CFO Intelligence Magazine – Fall 2022
Scott Settersten
Ulta Beauty, CFO
Ulta Beauty, Inc. is the largest beauty retailer in the United States, selling both mass and prestige cosmetics, fragrances, skin care and hair care products, in addition to offering salon services.
With more than 25,000 products available at 1,300-plus brick-and-mortar stores and at ulta. com, “the possibilities are beautiful,” according to the company’s website. But Ulta Beauty, like many other retailers, had to pivot its business model when Covid-19 struck, according to CFO Scott Settersten. “In less than a week, we had to temporarily close all of our stores and become a digital-only business.”
For more than a decade, retailers of cosmetics, fragrances, skin care and other beauty-category products have had a great run, generating some $500 billion a year in global sales. The juggernaut was fueled in part by so-called influencers, whose reach through YouTube, Instagram and other tech-enabled platforms — has gone global and helped to drive hordes of consumers through retailers’ doors. But in the wake of the Covid-19 pandemic and the resulting store shutdowns and social distancing mandates, successful beauty-category retailers had to quickly revise their own platforms, Settersten notes. “Our product sales were traditionally closed through in store, immersive experiences between our knowledgeable associates and consumers. That model suddenly got upended, and we had to adapt.”
A SUCCESSFUL TRANSITION
There’s no doubt that Ulta Beauty, a debt-free company, made the right moves. Despite ongoing effects from the pandemic, net sales for the fiscal year ended January 29, 2022 increased 40.3% to $8.6 billion, compared to $6.2 billion in fiscal 2020, while net income jumped more than fivefold to $985.8 million from $175.8 million in fiscal 2020. Significantly, the results also represent a marked improvement from pre-Covid results when net sales and net income for fiscal 2019 were, respectively, $7.4 billion, and $705.9 million.