Ulta Beauty, the American cosmetics retailer, has experienced a substantial decrease in sales during the first quarter of 2020 as a result of the ongoing Covid-19 pandemic. Net sales dropped by 32.7% compared to the same period last year, with revenues totaling $1.17 billion, down from $1.74 billion. Comparable sales also plummeted by 35.3%, contrasting with a 7.0% increase in the first quarter of 2019.
The closure of all Ulta Beauty stores on March 19, due to the impact of the pandemic, had a profound effect on the company. Although they introduced curbside pickup at select locations on April 23, it wasn’t until May 11 that stores began reopening. Currently, 333 locations are open to customers, while an additional 840 offer curbside pickup.
As a consequence of these disruptions, Ulta reported a net loss of $78.5 million, or $1.39 per diluted share, in the first quarter of 2020. This is in stark contrast to a net income of $192.2 million, or $3.26 per diluted share, during the same period last year. CEO Mary Dillon acknowledged the impact of the pandemic on the company’s operations, citing that although e-commerce sales exceeded expectations, they were insufficient to offset the effects of store closures.
In response to the challenges posed by the pandemic, Ulta implemented several cost-saving strategies. This includes furloughing store and salon associates, suspending new hires, and reducing marketing, travel, and other discretionary expenses. Additionally, the company adjusted its capital expenditure plan for the fiscal year, now estimating a total expenditure between $200 million and $210 million.
Despite the hardships faced by Ulta Beauty, the company was able to open 11 new stores during the first quarter. However, due to the current circumstances, their store opening plans for the year have been reduced. Ulta now expects to open between 30 and 40 new stores and complete about three relocation projects in 2020.
Given the unpredictable nature of the Covid-19 crisis and its impact on the retail industry, Ulta has decided not to provide financial guidance for the second quarter or the full fiscal year.
Ulta Beauty, alongside many other retailers, has been severely affected by the Covid-19 pandemic. Despite implementing measures to mitigate the impact, the company is likely to face ongoing challenges until the situation stabilizes.