ULTA - Earnings call 3 2024 | Ulta Beauty, Inc.

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Operator

Good afternoon, and welcome to Ulta Beauty's Conference Call to discuss results for the third quarter of fiscal 2023. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Ms. Kiley Rawlins, Vice President of Investor Relations. Ms. Rawlins, please proceed.

Kiley Rawlins

you. Thank and Beauty's joining quarter results XXXX. everyone, discussion for of you Ulta of for thank afternoon, us for a fiscal Good the third our session; and also with Chief Executive Officer, will Finance, Kimbell, Chief Hosting is for on Officer; Senior Operating are us the Vice us Scott of Q&A Financial President call and Oyibo, today. Settersten, Chief Steelman, Kecia join today call Paula the Officer; Dave President

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

obligation law, to statements, our or update as required expect except by no revise do have and We not to should you forward-looking us so.

with one for us that one question scheduled accommodate hour to to as We'll [Operator We and follow-up Scott, as from To allow during limit call question. Instructions]. call. afternoon remarks the you begin and this time the respectfully Dave many prepared questions. and then open your for up this possible ask questions

follow-up team for IR available the any always, questions after As be the call. will

to over call the turn Dave. Dave? I'll Now

David Kimbell

performance. today transition your We good and our financial outlook. I'll Ulta everyone. third Then then discuss our plans CFO Scott Thank will quarter the about our results Beauty. comments review you, appreciate and interest with in and Kiley, afternoon, start

CFO, throughout From and returns Ulta Beauty early the business Scott plans decision public, a and effective years been and impact last us has constant with the than Settersten, XX take our a as his succession X, profitable Scott's helping leadership with Ulta this been has during afternoon. to we more He's his the XXXX. driving a days with Beauty Beauty steward strong Ulta testament CFO, passionate his of decade tenure shared Starting announced retire, After growth. nearly and and shareholder as XX approach tremendous. his achieved to disciplined are to on years April

an our my to his He has Scott the sincere been to I our me and inspirational team and an business. to want exceptional for company. contributions across partnership remarkable gratitude for partner to express his leader

she retirement, leader confident to growth. Paula Scott's I'm the very am our Officer. industry Oyibo next is experience, a chapter broad Ulta for will and Chief that I dynamic announce next this finance With Financial with executive pleased be right of Paula is Beauty's

company as dynamic and serve nurturing our our continue the XXXX, as Paula a to joining an trusted to journey. Ulta and addition Beauty's great strong and culture inclusive herself experience Her has she business, established a leading finance in commitment with understanding of visionary organizations talent Since large leader. deep executive as growth to will make person our her we next forward her look the ideal with partnering I CFO. to team, be partner

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Okay.

all gross this exceeding and Now strong EPS profit quarter, with expectations. let's third performance. internal about delivered talk Beauty our Ulta our quarter again team sales, The performance

trends traffic Our remain healthy.

for associates want reached and program to on executing transformational I on while maintaining and initiatives our track. results and awareness focus our are transformational great guest Ulta agenda. all-time against highs, brand loyalty thank their these delivering experiences Beauty Our creating all

increased X.X% share. Operating XX.X% X.X%. quarter, billion. sales and net For to profit Comparable the $X.X diluted sales increased was EPS was of $X.XX per sales

expected lapped prior was to the sales by sales first the we growth Store lapped increasing single-digit delivered our range. high moderate discussed approximately of As growth quarter Comp driven last half as healthy, single-digit growth double-digit from years year. Stores as XX% digital X in the remained for we growth growth. comps the from traffic on calls, comp strong low channels. high-teen we

performance routines have was and enthusiasts prestige results. our again also Molecules category, mass in is growth, these their driving double-digit in with Drunk to by regimens. and and Skincare Consumer brands to category. contributed cleansers experimenting trends moisturizers, leading Turning Good interest skincare COSRX strong Elephant, while maintained growth Beauty serums segments. into fastest-growing like driven new by our and

growth. brands Dermatologist-recommended for La The delivered double-digit growth also brands to driving continued fragrance and category like resonate, low Roche-Posay, and bath Cetaphil Dermalogica.

