Ulta Beauty at Annual Retail Round Up Conference: Strategic Moves and Growth

On Thursday, 03 April 2025, Ulta Beauty (NASDAQ: ULTA) participated in the Annual Retail Round Up Conference, where CEO Keisha Seelman and CFO Paula Oeygo outlined the company’s strategic direction and operational updates. While Ulta Beauty faces challenges such as inflationary pressures, the leadership expressed confidence in its growth strategies, underpinned by strong foundational advantages and strategic management changes.

Key Takeaways

• Ulta Beauty is committed to a "Ulta Beauty unleashed" strategy, focusing on core business growth, margin expansion, and future realignment.
• The company aims for a top-line growth of 4% to 6% and comp sales growth of 3% to 4%.
• Management changes include a new Chief Merchandising and Digital Officer and an elevated Chief Retail Officer.
• Ulta Beauty plans to explore new wellness categories and international expansion as key growth drivers.
• The partnership with Target is set to leverage efficiencies from over 600 existing stores.

Financial Results

• Top-Line Growth: Ulta Beauty targets a 4% to 6% increase in overall sales, with comp sales expected to rise by 3% to 4%.
• Operating Profit Growth: The company is aiming for mid-single-digit growth in operating profit.
• Margin Rate: Ulta Beauty plans to maintain a 12% margin rate, with ambitions to expand this over time.
• Cost Reduction: A cost-saving target of $200 million to $250 million is set to optimize operations.
• SG&A Management: Ulta Beauty intends to manage SG&A growth at a slower pace than top-line growth.
• Tariff Impact: Only 1% of receipts in 2024 were direct imports subject to tariffs, minimizing risk.

Operational Updates

• Management Changes: New roles include a Chief Merchandising and Digital Officer, and the Chief Store Operations Officer has been promoted to Chief Retail Officer.
• Store Developments: Ulta Beauty opened 101 stores last year, with 210 stores currently operational. The focus remains on driving efficiencies across 610 stores in partnership with Target.
• Technology Investments: Recent upgrades to ERP, digital store platforms, and POS systems are complete, shifting focus to go-to-market strategies.
• "Ulta Beauty unleashed" Strategy: Efforts concentrate on enhancing core execution, digital acceleration, and personalization, alongside expanding wellness and international markets.

Future Outlook

• Financial Targets: Ulta Beauty remains committed to the financial targets shared at the October Analyst Day.
• Brand Strategy: The company aims to drive core business growth and expand margin-accretive areas.
• Wellness Category: Exploring opportunities in wellness, including sleep, sexual wellness, and life stages.
• International Expansion: Identified as a key growth driver, with plans underway for international market entry.

Q&A Highlights

• Tariff Risk: Ulta Beauty assesses its tariff risk as low, with minimal direct import exposure.
• Pricing Strategy: The company will collaborate with brands to adapt to changing environments, using historical tools.
• Loyalty Points: Considered a competitive advantage, with brand participation in funding.
• Target Partnership: In 2025, the focus will be on leveraging learnings and efficiencies from the 610 stores already open.
• Category Growth: Confidence remains in the beauty category’s historical growth rate of 2% to 4%.

For a detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - Annual Retail Round Up Conference:

Chris, Host, JPMorgan: Great. Good morning. Again, welcome to day two of the JPMorgan JPMorgan eleventh Annual Retail Roundup Conference. It’s my great pleasure to have the OpenManagement team, including recently promoted CEO, Keisha Seelman, and then CFO, Paula Oeygo, who was promoted last year right ahead of this conference. So we appreciate you coming back again, and we appreciate your time.

As with the other one at about fifteen minutes ago, I’ll go to audience questions. So please don’t be back, Cole. I’m gonna ask them for a little bit quiet because coming on maybe the market opens or something. Delta’s a very dynamic category and a very dynamic story. There are plenty of questions, so please join in.

So

Keisha Seelman, CEO, Ulta Beauty: I’m gonna kick

Chris, Host, JPMorgan: it off. Keisha spent about three months since you stepped up to be president, CEO into the c CEO role. Well, you’ve done it more than Ulta for ten years. I’d love to hear about your view of the organization. And now that, you know, you have more of a direct sort of imprint on the organization, where do you wanna take it?

Keisha Seelman, CEO, Ulta Beauty: Well, I wanna start off by saying thank you, Chris, and JP Morgan for hosting Paula and I and Ulta Beauty here today. We’re looking forward to our conversation. So, yes, I’m actually gonna be at eleven years with Ulta Beauty here in a couple months, and I’ve been over thirty years in retail. And what I can say is that time is going by really, really fast. But I could not be more excited to be at the helm of Ulta Beauty as the CEO right now today.

And as you mentioned, business environment is test fit. I’m ready for it. I could not be more excited about our future. One of the big reasons is that we have such a strong foundational advantage, I believe, in beauty and research sector from our assortment to our world class loyalty program to our strong omnichannel offering to the ability that we have at Ulta Beauty to generate a lot of cash. We have a very strong financial foundation, and it’s all underpinned by the 58,000 beauty loving associates that we have out there, bringing our brand to life every single day.

