Offer a broad assortment of beauty products, cosmetics, and fragrances across the price spectrum. Add low-pressure but high-touch customer care. Then mix in salon services like hairstyling and brow tinting. Together, the elements make Ulta Beauty (ULTA) a one-stop beauty shop—and one of the hottest stories in retail.
CEO: Mary Dillon
Headquarters: Bolingbrook, Ill.
Employees: 15,250
The Business: Cosmetic and beauty-product retail, along with salon-style services, under one roof.
The 800-store chain has found a profitable niche in the intensely competitive beauty market—between the Walmarts (WMT) and Walgreens (WBA) of the world, which cater to casual customers looking for bargains, and the Macy’s (M) and Neiman Marcuses, where women will pay a premium for pampering. The result has been staggering growth, especially by the sluggish standards of brick-and-mortar retailing. Ulta’s sales have risen 82.5% since fiscal 2012 and are expected by analysts to hit $3.8 billion this fiscal year. Nor is Ulta running out of steam: The first quarter of 2015 saw it post its best same-store sales performance in three years, while online sales rose almost 50%.
CEO Mary Dillon says Ulta’s singular focus keeps customers happy. “It’s really a fun beauty destination,” she says. “It’s not a chore.” The company has one of the most successful loyalty programs in retail, with 15.5 million members who account for more than 80% of its revenues.
But Ulta still faces stiff competition from bigger retailers that stock their cosmetics near the corn chips and kitchen appliances. The beauty market is growing fast—Euromonitor International forecasts growth of 5.3% a year through 2019—and it’s a vital traffic generator for drugstores and department stores. Walgreens, Target (TGT), and CVS Pharmacy (CVS) have made improved beauty sections a priority, while J.C. Penney (JCP) is modernizing its 850 hair salons in partnership with InStyle magazine (which, like, Coins2Day, is published by Time Inc.) And rolling out more Sephora cosmetics boutiques within its stores.
To maintain momentum, Dillon unveiled a multiyear plan in 2014. Ulta’s store fleet is set to reach 1,200 locations by 2019. Ulta is also doubling down on its high-end segment, rolling out boutiques for pricey brands like Lancôme and Clinique at 100 stores each and counting. And Dillon aims to get e-commerce up to 10% of sales by 2019, from 5% now. Her plans seem to have impressed Wall Street: Ulta’s market value has risen 68% since she became CEO in 2013.
Fastest-Growing Companies: Ones to Watch
• NVR
• Buffalo Wild Wings
• Ecolab
To see out top 100 Fastest-Growing Companies, visit coins2day.com/100-fastest-growing-companies.
A version of this article appears in the September 1, 2015 issue of Coins2Day magazine with the headline “Seizing Their Moment — Customers look good; so do sales.”