performance. Ariana YSL drove brands, Valentino Carolina category's to brands, also contributed luxury Dior and Prestige and and Newness Burberry growth. CHANEL from the Grande, Herrera, meaningful and

mid-single-digit makeup. makeup mass a flat, modest makeup offsetting growth the decline with in were Sales category in in prestige

growth Dior brands and with existing during Beautycounter the compelling like NATASHA and brands Juvia's including MAC OPI, innovation, newness DENONA and New all quarter. Place, e.l.f., and and delivered

newness benefit to last business year's of we the social While was from our launch. many to lap makeup continue and impact engagement, strong mass as more brands Fenty challenged continue prestige engaging

care Finally, a primarily decreased hair by Comp in in low tools. range, driven sales for decline the single-digit the category hair

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these to term. share in capture ability the short will While the market support long competitive increased dynamics our confident we are more our strategies intensity term, sales-driving over

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the financial call And now I discussion of the turn Scott will a results. over for to Scott?

Scott Settersten

for results that Ulta delivering ahead and Beauty team of afternoon, our Dave. to Thanks, quarter the third were Good echo I sentiments expectations. Dave's internal everyone. want thank financial

guest to supported store and traffic by of in enabled helped margin the SG&A XX.X%. some strong spend in deliver modestly and performance third plan. to pressures ahead faced operating the in new sales was of sales we margin resulting line quarter gross expectations, mitigate with Solid unique of growth margin us

strong new X.X% offset average across of Transactions by in for the the price. by store sales, growth ticket comp units average a channels. solid driven other in decline the impact Average higher X.X%, growth per selling to Turning increased than for sales transaction traffic more healthy and both Net quarter decreased driven quarter increased revenue. X.X% P&L. in X.X%, the performance the as

overall comp extraordinary are performance, the increases remain While the in normalize, quarter. we the to the continues benefits points contributed to price environment seeing basis XXX and increases estimate a retail year to to continue comp pricing last We benefit from than roll our price third off. overall less

During opened XX X stores. we the stores and relocated quarter, new

stores. XX remodeled we addition, In

was to decrease points Overall changes year. as primarily XX.X%, decreased driven promotional were margin as which higher primarily revenue. inventory margin growth due year. to XXX benefit higher last retail supply lower year, lapping shrink lower merchandise to the increased strong XX.X% margin, well merchandise this partially by timing price by chain gross last in QX costs basis was of compared The offset other and activity

XXXX remains normalize, continues activity promotional Inventory a below shrink be overall to While the financial levels. meaningfully continued impact to headwind.

Our remains efforts be to but to the address appear the shrink stabilizing impact, environment challenging. overall

we retail work the been of shrink. of continue in fleet, influence invest mitigate In installed our fragrance addition And with have the fixtures, associate to to to aimed environment. at store in overall improvements to industry improving changes macro the and X/X training, we new impact continue which operational staffing to partners nearly

quarter, Supply Carolina. pressures the recent to opening were card in were chain center offset costs from margin partnership. and market reflecting strong chain other primarily well investments partially These depreciation higher of as in to during in credit our due our growth revenue, new growth Target related income transformation, as the fulfillment income by royalty both South supply gross our in

increased to million. SG&A XX.X% $XXX.X

to in compensation. primarily UB other than percentage benefits lower basis priorities, SG&A points store higher investments in Digital overhead a corporate IT payroll expense our Project due well higher increased compared sales, SOAR, strategic due were store expenses, incentive to XX.X%, as XXX as year, Corporate Media. to to expenses and offset investments the which XX.X% overhead, more of including marketing capabilities quarter higher Store, primarily As and related to last greater

million planned strategic have $XX invested our spend incremental million through the about third quarter, to Year-to-date of initiatives. support our we to of XX% $XX

primarily and in in increase average store Higher of the the were and by awareness expenses to were key payroll quarter, largely driven rates. the and reflecting video The increased in drive channels, in expenses wage pressures investments loyalty quarter higher including Store investments to impact marketing member acquisition, was benefits the across brand inflationary streaming. due ongoing across planned business. social,

was the $XXX.X Lower income a Operating year's that line outperformance. with to quarter, million. our benefit internal significant compared targets performance for reflecting the in operational last incentive X.X% compensation declined to in quarter more is