You know, the landscape, while it’s continued to change, there are still some fundamentals that are true still today. The first is that beauty is a highly engaging category. And even if the consumer is looking at where they’re spending with their wallet, they’re still really engaged in beauty. The second is that this is a human connection business. And while there’s a lot of talk about ecommerce and more products going online, 80% of Ulta Beauty sales come from our stores.

So this is an environment and a category that human connection and coming into stores is really important. That’s great for us because having over 1,400 stores across The United States. And then also in the category itself, it’s about newness and innovation and having the ability to have consumer want to engage and come in and to try things. And the brands are really invested in that, and we’ve seen really good pipelines for 2025 and beyond. But what gets me the most optimistic is about the Ulta Beauty unleashed brand that we shared on our earnings call.

And it’s really about driving our core. It’s about doubling down our margin accretive businesses for us to continue to drive our profitability forward and also to be aligning our foundation for the future. And to me, it’s about having the right people in the right place at the right time with the right plan, and we are just having that momentum going in the right direction. So your question was, you know, what have I seen in the first ninety days? And what I’ve seen is exactly that.

When people understand the role they play and they understand what the mission is that Ulta Beauty is about, they’re on board. And the momentum is palpable within the organization. So that’s what really excites me about the future of security.

Chris, Host, JPMorgan: Well, you’ve made some very decisive changes in the management structure and realigning some responsibilities and and some people. Can you talk to the audience about what you did and and why you did it?

Keisha Seelman, CEO, Ulta Beauty: Yeah. Well, I’m a big believer in that. One of my top jobs as a leader is to make sure that I have the right people in the right places and the right level of talent. What’s gotten us to the growth at Ulta Beauty today isn’t gonna be what necessarily gets us to growth in the future. You know, I’ll just take a step back and say that two of the leadership changes I had were because of retirement.

So it’s not like I came in and I cleaned house with the team. Two of them were retiring after long careers here. I’ll start with the general counsel. She gave her retirement announcement, and I have a new GC that’s starting actually on Monday. So I’m gonna have a nice overlap in timing so we miss a beat there.

Our chief merchandising officer gave her notice to retire, and I’ve been on the hunt for chief merchandising and digital officer because that’s one of the changes that I did make is that I pulled digital and ecommerce from marketing, and I put it with merchandising. And the reason for that was there was a friction in the ways of working, and I really want to keep the consumer at the center of all of our decisions. That has to be the driver for our decision to streamlining that thought process and combining those roles in one and what I believe it’s gonna take to to cultivate the next level. I’ll be able to announce relatively soon who’s coming tonight. I I wish soon, relatively soon, who’s gonna be in that role, but I feel like we’ve had an exceptional candidate who’s gonna be stepping in.

And then you you look at that left marketing organization, you know, it’s a little bit smaller in scale, but we had an internal person who actually started with Ulta Beauty many years ago building our credit card business. And she also has been very intimately involved with the loyalty program. She knows the consumer better than anybody at Ulta Beauty. And understanding your consumer, especially in this hyper personalized environment, is gonna be what it takes to really drive the business forward for us. So we have an internal promotion there, which is fantastic.

I love seeing internal people grow. So then, you know, you’re positioned to I had elevated. I didn’t tackle myself. And so that gave me the opportunity to really streamline within my own management team and elevate a couple of roles. The first one I wanna talk about is our chief store operations officer.

We elevated her title to a chief retail officer. She owns everything all stores and loss prevention and services. We put real estate and store design under her leadership purview. And it just has all all these stores are now under one leader, which really can simplify and create heated decision making and how we’re really impacting our store fleet in the hands of one leader. And then also our chief technology officer, he’s done just a fantastic job of so much transition over the last couple years.

And I put a transformation under him because he’s got a lot on our agenda and a lot on our plate. And I’m very confident that under his leadership that all of the investments that we’re making, that Paula and I are staying really close to, that he’s bringing it all together in a way that we can really understand our CapEx and our OpEx and making sure that we’re getting our ROI and getting the value realized out of these investments. And so to me, it was really not about creating a lot of change. It was more about alignment and clarifying ways of working. And I feel it internally putting our aces in their places to the next phase of growth of Ulta Beauty.

And I feel that’s exactly what we’ve got going on right now, and we’ve got the right people in the place to to really carry us on to the next phase of growth here at Ulta Beauty.

Chris, Host, JPMorgan: I think we’re already starting to dispense this, but I’d love to ask the question if how how would those any organization that have been around for a long time describe your lead leadership style and maybe how that’s different versus the way the organization was run prior.

Keisha Seelman, CEO, Ulta Beauty: Yeah. Maybe you should ask Paula that question. I don’t know. Well, I’ll I’m gonna ask Paula later. Oh, okay.

You you can you can you can definitely you can can definitely you know, Chris, that’s so interesting. I think unique about me specifically is I grew up in retail. I started in an hourly position at a Target store, and I have worked every level of position you can imagine in a retail environment, in many retail environments out there. And I think that gives me a couple of advantages in in the CEO’s side today. First of all, that I if I did it, anybody else can do it too.

