decisions that on confident all again, have best of of we queue, the going of we and signed those, the all that are are we sure others with So making locations to all are that the agreements and we re-looking at good feel kind in best

it’s So capabilities we real our got thoughtful is team there but process, best-in-class. estate analytically, we a really like and have feel great

feel confident the future. we So in

Mary Dillon

one really amplifier to Target add is will which the of our we I it, the is, Scott’s say, top partnership, that way thing about answer, an Yeah. I’d to going to model. on just thought business

this well we map as can said, future we amplify full store locations those that right, have of our Beauty, of the Beauty everybody. point to yet locations Target we business the out a still us win plus to believe Ulta make another and guests in trial way of a Ulta model this and reach back partnership as for that with so of working number of we yet version distribution, and new a to the Scott gives millions out build with As we mapped discovery stores out

Mark Altschwager

Thank you and happy holidays.

Mary Dillon

you. Thank


the closing to now would we question-and-answer reached for the of to Dillon Mary And have end the session. remarks. turn I back like call over

Mary Dillon

ready help our our with today. working March Thank results. relentless Look like hard the for our safe forward again for you, no Thank to loved your and also joining that our of Ulta the full environment, stores, season. we holiday like your of we distribution joy associates effort I’d and truly season other, across but all thanking to stores, while our you guests their through will by website Beauty stay holiday fourth know ready us hope And this get We report close all see and centers to offices challenging be this navigate quarter and to the healthy. of speaking you. team to and is season. you colleagues when year in ones excited the to and DCs


This concludes teleconference. today’s

your lines time. this at Thank disconnect your may You for you participation.