As a X.X% earnings compared XXX percentage of share year. to last XX.X% operating last $X.XX per $X.XX decreased year. to compared sales, margin to share Diluted per to share per decreased points XX.X% basis

Turning last to increased Total inventory to the $X.X to sheet flow cash $X.X year. billion, statements. balance compared and X.X% billion

reflects XX market of increase impact the in new stocking inventory as support the to our Carolina, addition center South well cost fulfillment launches higher product and additional of new stores, and brand the In demand as to increases.

expenditures compared Capital reflecting investments and last the million repurchased cost approximately existing at our and $XX.X million. have quarter shares million. quarter, IT $XXX.X a transformational Year-to-date, shares were the in million we of new $XXX chain for support as investments in repurchased XXX,XXX well We year. to to was of million as agenda. X.X $XX.X at a Depreciation stores cost million supply $XXX.X

During for peak inventory facility a priorities, our during to cash I the on short-term build in our allocation does the period credit short needs. lever activity not capital note repurchases to the ongoing our capital change our revolving quarter, recent including holiday. in we would rather needs year expenditures we as capital working drew philosophy our support allocation share a reflect support when capital and

with ended debt million the in equivalents. in cash $XXX.X and short-term $XXX.X quarter cash We and million

our outlook. to Moving

QX. our our expectations for to EPS and the first actual the year narrowing quarters X and sales reflect XXXX through for guidance fiscal We are performance our of

net sales X.X%. with year and will We comp $XX.XX sales for be between between X% and $XX.X expect the growth billion billion,

XX new XX approximately or continue stores. to year, to remodel net XX the we and relocate open stores to For to XX plan

sales, slightly remains $XX.XX. Reflecting margin Our gross and year at and SG&A. XX.X% come year deleverage from deleverage expectations assumptions, XX.X% will and diluted the $XX.XX unchanged, the for of for we to with be expect with these more from between SG&A, operating now EPS coming both margin for between

for We as QX cautious expected activity. of consumer well category potential higher distribution from as reflect to and prestige risks have the promotional for refined points our resilience the expectations spending, of beauty increased beauty

the for and left the sales have in to continue to the quarter. to We modestly season important weeks be be continues flat We expect holiday operating up fourth still comp dynamic. will several environment

addition, comp results performance January, last XXXX. strongest In of exceptional monthly which lapping we our are including the sales was incredibly year, strong an fiscal

now operating For expect modeling down deleverage purposes, flat and to margin margin to modestly to to gross last we compared be year.

in remodels $XX million We about XXXX, in million fiscal expect spend and for merchandise for $XXX update. stores, $XXX now and and to maintenance $XXX $XXX store fixtures, including One other. and between and million for million final CapEx million IT, supply approximately chain new

now depreciation share $XXX be million. million. repurchases to for around year will We $XXX the expect be We approximately expect

teams another Our dynamic operating amidst delivered solid a quarter environment.

plans our are ahead, focused our and season finalizing we year. we As for the on for look holiday next delivering plans

report when year-end about We more we will for confident. we share our expectations XXXX fiscal results. remain our But

growth positioned X% to performance year, lapping the XX% EPS growth of to targets with XXXX. are fiscal X% well next an in line XX% financial to our We of and sales reflecting with extra deliver week comp margin, in operating

moderate it privilege for the has forward Oyibo, with to and say operator our to moment CFO to I an Before It years. the to closely I've special than this a Paula worked look I over several I company for baton last you. turn thank as decade. want passing honor take the a to to who more a Q&A, serve been to over

to the work coming will again. Thank together over transition. ensure a We you smooth continue to months

call session. And over our the now the I'll turn to Q&A moderate back operator to