So I think I’m I’m a good role model for creating a lot of dreams that are out there because the American dream is definitely possible. The second is that I have a total appreciation for the role that everyone plays in making a company at retail a success. And not only do I have an appreciation, but I also have the credibility within the organization that they’re like, she does get it. She’s walked the the mile in my my footsteps. So there aren’t that many CEOs that I don’t believe out there and reach out specifically that have had that kind of a journey.

So it’s a little bit unique in and of itself. The second thing I would say is about my leadership style and approach is that I’m decisive. I’m strategic. I’m execution oriented. I’m competitive, and I like to win.

But I like to win with the team. I’m a big believer in surrounding yourself with a team that sells at what they do, but they play really well together. I use a lot of sports analogies with my team. It’s like, want a team that will pass the ball to each other and leverage each other’s strengths. You know, I’ve been called the staff at times, but I’m tasked with intention.

And I say oftentimes inside the organization, spinning is my least favorite move. Because if you can’t make a decision, you can’t start moving in a direction, you’re just spinning in place. And that’s not good for any organization and also for the culture with any organization in and of itself. So, you know, we’re we’re decisive. We’re moving in a direction, and I’m a big believer.

If we’re going down the long path, we can change the course. It’s not going down the path at all. It’s 10 times worse than my my opinion. So I’m about the future. This is the best job I’ve ever had.

I’m very excited about what the future looks like at Ulta Beauty and spend a lot of time.

Chris, Host, JPMorgan: That’s a great segue. So the new strategy was launched in October at the Analyst Day. Obviously, given your president and COO title, you had a lot of influence on that strategy, the pacing of that strategy, the direction of that strategy. But as in any team environment, everyone has a vote, and you didn’t have the vehicle. So how do you think about how do you as you reflect on that strategy, how do you think it evolves?

And what might be what might be edited versus what was laid out in October?

Keisha Seelman, CEO, Ulta Beauty: Well, I was a key architect of the strategy, and I do believe in what we shared at the October Analyst Day. And, you know, we’re still committed to our financial targets that we shared along with the strategies. Some of the nuances and changes that I’ve made since stepping into the role is on the big one on simplification and making sure that the organization really understands what it is that we’re trying to deliver. So let’s just take a step back. I I talked a little bit about driving the core.

So driving the core to me is about, you know, being best at class at execution, and that’s table stakes to me. So it’s getting back to the basics is step number one. That’s the cost of entry really to me in retail. But it’s also things like brand building and digital acceleration and personalization. It’s how do we take the businesses that we’re currently doing today and taking them to level up and invest in ways that are gonna continue to drive a a greater mode between us and its competitors.

So instead of just talking about everything separately, just buying together because that’s really about driving the core. And then when you look at driving margin accretive businesses, to me, that’s wellness. It’s it’s a new business that we can continue to lean into and really grow. It’s marketplace that we announced in our earnings call. That’s gonna continue to help us have the best of the assortment in a highly curated way that for our guests and the consumer.

It’s around UV Media and leaning into UV Media as a, you know, way that our brands can continue to communicate with the consumer and also drive a creative businesses for us and profit for us in the organization. And the fourth is around international. So that international expansion. So instead of talking about everything separately, we’re talking about it collectively as a whole. Organization understands that a little bit more.

It’s easier to talk to and get people aligned to kind of fully understand them, and I’ve got that. And then the the last one is really important too, and that is realigning for the future of our foundation. And to me, it’s it’s in two parts. It’s the ways of working, which I’ve talked about a couple times here. It’s making sure that everyone understands the role they play in a greater good of the organization and how what they do day in and day out makes the difference.

When people understand what it is and why they’re doing it, they can get behind it a lot quicker. And seeing that’s what you like. That’s really, really exciting to me. And the other part of that is driving cost out of this this model. It’s like, how do we continue to look for efficiencies and drive cost out?

And we’ve got everybody all in. I’m very confident we shared 200 to $250 of cost out of the model, and I feel like we’ve got a really good line of sight to that. So it wasn’t necessarily changing things. A little bit of the pacing. A little bit of the pacing, I’ve adjusted Paula and I together along with the executive team because, you know, we’ve got some changes within the the leadership team.

We wanna make sure I I’ve gotta get that new merchandising and video officer in role because I want them to be a part of this overall service. So the pacing’s changed a little bit, but our objectives are still the same. It’s the way we’ve communicated them. We’ve simplified them, and we’ve put really good plans in place to have good decision making around our investments in our OpEx and our CapEx and accountability. And that’s one thing that we continue to lean in is making sure that we have really good visibility and ROI and adjusting as we need to.

Just because this is the plan we have today, I’m a big believer, Chris, that if it’s not working, we’re gonna pivot. Because at the end of the day, we’ve gotta make sure that we’re returning returning long term, you know, responses to our shareholders and creating shareholder value.

Chris, Host, JPMorgan: Coming from the store side, did you think that the case was a problem? Was the digestion issue that the stores couldn’t handle it? Or to what degree was there’s a lot of people in different roles and there’s a new, you know, new person coming in that affected maybe a more moderate pace of change?

