Cosmetics retailer Ulta Salon, Cosmetics & Fragrances Inc. has big ambitions for e-commerce in 2013. It will embark on web and mobile site redesigns this year and it will expand e-commerce fulfillment to another distribution center, an Ulta executive said during a recent analyst conference call to discussion fourth quarter results.
“Ulta has a huge growth opportunity in e-commerce, in addition to the need to better integrate our store and online shopping experience,” said Scott Settersten, chief financial officer. “We plan to make a substantial investment in systems to enhance online and mobile capabilities through a complete site redesign, which encompasses improved search capabilities and expanded personalization functions.”
Ulta’s e-commerce site today is functional, Settersten said. “But we’re a long way from a best-in-class type of environment out there. This is the point in time we need to redesign the site and get some of the other functionality things really resolved.”
Currently, e-commerce sales are a low single-digit percentage of Ulta sales, Settersten said. Ulta, which does not break out web sales, will begin including online sales in its comparable-store sales in the first quarter of 2013. “That said, we have high expectations for growth in e-commerce this year. If we achieve our growth plans, e-commerce could add close to a point to the comp number.”
In the fourth quarter of 2012 and fiscal 2012 ending Feb. 2, respectively, Ulta reported comparable-store sales increases of 8.0%, and 8.8%. Same-store sales are projected to grow between 4% and 6% in fiscal 2013, Settersten said.
Ulta also will add e-commerce fulfillment to another one of its three distribution centers. Ulta did not disclose how many centers are used for e-commerce fulfillment today. In conjunction with the expansion, ULTA also will upgrade its warehouse management system to introduce new multichannel capabilities, such as direct-from-store ordering, Settersten said.
For the fiscal year, Ulta, No. 337 in the Internet Retailer Top 500 guide, reported:
- Sales of $2.22 billion, a 24.7% increase from $1.78 billion in the prior year.
- Net income of $172.5 million, up 43.4% from $120.3 million in 2011.
For the fourth quarter, Ulta reported:
- Sales of $758.8 million, an increase of 30.3% from $582.5 million in Q4 2011.
- Net income of $64.5 million, a 39.3% increase from $46.3 million in the year-ago quarter.