Operator

line [Operator first Telsey Dana of Group. with Advisory question Our the from Telsey comes Instructions]

Dana Telsey

And Hello, at everyone, on next the chapter. congratulations such looking Ulta, And the new a on on congratulations tenure and to and Paula, forward Scott, results. congratulations nice role. wonderful your

margin sales all newness, up you as the the beauty going pricing that obviously in promotional going such resiliency X%. makeup changing do product area? with that pricing? looking evolves year, and it at the and feel forward? you gross As higher How think And you we parse evolving had you that next what's how the around there trends category what your lower on the do the of together? And see do margin into and category, How see you merchandise which shrink, is SG&A about and in levers,

David Kimbell

that. thanks Scott nice and question gross then and can to specifically, And margin. those for beauty and there, and category thoughts on start some appreciate Paula, your I'll with Well, Great. answer I about comments the Scott the pick about up makeup maybe

and my long-term confident mentioned for remain out then of category beauty wellness stronger steady more beauty broadly about important comments, of us in of coming flat we a newness, beauty. And ever that's than the all future very I makeup I The the the As part was pandemic connection. highlighted, give in engagement, And is the quarter. connection level of category us the specifically, high reasons for stream that. compelling between an of emotional while confidence makeup for the essentially

are what year, see our confident makeup of our a strong next groups. this in And and into future fourth We level that of completing as driving part business. business. in engagement trends, across confident the quarter we're of all get important drive demographic will into moving positive high We both -- we

just from at cosmetics is Ulta, those brand, Faced. to contemporary again exclusively into three started Ulta new the Some actions exclusive brands, we've We're Ulta. to Society, Polite a makeup at like brands several creators taken Euphoria created that of to by Half a was the and this the business make makeup artist. continuing Magic, brands which Rabanne, brand, launch with up drive Spanish forward, exclusive exclusive Too of prestige specifically fashion which getting Beauty. launching

luxury into great key DENONA this Strong to launched We expanded throughout started innovation and NATASHA e.l.f. the mass within getting MAC, on and McGrath we all see and Pat year, compelling with that quarter. about of talked growth we're we've brands just -- like that the doors. continue feel makeup in expanded in and and CHANEL, segment launched that nearly -- we're my the business. I while there. We we've with remarks strength added year, Dior then third like expanded

Tape, exclusive Maybelline, to brands Place, Tarte's A existing examples. Ulta blushes, -- in at make like liquid recent a difference in Beauty. And Concealer, from items what's Radiant down exclusive confident Anastasia, we're Shape other new go In couple the list. Clinique, with NYX, newness existing Benefit, and Juvia's Ulta. at category continue brands blush of ahead. the

launch with and more optimistic lapping as the makeup and we general both engagement But confident. biggest we XXXX growth. drive and see in beauty specific the that coming forward, we're we had look the our we've and enter from in into as launched we strategies So and items We're both we're to Fenty newness XXXX. consumer confident

Scott, do you about want talk margins? to

Scott Settersten

Sure. Thanks, Dana.

So I give you than when minds about more put other well. as a were because little initially thinking on you together maybe it's question you sure this I'm investors' bit

directional And and about of beyond. 'XX particular again, I headwinds. no thinking but So is the this in with order, kind start

country. E-commerce as been So bit talked a of last continue to of transformation for continue next we be about about, benefit a the a the us again, out will tougher supply us it's chain think we've compare as in to across through years. mix, build for year we and work couple our centers distribution

now, BOPIS, for so to got from e-commerce will in and year grow back delivery. we to We come, than didn't expect headwind next be to rate higher and that that we've ship namely XXXX, that margin. have mitigate the us brick-and-mortar, gross years Again, and ways same-day in at a store a