Keisha Seelman, CEO, Ulta Beauty: I would say this, clarity of expectation and making sure you’re right, that you are trying to do more than you’re not overprescribed for what you can deliver. You know, one of the two two streams that I believe I have is focusing on execution. I wanna make sure that we’re executing with excellence. This is what we need to do. I believe in all of these strategies.

These are the the strategies we need to really lean into in 2025 to continue to emerge and and take growth in ’26 and beyond. You know, like I said, we’re gonna stay close to it. We’re gonna be agile. And if we need to adjust accordingly, we will. But I’m overall very confident in the plan that we’ve got in place.

In the sequencing, we’ve got a massive hand chart. We’ve gone through a lot of change in this organization, just all of the foundational improvements that we’ve made, and we’ve shown that we can do it. This is actually when the fun starts to happen because now we’re focused a little bit more on the go to market side of the business. The team internally at the corporate office is very excited, and the scores are too. They’re ready to get behind this and execute the next month and bring this vision to life.

Chris, Host, JPMorgan: You know, I wanna touch on sort of the investment cycle a little bit because I think the front and parcel you came in after Mary. I think it was it also went into an investment cycle for a number of reasons as they source, Salesforce, but we’ve got to become more efficient as an organization and digital and CRM and supply chain automation. And, you know, that that program emerged in 2014, and it’s now 2025. And he did the ERP recently as well. So he’s kinda high rate of spend that he can investors interpret it as it was a catch up, and we needed to catch up.

I think the one question right now is sort of two part is, is this trend sort of growth for the sake of growth without a focus on returns? And then the other piece of it is, to what extent has the spend maybe lasted longer than investors expected because the industry has changed and become more dynamic?

Keisha Seelman, CEO, Ulta Beauty: Oh, I think the industry has continued to evolve and change, but we’ve had to evolve and change with it. You know, the last three years, we’ve been in a heavy investment cycle on our foundational systems. I mean, when you just look at what we’ve had to to tackle as an organization, it was our ERP upgrade, which is now behind us, our digital store platform, which was a monolithic platform that we’re now on a more robust system that we can, know, introduce changes and enhancements in a much more unique and individual scope way. You know, our POS was outdated. We had to get our POS updated.

Our data systems were a little indicated, and we didn’t have really good data governance around all of our data, which is a huge unlock if you can have clean data sources to leverage AI, generative AI in the future. We’ve got all that work behind us. We had to do that in order to be able to now start to shift to work on our go to market type strategies, so all of the things that we’re talking about now. In this competitive environment, you gotta continue to invest in your business, so you’re gonna become irrelevant, I think, very quickly. And while, yes, we’ve been in a heavy investment cycle, so the market is highly competitive, but it’s still really growing at the same pace.

And I believe we are focused on the right things that are gonna continue to grow the business, you know, for the long term growth of the future. So anything you’d like to add? Yeah. And I I the

Paula Oeygo, CFO, Ulta Beauty: thing that I I would add is that we can assure investors that we are not just investing for the sake of investing or and we are focused very much on returning on the investment. We do recognize with what we shared a consistent growth this this year on Granite twenty twenty five with that in extraordinarily low level because we we quickly adjusted in order to to navigate the the more challenged top line. A 10 growth over the long term is not what we’re targeting. And our absolute goal is to ensure that we’re managing SG and A growth at a slower pace than our our top line from a long term perspective, which, you know, we’ve shared we expect that to be between four and six months.

Chris, Host, JPMorgan: And since you get beyond 25, even you have a multiyear plan out there, is the expectation that you’ll start to see leverage in SG and A if we got back to normalized growth rate from a top line perspective?

Paula Oeygo, CFO, Ulta Beauty: Well, what I would say is what we’re focused on and we shared this. We’re we’re focused on driving our top line four to six from a three to four comp, and we’re really focused on driving mid single digit operating profit growth. And we think that that is the key thing to focus on in an industry category that is as dynamic as the beauty category. We wanna allow ourselves the flexibility to invest in ways that we can consider the the most relevant at that particular time. And so some years, we may decide to to to invest more from a gross margin perspective.

Some years, we may decide to to to invest more from the s g and a perspective in service of making sure we are delivering that mid single digit operating profit growth. We are confident, and we share this, that we will be able to maintain a margin rate of 12%, but absolutely expect that we will expand that margin over time.

Chris, Host, JPMorgan: I guess as as long as we’re on the expense side before we can talk about the brands and consumer a little bit, The can you talk about the profits? 10% is a big big number after big numbers for for a while. So if you’re gonna pocket that 10% growth, what’s driving it?

Paula Oeygo, CFO, Ulta Beauty: Yeah. What I would say is a a big component of that is what I would consider wage and inflationary pressures. Right? And so when we think about score wage pressures, we we know what’s going on from the macro perspective. We have a a big fleet.

And so wages is one component. Health care health is another component. And so I I would it goes under the the inflationary pressure. For taxes, another component would be as we have invested over the last several years, and Tisha talked about this, in our core infrastructure, we are now realizing the the impact of that from a depreciation and a cloud and SaaS perspective. And so so that’s for pushing some pressure from a s g and a growth perspective.

