Ulta 2013 Annual Report Download - page 3

Dear Stakeholder,
The ULTA Beauty team achieved record sales and earnings in 2013 and further enhanced the company’s position
as a beauty destination. With 675 stores and a thriving e-commerce business, ULTA Beauty’s differentiated model –
convenient locations, value and an unmatched breadth of assortment of products and services – continues to resonate
with customers and deliver industry-leading growth and market share gains.
2013 Financial Performance Highlights
Net sales increased 20% to $2.7 billion. This growth was driven by 22% square footage growth and a 7.9% increase
in comparable store sales. We continue to gain market share across all major categories, with prestige cosmetics and
skincare leading the way. Operating profit rose 17%, as we invested in projects that we believe will sustain our long term
growth, absorbed the impact of a large number of new stores, and sharpened our promotions to protect market share
in a challenging retail environment. Our operating margin decreased 30 basis points to 12.3% of net sales. Earnings per
share increased 17.5% to $3.15 per diluted share.
Our Five Point Growth Strategy
In 2013, we advanced each of our five key growth initiatives: rolling out new stores; introducing new products,
services and brands; enhancing our loyalty program; broadening our marketing reach; and increasing our focus
on our digital strategy.
Store Growth. We opened 125 net new stores in 2013, increasing square footage by 22%, the most ambitious store
opening program in our history. We ended the year with 675 stores in 46 states, progressing toward our goal of 1,200
stores in the U.S. We remodeled 7 stores, and now have almost 95% of our store base in our latest formats. We are
pleased with the quality of our real estate and the productivity of our new stores.
New Products, Services and Brands. We continue to enhance our portfolio of new products, services and brands,
strengthening our position as a beauty and trend authority. We have added 90 significant new brands since 2009,
including 25 in 2013 alone. Examples of these launches include Perricone MD, IT Cosmetics, Mally, Meaningful Beauty,
St. Tropez, Lipstick Queen and Jane Cosmetics. We added 83 prestige brand boutiques to our stores during the year,
ending 2013 with 100 stores offering Clinique products and 105 stores offering Lancôme products.
Loyalty Program. Our loyalty program grew to 13 million active customers by the end of 2013. This valuable tool
drives customer visits and share of wallet, with loyalty program member purchases representing approximately 80%
of total sales. During 2013, we developed stronger Customer Relationship Management capabilities through the
CRM platform we put in place at the end of 2012, improving our ability to segment and target customers with
more relevant offers.
Marketing. We continue to extend our marketing reach, building upon our strong foundation of print advertising.
Strong top line growth was supported by our signature promotions (including: “21 Days of Beauty,” “Love Your Skin,”
“Love Your Hair”), special events in stores showcasing new products and services, increased digital marketing and a
stronger focus on social media. Our marketing team is leading our efforts to drive greater awareness and clarity about
the ULTA Beauty brand, increase customer acquisition and optimize the balance between promotional and brand
building activities.
Digital Strategy. 2013 was an exciting year for our e-commerce team. Ulta.com sales grew 74% to $96 million,
and contributed almost two percentage points to our total company comparable sales. We recently launched a
new e-commerce platform featuring innovative Responsive Web Design, significantly improving the online shopping
experience across a wide range of customers’ devices. We also added e-commerce fulfillment capabilities to our
Northeast distribution center to support the rapid growth in our online business.