So something would be I'd those kind headwinds. I say TBD. the is promotionality call of

So again, XXXX normal to yet a for more out. XXXX be on has seen environment. bit into we're It's getting been back because deleverage shake of us will point a a how

So that's have navigate. something we'll to

it would some XXXX line. that the will a price into to the business plus continue, bit gross been -- for deeper On out big it's for any #X, little stretch increases margin that this in We scale to continues of and by fixed Cycling and us we've margin third business we place but do we're expect we will we in help other year Again, although has imagination, the called expect course, That mentioned Well, us. that moderate bit. major a as been headwind benefit 'XX. that XXXX, up, into we that tailwind again, you accomplished mission better not that. Shrink, on tactics in a managed. like be of get the UB to as We us now cycle a to cost. revenue, couple. gaining of moderating quarter. Media it's get then, a feel a through side, over got

bit that an third long maintenance the able Xx we Xx. on cost of in store repair some Again, leverage kind and with be a the of expenses quarter, expect we to of absorb, term, to but anomaly over a fixed to the

Operator

Bank from line And with of question Lorraine Hutchinson of our the comes next America.

Lorraine Maikis

quarter. strategies, working You that mentioned some the the to on brand and in to about in talk you prestige launches, defend you're Can return growth? brick-and-mortar share marketing sharing loss

David Kimbell

e-commerce that's for largely yes, even our Thanks feel -- market about share parts, the care, prestige business. a brick-and-mortar were pressured. prestige But did ago. we that locations including due all years our brick-and-mortar skin hundreds mass fragrance Lorraine. Yes, business, gain parts are more positive think of expanded to business, we in our our we our our points couple we across of than business, distribution. was -- just there to There in is objective prestige many And the and Yes. of it question, now

a to seen quickly, competitive impact share kind we more existing pressure. to this from growth, what able modest rebound and over are see our locations Historically, -- competitive recover we've but there's new of open impact. relatively -- time. short-term drive a growth and near locations, as And the stores of is But our short-term

share stronger of confident stores some pressure we're the doing our and everything forward. were we're strategies the we're seeing, loyalty our our confident across holistic than our human that we ahead we're across and behind engagement, strategies strategies, what year-over-year, in that and we lot there's our in then certainly, assortment, program, and growth that largely, that experience brand still path our our in pre-pandemic, give going in uniquely a while we're deliver confidence short-term us So

Operator

Our comes Baird. from next question of line with Mark the Altschwager

Mark Altschwager

congratulations and you. Paula, Scott each to of

but given QX the guide, are you that the bit spending refined the for So low of mentioned QX, and overall, endpoints risk than distribution. better your end you consumer guess, to some a your your internal of outlook raising of you expectations. I

category on on bit detail spending promotional and little months the a how us views changed give just backdrop maybe more have ago? your X versus So

David Kimbell

a than -- I'll environment, promotional start start, we meaningfully in we but quarter, give as highlighted there, would still the let below XXXX ago, at QX a levels. the maybe environment here. was I When year so in Mark. and the -- promotional The insight look higher I'll Scott yes, third little Yes.

So while to within see levels. we're promotional we seeing We're effectively our some overall CRM increase, don't and capabilities to irrational it's XXXX been not definitely And to leverage our -- back able personalization manage we've promotional an intensity. behind more market.

levels. quarter, backdrop, promotional, again, So radically as XXXX far, than with saw, we look bit not expecting essentially fourth into irrational more back we're to a different so seen the what anything not what that we not we've to

look at we color, let our changed our And comp more outlook, I'll haven't and really when give fourth quarter bit we Scott little a sales.

in the bit As ahead of move that for We we've second third quarter, year and to the to a been for to bottom single while, comp us our -- still and a us digits. this the we've of that confidence expected half our end that confident outlook gave were we're seen talking up we quarter fourth third really of for -- the quarter, range. performance in moderate low the gave in

we out, of But are mentioned anticipating as disruptions not the So ahead. biggest major from look promotion. any Scott holiday weeks we're still

to our that's and about, that. engagement, The refined updated in So we're close staying positive reflected consumer forward. going outlook we're