And then as we look to invest and support some of the core elements of the Ulta Beauty unleashed plan, that in this year is driving the strategic investments or driving some of our SG and A growth.

Chris, Host, JPMorgan: And I guess, you know, back to the the brand side. You you mentioned you’re on the cusp of of announcing the new chief merchant and digital officer. The relationship with the brands is so important. And and I do think investors under appreciate how important all this is to the brands in terms of driving their business. What were you looking for?

If you had digital and chief merchant, you know, one is sort of, I got relationships with brands, and I know has secret brands and but then there’s the digital aspect. So who were you looking for in this person that we were sounds like I’m gonna soon find out about?

Keisha Seelman, CEO, Ulta Beauty: Well, you know, clearly, someone who has done faster many cycles in retail, I think, is very important. Someone who really understands what it takes to build an exceptional team for the future. So a great cultural fit. You know, something that had experience in mass to luxury and everything in between because I do think that there’s unique differences, and you have to have an appreciation for that global experience. All not necessary.

I thought it would be something we we found it. It would be important. And so we just like to win. I mean, I want somebody that wants to be a part of this team, that wants to win, that wants to drive the business forward in a cohesive way. You know, I I shared that the the team, the go to market team, it’s not just about the merchandising piece.

It’s about the merchandising and digital officer working very closely with the marketing officer, working really with the chief retail officer. The power of that trifecta, you know, it’s gonna be just I’m I’m I’m very excited about what the future is going to bring when I see the three of them working really closely together. So I think that’s what it’s gonna take for us to continue to take Ulta Beauty into the next stage in growth. Those are the traits that I was looking for.

Chris, Host, JPMorgan: Know, the brands, can you can you talk to investors about the importance of Ulta that’s for the brands? And our brand’s appropriately channel managing. I think it’s about the best in terms of how they launch newness in in terms of thinking about Ulta versus an Amazon versus, you know, a Sephora in terms of customer acquisition and growth?

Keisha Seelman, CEO, Ulta Beauty: Yeah. Well, one of the very first things that I’ve done as I stepped into the role of CEO is I spent a lot of time in conversations face to face and in Teams calls with our brands, spending time in LA and New York and many places in between, and creating an environment where we can have open and honest conversations. What do I need from them? What do they need from us? And we do call them our partners because if we win and they don’t own successful, if they win and we’re not, we are such a big part of their brand, they cannot win.

It’s all transparency. So, you know, we’ve had some really good dialogues of things that I feel like we can we’re having a fresh set of eyes that we can lean into and really help them to drive their business forward. And I have expectations from them of what I’d like to see how they show up with Ulta Beauty. Things like if you’re in a lot of distribution points, you will need to have some expertise that are unique to Ulta Beauty that’s driving that consumer into our ecosystem because in other places, no one does what we do. We are the the only place where we can take a consumer from mass to luxury and have conversion both ways.

So you wanna try to get a new consumer into your product line, you probably need to be either launching your newness with us or having expenses with us, and that’s how we’re gonna help you grow your overall business. And when you’re ready to roll it into, you know, some other some other place, then we need to have something on the back end of that. We call it getting in the kitchen brand, and we’re leaning in on that. So getting in the kitchen and coming up with, you know, bringing our best thoughts together with your best experience and coming up with ideas that are unique to our consumer, there’s a lot of openness to that, which I’m very excited about, and I think that’s gonna continue to help differentiate us in that the future. But, yes, you know, we’re very important to brands, and that’s I we’ve had very clear and candid conversations with our expectations, I believe, going

Chris, Host, JPMorgan: forward. You know, and to think about the two sides to it. Put yourself in your own little staircase around Amazon. So so what don’t you care to appreciate about category in the beauty enthusiasts? And what scares you about Amazon?

Mhmm.

Keisha Seelman, CEO, Ulta Beauty: Let me start with no one does what we do. No one does what we do. And as I shared earlier, 80% of our revenue is still coming from source. And part of that is the experience of human connection. We’ve got services in our stores.

The human connection in beauty is really, really important. You know, the fact that we’ve got, you know, a world class assortment that is really targeted to the beauty enthusiasts and the beauty consumer, which is just having a lot of products out there. Our buyers do a fantastic job. Our merchants are doing a fantastic fantastic job day in and day out, making sure that we’re putting the best items in front of the consumer versus just having everything in front of the consumer. And we’ve created that reputation, I believe, out there in the industry and with the consumer base that, you know, they can talk Ulta Beauty.

We’re gonna just continue to lean into our areas like marketplace and our digital acceleration. There’s things that we still have an option on our ecommerce platform that are coming very soon, like, subscribe and save. So for that replenishment piece, which is still a relatively smaller part of what drives the spend, it’s really newness and innovation that’s driving the spend. And newness and innovation, you’ve gotta experience it in store. So I see that’s what we are continuing to lean into and what makes us unique from Amazon as a perspective.

