Ulta Beauty increased its loyalty members by 1.7 million in its first quarter of 2021, the largest jump the retailer has seen in a single quarter.
Ulta had 32.3 million members at the end of the quarter, a level about 2% lower than Q1 last year, yet it is 5% higher than Q4 2020 and only slightly below Ulta’s member level in the first quarter of 2019. The recovery of its member base from Q4 was driven by strong reactivation back into Ulta Beauty stores, as well as increased new member acquisition, according to president Dave Kimbell.
“Our store associates continue to deliver a compelling member experiencing, welcoming members back and converting new members at higher rates than in 2019,” he said. “We are seeing strong retention across all tenures as we deepen engagement with members who continue to shop with us throughout the pandemic, manage at-risk members to prevent attrition, and introduce Ulta Beauty to new or newly reactivated members. We continue to lean into our member data to target high-value audiences and apply predictive behavioral modeling, while personalizing experiences with product recommendations, replenishment reminders, and offers optimized for incremental response. We're using engagement levers like the mobile app to communicate our holistic member experience and drive key moments like 21 Days of Beauty, where we featured personalized offer for every member to drive retention and increase sales per member.”
Comparable sales increased 66% in the quarter compared to a decrease of 35% in the first quarter of fiscal 2020, driven by a 52% increase in transactions and a 9% increase in average ticket.
“We have emerged from 2020 with strong momentum in our sales trends, market share gains, and consumer sentiment,” said Kimbell. “As increasing consumer confidence, the relaxation of restrictions, and a desire for newness drive increased engagement with the beauty category, our differentiated model, combined with our ongoing efforts to create meaningful guest connections, position us well to lead through the category recovery.”
Looking ahead, Ulta plans to spend between $225 million and $250 million in fiscal 2021, including $90 million for supply chain and IT, about $33 million for store maintenance and other, and approximately $115 million for new stores, remodels, and merchandise fixtures. The retailer is continuing to look for efficiencies within its supply chain and network as it builds out to support the store and e-com business, according to chief store operations officer Kecia Steelman.
“We'll have more to share here in the future, but we're continuing to look for efficiencies and the ways to get the products to our stores and to our consumers in the quickest, most efficient way possible,” she said.
The retailer also noted it’s on track to deliver and launch the Ulta Beauty at Target concept at the end of late summer this year. Fulfillment plans are completed, and brand and store selections for the first wave are all done, she said. “We're finalizing our IT requirements, our training of our Target team members, and the joint marketing strategies.”
When the concept launches, it will create and ecosystem for Target’s 90 million loyalty members and Ulta’s 32 million members, that Steelman called “second to none.”