Scott Settersten

fourth ourselves $X just giving couple billion on of would what see is at would to quarter above you stage said, have I little all not expect would probably I bit We last this the are year. But And say, reiterate it quarters. the of sales wider comp than a margin changed, expectations right? Dave our operating range,

changes our could in on bigger reaction have consumer So a small business. impact

good we're ourselves experience store So We're start, we both just again, the great and there's still deliver positioned. in guests, I room would to we're how feel but being about prudent, giving off guess, for Thinking say. online. go. to well maneuver, a to a way like we really And long the I overall

Operator

with And Evercore line Michael from of our next question ISI. comes Binetti the

Michael Binetti

with have with the there's really rate. to. pointed low in next SG&A effect rate you leverage over the walk January the time. the reminded get then I'm the pointed as the growing the you The comp hurdles wait in to SG&A us [indiscernible] that below to how Scott, great, through return normal work quarter. to resilient Paula recent line? unique you comp wonderful, Is normal some to? And congrats. growth double you year. allows Can category as that kind comps also been flat, industry mid-single-digit to only you It's to impediment my mentioned to years is and go algo been SG&A how a just is the to curious know hurdles you. Dave, low may given for comp I the that of in fourth cannot digits us you so conversations over the below Scott, on quarter has algo, this the growth

David Kimbell

all of objective -- start look -- the time we a you've this. But total lapping last we to very well, the think in the our we been trends year. term, year our very are a certainly We our with moderation all ability look yes, long. fourth comp. quarter a about again, That's gain as quarter, it's Yes, anticipated it the I we're when long confident talking We've strong growth said comp I'll in share. in category fourth and

out it's we so ahead modest played how but far, as we with little And that, some anticipated. a bit thought essentially, of improvement, that's

get quarter, is basis, X-, and fourth we're a last in year as through holiday a look some comps what's engagement, certainly the quarter. this fourth outlook reflected So we into X-year when performance healthy on continued strong strong we successful our but lapping

Scott Settersten

a to business midst multiyear opportunities come. in business expect for we across to Michael, on years again, efficiencies the deliver And the transformation significant many for many we're that, and optimization of our fronts

last extraordinary peak investment the again, again, or the million quarter XXXX. we burden an for that the of of the is $XX $XX for top at XXXX near third so is line, And we're coming on million, to of through year, year. of $XX lot A SG&A believe million it a large brunt

have I So as to calling willing we can moderate 'XX the we as just said SG&A you're to consistently, would operating when and growth again, we we're -- margin long in leverage. would in deliver SG&A invest line, remind beyond. And folks, SG&A out expect but

that. It cost costs over to time, UB Media again, things the over people ramp there the cost, and So margin but line long tool up a is money, we example term. good of get back gross in

well on positioned the So for and believe track. the future we're right we're

Operator

the comes next line TD of with Chen Oliver question Cowen. Our from

Oliver Chen

been done on and with it's work in to Congrats Scott, the awesome you've David, years ahead. everything you. Paula

advertising. It of of about format Media, that about big have offer there As you potential a UB on appreciate part and the new stores nice in doing? the are as future path What's you're data the you is the well. modernize thinking laid second, as that think we then terms out? And also had continue do can brands cross-section the lot to -- store of believe e-commerce should and stores a and productivity digital feels really maximum how what also the and you the them What the you you extraordinary for smaller you've pretty store experience, growth. be

