Ulta 2012 Annual Report Download - page 11

approximately $1.0 million, which includes capital investments, net of landlord contributions, pre-opening
expenses, and initial inventory, net of payables. However, our net investment required to open new stores and the
net sales generated by new stores may vary depending on a number of factors, including geographic location. As
of February 2, 2013, we operated 550 stores in 45 states.
Store remodel program
Our retail store concept, including physical layout, displays, lighting and quality of finishes, has continued to
evolve over time to match the rising expectations of our customers and to keep pace with our merchandising and
operating strategies. We have a formal store remodel program in place to update our older stores to provide a
consistent shopping experience across all of our locations. We remodeled 21 stores in fiscal 2012. Our newer
store prototype, including new stores and remodels, represents approximately 90% of our store base. We
continue to evolve this program to update older stores with a consistent look and experience to drive additional
customer traffic and increase our sales and profitability. The remodel store selection process is subject to the
same discipline as our new store real estate decision process. Our focus is to remodel the oldest, highest
performing stores first, subject to criteria such as rate of return, lease terms, market performance and quality of
real estate. We also consider remodeling all relevant stores in a particular geography when appropriate, which
allows us to present a consistent brand identity across an entire market. The average investment to remodel a
store in fiscal 2012 was approximately $0.9 million. Each remodel takes approximately three months to
complete, during which time we keep the store open.
Salon
We operate full-service salons in all of our stores. Our current Ulta store format includes an open and modern
salon area with approximately eight to ten stations. The entire salon area is approximately 950 square feet with a
concierge desk, skin treatment room or dedicated skin treatment area, semi-private shampoo and hair color
processing areas. Each salon is a full-service salon offering haircuts, hair coloring and permanent texture, with
most salons also providing facials and waxing. We continue to expand our service offering, adding services such
as gel manicures, microdermabrasion and hair extensions to select locations. We employ licensed professional
stylists and estheticians who offer highly skilled services as well as an educational experience, including
consultations, styling lessons, skincare regimens, and at-home care recommendations.
Ulta.com
We established Ulta.com to give our customers an integrated multi-channel buying experience by providing them
with an opportunity to access product offerings and information beyond our brick-and-mortar retail stores. The
Ulta.com website and experience supports the key elements of the Ulta brand proposition and provides access to
more than 16,000 beauty products from hundreds of brands. As Ulta.com continues to grow in terms of
functionality and content, we expect it to become an even greater element in Ulta’s marketing programs and a
more important resource for our customers to access product and store information, beauty trends and techniques,
and buy from a larger assortment of product offerings.
Merchandising
Strategy
We focus on offering one of the most extensive product and brand selections in our industry, including a broad
assortment of branded and private label beauty products in cosmetics, fragrance, haircare, skincare, bath and
body products and salon styling tools. A typical Ulta store carries over 20,000 prestige and mass beauty products.
We present these products in an assisted self-service environment using centrally produced planograms (detailed
schematics showing product placement in the store) and promotional merchandising planners. Our
merchandising team continually monitors current fashion trends, historical sales trends and new product launches
to keep Ulta’s product assortment fresh and relevant to our customers. We believe our broad selection of
merchandise, from moderate-priced brands to higher-end prestige brands, offers a unique shopping experience
for our customers. The products we sell can also be found in department stores, specialty stores, salons, mass
merchandisers and drug stores, but we offer all of these products in one retail format so that our customer can
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