Ulta Beauty kicked off fiscal 2017 by posting its largest online sales growth rate in three years.
Ulta, No. 119 in the Internet Retailer 2017 Top 500, reported online sales during its fiscal first quarter ended April 29 of $104.3 million, up 71.0% from $61.0 million during the same period last year.
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“This was the highest quarterly growth rate for our e-commerce business since the first quarter of 2014, back when the base was only $17 million,” CEO Mary Dillon told analysts on Ulta’s earnings call, according to a transcript from Seeking Alpha.
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The cosmetics retailer’s web traffic increased 77% year over year and traffic from mobile devices was up 107%. E-commerce accounted for 7.9% of total sales during the quarter, compared with 5.7% last year.
Dillon says that boosting its digital marketing spending has helped boost sales and traffic
“Paid search, display advertising, paid social—those are all building momentum to really drive traffic, so that certainly has benefited our e-commerce business,” she said. “We also just had great offers [and] I believe smartly targeted site improvements and the supply chain investments have made the overall experience for the guests even better.”
Also helping to fuel Ulta’s overall sales growth are its loyalty program members, whom Dillon says are increasingly shopping with the brand both in-store and online.
The company’s free Ultamate Rewards loyalty program, which offers shoppers one point for every $1 that they spend with Ulta, has 24.5 million members, a 26% increase from the same time last year, Dillon said. 8.6% of those loyalty program members are considered omnichannel shoppers. Those shoppers are more lucrative than other consumers who only shop via a single channel, she said.
“When somebody becomes an omnichannel shopper, they end up basically being our best guest because they are spending 2.5 times the amount of money of somebody who is just shopping in-store,” Dillon told analysts. “The Ulta rewards member who shops online is also increasing their purchases in bricks and mortar versus shifting their purchases online.”
For the fiscal first quarter ended April 29, Ulta reported:
- Net sales of $1.315 billion, up 22.4% from $1.074 billion last year.
- A year-over-year comparable sales gain including e-commerce of 14.3%, compared with a 15.2% gain.
- Net income of $128.2 million, up 39.3% from $92.0 million.