David Kimbell

start Thanks, Oliver. with stores. Yes. I'll

the range, stores, with and mentioned as We not And of X,XXX those we -- XXX expansion X,XXX our in and reiterate believe that. continue we've high we're to that does end and And towards hasn't confident our to and call, towards include Target. that that that the up be we'll I to locations. said outlook of of changed, we're partnership in in

positive remains Our very confident store to and presence. very the in the opportunity store-level new profitability expand earnings, opening store continue our healthy. performance, We're we're to about our

smaller highlighted. into remodels expanded together. updated have or are more highlighted maybe the markets, some success we're store. The are expanding engage been there. and that's testing to say, The that and easy and -- more good our full store more, new really intuitive We've now smaller We of a XX that store a are format, you a so it's remote stores format in. that we've a new makes foot brands think to services couple have that categories the stores whole shop all I bundled X,XXX square that is towards it things markets, We've I'd having layout which really targeted

year. and our to brands And that expanded so We've our the continue data, our price insights and exactly an said, that on guests. thousands we through And experience invest we year. very all We've of campaigns unique to the categories the really invested the spans it's in had And you team. We've and the elevate course participate, we points we're tool bullish that. and with brands, of Media, our outlook. On UB we're in brands bring, advancements. the the our this we've pleased assortment of we're geographies over demographics, performance we what powerful can have in engaging because with XX got all our how stores, all members, with hundreds a we can bring have million power the that value and of

lot say -- future. the into with of I'd I'd but that. from results a we And more see good continue just started getting to we're look say also we And so come opportunity, to as

accelerating So we're -- that as well. we're putting effort

Oliver Chen

AI. on Last David. Okay,

and you're utilizing about how post-shopping you've you and also Are impacting the in creative organization? reality. active the pre- been augmented you've You done, and/or how highlights Scientific there have deals see QM AI and across experience it any

David Kimbell

Yes.

AI question You're Scott's day, in, of announcement Oliver. important sneaking right? So another business. On -- part an is yes, too, our but

You just scenes data so it make go to increase many say Scientific, other service we're and and objective mentioned online and to some able QM and more of automate processes. anticipate leverage up more chain bought among can And years which we then is across of things to time started, the see board, bringing we points. And real places. some better our opportunity touch advance one some really a few our needs we guest of to better creative for some but that to personalize store, and with management to that supply to ago, ultimate we're our step of power advanced being with desires streamline, more and behind innovation of Gen them life, all experience. And getting analytics to really within accelerate in through the our sure, our using generative like our behaviors but experiences, and we're product to the opportunities of descriptions, understand an speed to guest AI, I'd the AI

contributed advantage be about take to far, full for excited and our leader space that both we're what in as so So it's a big a well. it's organization and focus

Operator

comes the from Our next question Krisztina line Bank. Deutsche Katai with of

Krisztina Katai

Dave. I'll was to about could member wondering I Paula. both engagement. add question you, to if is Scott But and my you congratulations my talk

increased members You diamond and platinum that XX%. said

seeing on cohorts? And of you effort compound can confidence perspective, what spending deliver mature that early from are with what share maturation that member you some to share So members versus a newer personalization wallet your those are how the helping of you you more are some or the of gives reads that can goal? continue these your essentially

David Kimbell

advance the Yes. our this Great and team's key more to pleased question, tell our to I business Krisztina, so is success. loyalty be efforts And can't program of to couldn't you, and because proud evolve our -- program. and I

delighting to say assortment, our new single in-store, associates I advertising, engagement the point online members our importantly, services have. us our but social day, is, the of touch XX,XXX acquisition to our guest what internally contribute through our single media, every our every every And one members, own and and both loyalty, we of and

delighting we that long-term our healthy, drive we of of wouldn't top the to loyalty for us And big personalization. every with so to the it's big guests success big to our member be of know make very every is we it start it we continue growth a day picture that's a X% day our first industry-leading is our that secret things that's on for to level, that and number to -- sure with that mind to at us, result evidence because number, we growth weren't if future. The our retention an through working and we very are high, work always-on together every and activity come because retaining of that believe, debt improve is, foremost, growing a type program

guests, and efforts, then if to and be ultimately can they to guest and use to and are long-term all to move levels retention our likely will personalization provide platinum a say, to and stay the I the us, value of diamond with foremost, that. first because us up more So personalization into with I'd about more buy be more