You know, we’ve seen this research as a lot of some of the brands that have gone on to Amazon. The price is actually being sold on Amazon before. It was just in a gray market way. So so oftentimes, we don’t see a huge disruption. It’s just that you’re buying it off of Amazon.

You’re actually buying it now through it’s a lot of versus through a third party, which who knows where it came from. And sometimes, the tenant could be not could be stolen products even from us. So that’s not good for us either as a company. So, you know, we’re we’re continuing to keep an eye on it. We’re leaning into our super strength and what makes us different and what makes us unique.

And I believe by doing that, I’m very optimistic that we will continue to grow our business in the future in beauty and in wellness.

Chris, Host, JPMorgan: K. Sephora, North American CEO at at a mid March fireside, called the consumer very, very overwhelmed right now, quote, unquote. And there’s a lot of consternation amongst all of us around what if it’s something after a really nice holiday, like, what happened? So the shelf announced in January, and they talked about the deceleration environment. How are you thinking about the consumer?

What’s going on? And how do you think the category reacts in a tougher environment? It’s a tougher environment.

Keisha Seelman, CEO, Ulta Beauty: Well, I’ll start by saying that beauty is still a highly engaged category, and consumer is still making a decision on where they’re investing towards the dollars. And beauty is the category where they can feel good about themselves and how they can express themselves in a, you know, cost effective way. So we still see good engagement in beauty. You know, we haven’t seen a shift in the consumer shopping patterns from our last report that we’ve had. You know, we’ve publicly shared.

We’ve not seen adjustments in how the consumer is spending. I I would just say that what makes us unique from the competitors that you mentioned in your question that makes us different is that we have everything from mass to luxury. So we’re not just relying upon higher end price points, and we’ve got everything in between. So if the beauty consumer is wanting to still engage in beauty, but maybe in a, you know, less high dollar way, they can still come to us and be engaged with us, whether it’s online or in store. So I would say that we’re not we’re not seeing what whoever is being referred to before, and we are we’re pleased with how the beauty consumer is continuing to engage with Ulta Beauty today.

Chris, Host, JPMorgan: And then I just as a a follow-up, so it’s for that one level down. In the past, right, if you went back to the GFC, think, the power was down seven and beauty was down three. Right? So it is a relatively defensive defensive category. But one of the early warning signs that you’ve talked about in the past is trade down.

How does consumer behave in in 2024 and have certain any change any any signs that you’re seeing that are concerning?

Keisha Seelman, CEO, Ulta Beauty: Yeah. I mentioned that just in the previous question that we’ve not seen any changes necessarily in the consumer behavior. We are just continuing to lean into what it is that we do well and controlling what we can control. Twenty five I mean, even the tariffs that came out today, like, it’s a totally unpredictable environment that we’re in. But I believe Ulta Beauty is focusing on controlling what we can control, keeping the desk the center of all the decisions that we’re making, and really being focused on our Ulta Beauty unleashed plan, employing to be all the right things that we need to continue to lean into to help propel us through 2025 and beyond.

Chris, Host, JPMorgan: Awesome. So with that, I’d love to open it up to to the audience for questions. That’s one very fantastic that that did not bring up someone’s behalf in the audience. Audience. Can imagine.

That’s with a t. Paris. That’s what they’re all thinking. That is what they’re all thinking. Can you talk about obviously, I didn’t bring this to the board.

I was gonna ask you

Keisha Seelman, CEO, Ulta Beauty: about Oh, yeah.

Chris, Host, JPMorgan: Malaysia, Forty Six Percent. But can you talk about tariff risk? I I know it’s very hard. You have a lot of brands, but how do you how do you think about tariff risk? Are you have you seen any impact?

Some some companies, I’m not sure I have told you, already seen some impact in their categories in this in in in our factory taking some price. So just broadly talk about tariff risk.

Paula Oeygo, CFO, Ulta Beauty: Yeah. Thank you, Chris, for the question that I know is on a lot of mind. So what I would say is we’re watching the tariff evolution as closely as as as everyone else, and it’ll take us a minute to kinda process all what what the implications of of all that has been shared over the last day or so. But broadly speaking, what I would say is for Ulta Beauty, our tariff risk is relatively low. And the reason why we say that is because in 2024, only about 1% of our receipts were direct imports, which would be they were subjected to to tariff.

So, again, relatively low. Our Ulta Beauty collection collection is a large portion of of of that. When we think about our brands, right, I mean, being a house of brands and having 600 brands, it’s it’s difficult to to to really and it takes time for the brand and then also us to go through and assess for them what are the the impacts going on that business their business. We work in close partnership with our our brand to try to mitigate kind of the impact that that would have on the the end consumer. Similar to, like, how we navigated in 2018 and 2019 when there was a big kind of tariff implication, We’ll continue to do that.

We stay close with our brands and and we’ll we’ll flex. Beyond merchandise product, I would say we do have some exposure. Again, very limited in things like, you know, our store fixtures, our store lighting lighting, IT equipment, and other store supply. And we’ll continue to to monitor the debt and the best of our ability to offset or mitigate some of those those those implications.

