Author Topic: ULTA - Ulta Beauty  (Read 10617 times)

KCLarkin

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Re: ULTA - Ulta Beauty
« Reply #10 on: August 30, 2019, 06:41:55 PM »
I donít know, the CEO didnít seem that confident in the latest earnings CC. I feel they make have ridden some fads recently (those upstart brands, that failed to deliver) or perhaps they are the fad. I donít understand the moat with their business (no surprise as a middle aged male).

With retailers, I find moats to be a bit mushy. But there are clearly retailers who exhibit moat-like qualities. One surprising thing about Ulta is that it has more active rewards members than Starbucks. If you look at their growth this quarter and the negative growth at the brands, it is pretty clear that Ulta is still taking market share.

But anyway, I think this is a good starting point:

Quote
Ulta Beautyís success is rooted in a single consumer insight that the founders uncovered. Like all great insights, it is simple but meaningful: Most consumers shop for and buy beauty products across price points, across categories, and across brands. They are looking to curate their own collection. But the beauty industry has always beenóand largely remainsóset up to separate products by price and category

Quote
What we find is that this engagement isnít about demographics. Rather, there is a segment of consumers that sees beauty as a joy: itís fun, itís a passion, itís an escape. By tailoring our experience in a way that helps this behavior come to life, weíve been able to have success.

Source:
https://insight.kellogg.northwestern.edu/article/the-secret-to-ulta-beautys-success-joy/amp


Spekulatius

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Re: ULTA - Ulta Beauty
« Reply #11 on: August 31, 2019, 05:09:35 AM »
I donít know, the CEO didnít seem that confident in the latest earnings CC. I feel they make have ridden some fads recently (those upstart brands, that failed to deliver) or perhaps they are the fad. I donít understand the moat with their business (no surprise as a middle aged male).

With retailers, I find moats to be a bit mushy. But there are clearly retailers who exhibit moat-like qualities. One surprising thing about Ulta is that it has more active rewards members than Starbucks. If you look at their growth this quarter and the negative growth at the brands, it is pretty clear that Ulta is still taking market share.

But anyway, I think this is a good starting point:

Quote
Ulta Beautyís success is rooted in a single consumer insight that the founders uncovered. Like all great insights, it is simple but meaningful: Most consumers shop for and buy beauty products across price points, across categories, and across brands. They are looking to curate their own collection. But the beauty industry has always beenóand largely remainsóset up to separate products by price and category

Quote
What we find is that this engagement isnít about demographics. Rather, there is a segment of consumers that sees beauty as a joy: itís fun, itís a passion, itís an escape. By tailoring our experience in a way that helps this behavior come to life, weíve been able to have success.

Source:
https://insight.kellogg.northwestern.edu/article/the-secret-to-ulta-beautys-success-joy/amp

Thanks, great article and really helps with understanding what ULTA is about. It seem sort of e-commerce resilient this way.

Another thought is that the increasing self awareness regarding looks related to Instagram and other social media platforms in particular is helping ULTA or similar companies.
To be a realist, one has to believe in miracles.

KCLarkin

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Re: ULTA - Ulta Beauty
« Reply #12 on: August 31, 2019, 06:12:30 AM »
Just going through the LíOreal transcript and they reinforce that this is an industry-wide issue not Ulta-specific:

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In North America, if I understand your question itís about the different channels for luxury. Whatís happening to us is the same that whatís happening to the market in general. Department stores are pretty tough. And specialty retailers like Sephora and Ulta are growing very well. And so we are Ė with this retailers we are a very important partner of Ulta, a very important partner too of Sephora.

Quote
So when the makeup market is strongly growing, really itís a tailwind. When the makeup market is more difficult, like it is today after these four or five years of boom of the makeup, itís more a headwind.

KCLarkin

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Re: ULTA - Ulta Beauty
« Reply #13 on: September 01, 2019, 07:09:43 AM »
Another thought is that the increasing self awareness regarding looks related to Instagram and other social media platforms in particular is helping ULTA or similar companies.

This is actually the trend that is working against makeup industry right now. There was a very strong 4 or 5 year makeup-heavy cycle driven by social media. But the trend now seems to be towards more natural makeup (e.g. VSCO girls).

Spekulatius

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Re: ULTA - Ulta Beauty
« Reply #14 on: September 01, 2019, 09:07:36 AM »
Another thought is that the increasing self awareness regarding looks related to Instagram and other social media platforms in particular is helping ULTA or similar companies.

This is actually the trend that is working against makeup industry right now. There was a very strong 4 or 5 year makeup-heavy cycle driven by social media. But the trend now seems to be towards more natural makeup (e.g. VSCO girls).

I am so out of touch with these trends that I had to google half the terms (VSCO, Tik Tok,  scrunchie). Based on the pics , I think the 70ís make a comeback. Definitely far out of my circle of competence, although I do know a thing or two about the 70ís.
To be a realist, one has to believe in miracles.

SHDL

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Re: ULTA - Ulta Beauty
« Reply #15 on: September 01, 2019, 09:15:21 AM »
These are things I tend to worry a lot about when looking at retailers.  What if this movement toward lighter make up turns out to be not merely a cycle but a secular trend? 

Jurgis

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Re: ULTA - Ulta Beauty
« Reply #16 on: September 01, 2019, 11:02:57 AM »
Well, I don't use makeup, so it's definitely a secular trend.  8)  ::)
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SHDL

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Re: ULTA - Ulta Beauty
« Reply #17 on: September 01, 2019, 11:30:51 AM »
Well, I don't use makeup, so it's definitely a secular trend.  8)  ::)

I donít always scuttlebutt but when I do I do it with n=1.   8)

roark33

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Re: ULTA - Ulta Beauty
« Reply #18 on: September 03, 2019, 08:53:10 AM »
As if right on cue, ULTA written up on VIC.  Value investors love a good fallen growth story.  There is a lot of air between growth and value and when it comes to retailers, I am not sure that gap is really ever filled. 

Broeb22

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Re: ULTA - Ulta Beauty
« Reply #19 on: September 03, 2019, 11:41:40 AM »
Well, I don't use makeup, so it's definitely a secular trend.  8)  ::)

You're just untapped TAM for ULTA.