a our We stores, we our member and expand been new our who through that, we new advertising, social our results never also our Beauty, Ulta digital continue of And presence, that's member, media. part saw we've retention, of nice Target, while in our partnership beauty to reactivation, and we we like, feel currently that enthusiasts have scale, of don't area everybody. retain where had very strong a of are of while healthy tens the millions lot are there not program. And is third with

of that guests a isn't is at there time, So Ulta. it a bad shopping -- of because just most experience. pool they habit the had out of the It fell of

to personalized have growth. guests, a those contributing reengage direct our to been we lost that's so and reactivate and program very And

pleased for in through we're that runway, continue encouraging be the guest with the and per long us, see that engagement. focused on and just to the metrics work innovation, to drive spend term. commitment board, a a with to we're long and to we all So every program day member, experience We're hard across pleased it the

Kiley Rawlins

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

Operator

Sure.

comes line UBS. question of last with Our from the Michael Lasser

Michael Lasser

increase in and absorb algorithm question in we category to year? market responding an to wishes its going and losses how those to how if that impact before share achieve Beauty's is you losses ability XXXX, willing to My are extend Best market Scott Paula. earnings Ulta share activity, next that long is, into prestige assume beauty with the promotional

David Kimbell

our I'd of gain gain and say a doing question our forward. Yes, e-com, our we share business is been be our history the to our our assortment, program, continue to our first, to have strategy marketing, we tools, many to everything business, do and start our drive be designed goal stores, digital in is, leader And share across answering is parts and our that. loyalty our to entire that, and long-term that yes, by I'd Michael, and

distribution And and gaining pressures. In in prestige and so. expanded in talked really to haircare, of I makeup in makeup, fragrance, distribution, some and that that's we points in more Our which competitive share are challenged. mass prestige in been disproportionately hair categories those skincare, do about have points other business those of mass, prestige are hundreds impacting continued a reflection of largely skincare, mass have

So to bit to have accelerate our ones share and take more growth, the that. growing plans focus do a business the been to strong that have got continue to is healthy, do that, that, we to challenged our and to return of and parts

true more we're execution turn be go focus on we as the to back. makeup And to newness XXXX, in have we and through launched holds talked Same in that question. haircare. able the to come that we that we've I will calendar the that store, confident about drive online, an earlier our we

Specifically around as Where growth. trickle a see promo, we overall good feel about our our position, we it balance. overall honestly,

I said, gaining As of we're business. our in share many parts

want swing long-term to we're return promo share will growth, so and assortment efforts in pinpointed back time. And confidence we over that to to want and just drive around not how will growth execution when the it's actions, intensity. that it's We leverage the share have our promotional collective wildly we that don't strategies

leverage we'll term. so in And short promo the

get for that from right. and to going in record of that not to share We'll actions be We way strategic, have share we're be many into future. All able the gaining I sustain us we'll said of that thoughtful, no do to earlier, position growth. but a our given as we consistently well XXXX, clear years, say confident back swing have to turned long-term we've And have and track confidence just one and is We're which wildly. been, actions indicator.

I for So our close wish XX. I and to want again, to I healthy Ulta Scott and associates want happy to when is at our strong you while executing you have against I Beauty get your hope speaking season. also congratulate strategic a going an delivering Hope Paula shareholders thanks outstanding Michael, Ulta to CFO out you often. be we look his know shop And holiday of we Ulta tremendous for March question, priority. And to and XX,XXX and forward a Beauty thank all on for for for good fiscal for and successfully you thank our once impact results as want engagement. quarter another all that by you Beauty, than report thanking I on more company. We partnership you evening. again she XXXX our for for to

Operator

and this participation. And you may your for Thank conference, time. lines this you concludes at your today's disconnect

Ulta Beauty (ULTA) 30 Nov 232024 Q3 Earnings call transcript