Sales are more profitable thanks to Ulta's supply chain investments, CEO Mary Dillon says.

A strong fourth quarter helped cosmetics retailer Ulta Beauty post another big year of online sales.

Ulta, No. 153 in the Internet Retailer 2016 Top 500 Guide, reported online sales during the fiscal fourth quarter of 2016 of $154.9 million, up 63.4% from $94.8 million last year. According to Top500Guide.com, Ulta sold more online in the fourth quarter ended Jan. 28 than it did in all of 2014 combined ($149.9 million).

“This [quarterly] revenue growth was driven almost entirely by increased transactions,” CEO Mary Dillon told analysts Thursday on Ulta’s earnings call, according to a transcript from Seeking Alpha. “While total traffic growth was up almost 63%, mobile traffic rose more than 90%, driven by growth in digital marketing paid channels including search, affiliates, display and Facebook.”

For the full fiscal year, Ulta reported online sales of $345.3 million, up 56.2% from $221.1 million last year. Online accounted for 7.1% of Ulta’s total fiscal 2016 sales, compared with 5.6% last year. Ulta’s online sales have been growing at a compound annual rate of 37.97% since 2013, according to Top500Guide.com.

Not only are Ulta’s online sales surging, those sales are bringing in higher profit margins, something Dillon attributes to the ramping up of its fulfillment facilities near Indianapolis and Dallas.

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“The Greenwood (Ind.) distribution center ramped up to serve 230 stores through the holiday season and delivered 45,000 e-commerce orders per day during the peak,” she said. “Our newer Dallas building ramped to 130 stores and 25,000 e-commerce orders per day at peak. The big part of our supply chain investment is around fulfilling the online orders in a way that’s better for our guest in terms of speed and also more efficient in terms of cost.” Dillon told analysts that Ulta plans to open its sixth distribution facility in Fresno, Calif., in mid 2018.

For the fiscal fourth quarter ended Jan. 28, Ulta reported:

  • Net sales of $1.581 billion, up 24.7% from $1.268 billion last year.
  • Net income of $140.2 million, up 30.1% from $107.8 million last year.

For fiscal 2016, Ulta reported:

  • Net sales of $4.855 billion, up 23.7% from $3.924 billion last year.
  • Net income of $409.8 million, up 28.1% from $320.0 million last year.
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