Chris, Host, JPMorgan: So the first question that is pricing. Mhmm. I think in 2018, it was a bit of a different environment where there was it was pre all this inflation, like consumer wallets, particularly around needs. Historically, can you talk about how you put pricing around inflation? And is it potentially different in in partnership with brands?

Is it potentially different this time given, you know, how much the consumer has taken from the inflation side?

Keisha Seelman, CEO, Ulta Beauty: I would say, you know,

Paula Oeygo, CFO, Ulta Beauty: it’s all we will continue to work we will work with our brand to adjust to this evolving and dynamic environment. You know, what I would remind us is that, you know, half of our business is on the perceived side of the house, which is in our in our. The other side is is massive. We have a little bit more flexibility from a from a pricing perspective. Yeah.

I think, you know, we will leverage a lot of we’ll go back to our toolbox that we we use prior, and then we will flex it and adjust it given the evolving consumer dynamic and see as as consumer are even more value sensitive.

Chris, Host, JPMorgan: Any other questions? Go ahead.

Keisha Seelman, CEO, Ulta Beauty: Yeah. Now we’re deploying that technology here very, very soon into our system. But, you know, we also you you earned your point, which is very important to our Ulta Beauty consumers. Our points matter versus going something else for your replenishment. And then in addition, our ability to communicate through our personalization efforts, we already have the algorithm that was there.

It’s just that we’re gonna make it a lot easier so they can automatically set up for it. So we were doing a lot of that already behind the scenes with our personalization efforts, but now it’s just gonna become automatic and you’ll be able to sign up for it. So that’s kind of low hanging fruit process coming relatively shortly here too. Well, what what I would say is, obviously, when you think about

Paula Oeygo, CFO, Ulta Beauty: this as privacy, there is a there’s a a implication because we’re offering a bit of a discount to get that that repetitive purchase. But even if we take a step back and think about the beauty enthusiast, the thing that’s driving the beauty enthusiast, which is this contact, they are not a true beauty enthusiast is not buying the exact same product or finishing the exact same product every month because newness is so important to them. They may try a serum one month and want to try a different serum the the the the next month. And so while there are some consumers that are very focused and repetitive, for the large majority of the beauty enthusiasts, they are going to be looking to drive to try different different products in in different brands. Professional.

Keisha Seelman, CEO, Ulta Beauty: Yeah. So we have we opened a hundred and one stores last year. We are right around 210 stores open. And during partnership with Target, we made the decision to really lean into the 600 plus stores that are open this next year and really look at how do we continue to drive efficiencies and leverage the learnings that we’ve had to really unlock value for both of us effectively together. So we’ve taken a little bit of a pause in opening more stores, but that is really to just make sure that we’re working on all the things that we’ve learned over the last few years collectively together and bring two great companies’ minds together to really make this even a greater value for both of our organizations.

So we haven’t announced what we’re gonna do past 2025, but right now, this this year, we’re really focused on improving and leveraging the learnings that we’ve had already in the 610 stores that we have open right now. Yeah. So so the question is on TikTok. And what we’ve done is just in our more recent twenty one days of beauty, we actually were participating on TikTok that you could the link and it would take you to our site. We really want the consumer to still be purchasing through our Ulta Beauty channel today.

What you’ll see from a lot of the brands that are selling on TikTok, the majority of them are at a discounted rate. I don’t know how long the brands can continue to do that because you’re it’s expensive to be on TikTok. And if you’re doing it at a discount, it’s it’s it’s not necessarily what I would view as a long term play. It might be a way for you to to get some energy and excitement into your brand, but you’re not gonna stay on there forever. It’s just I just don’t see that that working.

So I I think that you’d see it to spike some, you know, activity within your brand, but then you’re gonna wanna back off of it. I don’t think that’s that’s gonna be where brands are gonna be selling every day all the time. You know, let me start just a little bit about the category, and I’m gonna kick it over to you, Paula. So, you know, one of the things that was unique over the last few years is points of distribution, specifically around tattoo cosmetics. There’s been over 1,600 new points of distribution added in the last few years, and that has been extremely disruptive to to the industry as a whole.

The fact that we were able to really go through that cycle where we had 90% of our store chain was impacted by one or more competitors opening, we’ve never seen anything really like that. So the fact that we were able to hold in there, you know so that in 2024, we said it was a concern that we actually lost a little bit of share. So we’ve been in this fight for a while. We’re cycling through that now. So I do think there’s some good upside potential for us here in the future.

Paul, anything you’d like to add? The the thing that

Paula Oeygo, CFO, Ulta Beauty: I would add is, broadly, our perspective on the the category is that you can talk about this early. Earlier, that is strong. It’s resilient. It is a growing category, and our expectation is that it continues to grow. Moderate moderating, but it’s still growing at the the historical rates of the two to 44%.

So we’re we’re confident about the the growth of the category, know that we would participate and be driving that that that growth over the

Keisha Seelman, CEO, Ulta Beauty: long term. You know, in the last three years, beauty itself has grown $20,000,000,000 in, you know, sales. And the wellness category is the size is $400,000,000,000, and it’s actually outpacing the growth of beauty. We’re leaning into beauty and wellness. So when you think about what the future looks like for this category specifically as well, I think there’s huge upside potential here in the future.

Where do you think we can make up

Paula Oeygo, CFO, Ulta Beauty: that for the next few years? Oh, so you I would say where we’re confident we will end up is in continue to be a leader in this category and a share gainer. And so a market share gainer. They’ll you know, there’s there’s disruption that’s happening that happened over the past several years. It’s not attractive category.

It’s a great category with margins. It’s so weak. It has always been a competitive category. And so we expect the competition to to continue and for new insurance to come and go. But Ulta Beauty will be the lasting one, and we will be the leader in the category and a share gainer.

Keisha Seelman, CEO, Ulta Beauty: So this is what we do. That’s the other thing. You were talking about all these other department store discounters, etcetera. This is what we do. This is who we are to our core.

So, you know, others can wanna participate in it because it’s, you know, there’s attractive margins that are out there. But this is what Ulta Beauty is all about, and this is what we’ve been about since day one.

Chris, Host, JPMorgan: Points. Oh, I’m sorry. Go ahead. You just talk a little bit more about wellness? I I get conceptually something coming out of COVID, other than, like, before COVID.

I’m not sure I understand what that actually means, like, a merchandise. Like, what what categories does that mean? How much of the store do you guys wanna dedicate to? Because seems like it’s a big part of it out. That’s the best you guys are making sure.

Keisha Seelman, CEO, Ulta Beauty: Yeah. So currently, we have wellness in about eight feet in all of our stores. So we’ve had some initial key learnings of what wellness can drive within the category. What we really like about wellness is it’s not a trade off for investing in your beauty. It’s actually an add on in addition to.

Some categories that, you know, I could just share today that we’re thinking about is sleep. Sleep is really important. How you how much did you get? Actually, response time and chasing on your body. You know, those eye patches don’t always cure when I’m having enough sleep at night.

You know, sexual wellness and changes in life life stages, especially for the female consumer. So going, you know, from engaging from someone who’s having their first period as a young teenager all the way through menopause, it’s a very personal thing to have to ask about. And we’ve done a lot of research that says that we have the credibility in the industry and the confidence of the consumers. They feel like they talk about the beauty for these questions and these needs. I think the fact that our associate base is very you know, it it’s they’re approachable.

They’re not judgmental. The confidence that the consumer has with us, it just leads to that this is an area of the business that we need to continue to lean into. Sexual wellness is younger generation that’s really important to them also. So, you know, it’s it’s not just about ingestibles, seems truly important we have them in store today, but it’s it’s beyond that. It’s these categories that kinda surround how you feel about yourself and how you can be the best version of yourself going forward.

You’re gonna ask?

Paula Oeygo, CFO, Ulta Beauty: I was just saying, yeah, and and how you take care of yourself. It’s a really important category, involving category. Right now, it’s it’s disparate. There’s no one clear owner in this category, And we know that given the trust that the consumer has for Ulta Beauty, we have a real right to win in store and digitally. And we think that our announcement with Marketplace wellness will play a key role in bringing marketplace will play a key role in bringing wellness to to to life in a

Chris, Host, JPMorgan: differentiated way as well. I wanna clean up with a question on points and promotions. I think a lot of investors don’t appreciate the importance of points as you mentioned to the consumer. And we can have you evolve the promotional strategy you’ve tried over the past two years in in terms of leveraging points. So this is an open mic for you there.

Keisha Seelman, CEO, Ulta Beauty: Yeah. I’ll start. Maybe, Collie, you can add. Is that points are really important to the consumer. You know, what we like about points is a lot of times the brands are participating in funding those points, and it’s a way that the brands can engage in offering the consumer a a greater value without discounting their prices, especially in prestige and luxury.

They don’t really like to play that first game off. This is a way that you engage a consumer that is a competitive advantage that we have. You know, the last couple of years, since I’ve been here even, the evolution of the personalized marketing campaigns that we can do that are really tailored, we used to do a lot more broad based marketing to the consumer. We don’t really do much of that anymore. It’s you know, if you’re getting a a unique coupon to you, it’s different than your neighbor’s gonna be because your shopping patterns are different.

What works for you is different. Maybe we wanna get you back in the store a little bit sooner. And that’s just a single power that we’ve been able to unlock. And, again, the fact that we have our foundation system really, you know, top notch, world class, but leading right now enables us to continue to lean in on that. How anything I

Paula Oeygo, CFO, Ulta Beauty: would say, I guess, tell us they love our points. I mean, it’s it’s clear. It’s simple. You spend a dollar. You get a point throughout the year.

It’s also really compelling point multipliers, and so two x three x four x. I love it. It’s unique. And in an environment where consumers are looking for value, they become even increasingly important, and we believe that it’s it’s it’s a key to offer us, and our consumers love the program that we have. Awesome.

Chris, Host, JPMorgan: That’s a great thought. I have to cut off. We thank you for your time so

Keisha Seelman, CEO, Ulta Beauty: much. Thank you, Toyota. Thank you. Yes.

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