ULTA Beauty is #1. But What is Around the Corner???

Ulta Beauty is a thing of beauty. Both the company and the stock are exceeding everyone’s expectations. But like all beautiful things, they can wither from old age and neglect. Ulta Beauty’s strategy is on the edge of doing just that. Yes this sounds crazy, but read on.1st Body Image

It is management’s job to look forward and around the corner in order to set and adjust strategy. Let’s look around the proverbial corner.

Since their 1990 launch, Ulta maintains their force fields of differentiation:

  1. The combination of high/low merchandise price points.
  2. Full-service salons are in the back of every store.

NO COMPETITOR HAS BEEN ABLE TO COPY THESE DIFFERENTIATORS

Their financial position is equally astonishing. On October 25, 2007, Ulta Beauty (NASDAQ: ULTA) went public and opened at $18. Right now, the stock is about $350. If you are counting, that is over 18x your money. They are also completely debt free.


“The Ulta Beauty team delivered excellent results in the fourth quarter,” said CEO Mary Dillon. “This performance reflects an acceleration in comparable sales in our retail stores, primarily driven by traffic.”

Mary Dillon Ulta Beauty CEO
Mary Dillon, CEO ULTA Beauty

Ulta highlights their execution in (3) segments:

Product Sales

Beauty Services

Ecommerce

Press releases reveal the reality of these (3) initiatives. Brick and Mortar Retail product sales dominate at 83% of revenue. Ecommerce is only 11% and only recently have they signed on with cutting edge digital partners. The Salon segment of their revenue is a mere 5% of their massive $6.2B in revenue, and they project the salon growth at only 3%. Remember the salon is a sustainable competitive advantage. At only 3% growth, it functions more as a cost center than a profit center.

The Salon projected at only 3% growth is more a cost center than a profit driver

Further analysis reveals more. The bulk of their spend and focus on execution is actually on building new stores. They plan about 80 new locations this year. That’s it-this is the grand total of their execution.

Is this enough??? 

To recap- Ulta is a $6.2B company, debt free and the largest retailer of its kind-and their biggest growth driver is new stores in strip malls across suburban America.

Again, the question can be asked- is this enough? Is it enough to maintain the #1 status they have enjoyed for so long? Or does doing the same thing they have always done threaten their competitive advantage? Are they doing enough for shareholders, consumers and for the brands they sell?

To their credit, there has been a recent sizable coup and significant activity by signing Kylie Jenner and launching Cannuka, a CBD skincare brand.

Stakeholders and Shareholders are first with public companies
Stakeholders- Is Ulta doing enough for them?

Yet,it can be argued that despite their incredible stock performance, Ulta may not be delivering enough value to shareholders. Seems they have much more capacity to comfortably do more- much, much more.

Ulta has only 1 strategic comfort zone. Building new stores.

They basically have only 1 revenue and profit source. Selling product.

Compare this to the competition: Sephora is a part of luxury behemoth LVMH and they benefit from an internal capital market. Department stores also sell fashion goods. Digital only players are proving to not even need a brick and mortar environment.

Ulta’s very narrow growth strategy of opening new US stores is very capital intensive. Their narrow revenue model makes them very vulnerable. The competition is outspending them on digitization. Unless they become more expansionist, Ulta’s competitive edges will be dulled. They will find themselves in a financial cul-de-sac with a lot of physical stores, but no liquidity for new investment opportunities.

What are Ulta’s strategic options? What more could they be doing?

The Answers

Create additional revenue and profit streams

  1. Form an internal business acquisition team- “The A Team”.
  2. Hire a leading global consultant firm to work with The A Team.
  3. Ready corporate culture for global expansion.
  4. Generate meaningful ROI from The Salon assets.
  5. Enter into additional exclusive brand distribution agreements.
  6. Invest heavily into enterprise IoT.

Compared to their formidable capacity, Ulta can do so much more for their stakeholders. The 3 Levers described here just scratch the surface. What do you think? What else could Ulta do?

††

Madison Luxe Group is an innovative beauty, fashion and lifestyle luxury brand retail sales distributor and marketing consulting agency founder Christine C. Oddo and Madison Luxe Group
Christine C. Oddo founder Madison Luxe Group, author The Christine Report Blog

ROOT OF SKIN- A Whole New Technology In Skin Care

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AIVITA Biomedical™ is a global bio-tech wellness company specializing in novel stem cell applications.  While researching new cures for cancer, we realized the opportunity for a new class of ingredients and from this discovery, the formula for our topical skin care brand, ROOT OF SKIN™, was created.  Our actives complex, SourceCode Technology™, is patent-pending and the most pure stem cell extract ever created.  Our complex does not contain any actual stem cells or debris.  It contains the 670 naturally present precursors for human skin development and is combined with 52 nourishing active ingredients.  See our founder, Dr. Hans Keirstead briefly explain our company and technology!

We are a mission based company and all of the proceeds are rolled back into the company supporting our ongoing cancer therapy research.

Completely gender inclusive, our formula is made for both women and men!

 

 

Cropped Version Front of Package ROS for Women and Men

 

 

 

 

Circ Cell Dew Perfector Treatment Tonic

Dew Perfector Treatment Tonic by Circ Cell Skincare Reviewed by Sleekhair Panel On Stage at Stylecon 2016

Sleekhair Executives: Joan Ngo COO & Christina Krasch, Marketing Coordinator, Speak at Stylecon 2016

The Expert Product Review Panel Reporting on Dew Perfector at Stylecon 2016.

“What This Does It Creates A Harmony On Your Skin and It Creates a Natural Balance of Oil and Water Without Stripping Anything Natural”, says Christina Krasch.

More info www.circcell.com

headshot-from-christmasChristine C. Oddo is the author of The Christine Report blog and founder of Madison Luxe Group; a beauty and luxury retail sales, product development, brand curation and digital strategy agency.

Inquiries to christine@madisonluxegroup.com

www.madisonluxegroup.com

Kim Thai Birthday Bash Hosted By SleekHair

Fantastic event hosted by SleekHair and Kim Thai celebrated her Sweet 23 birthday with all her blogger fans!  Thanks to the Sleekhair Team and Kim Thai!

 

headshot-from-christmasChristine C. Oddo is the author of The Christine Report blog and founder of Madison Luxe Group; a beauty and luxury retail sales, product development, brand curation and digital strategy agency.

Inquiries to christine@madisonluxegroup.com

www.madisonluxegroup.com

Free or Best Offer. What is the affect of Live Streaming on Fashion’s Finest Freelancers?

Live Streaming Fashion may have completely changed the fate for Fashion’s Finest Freelancers.

While going for my daily morning run, this old chest of drawers was on the curb looking for a new home.  I stopped, stared at the sign and had to take a photo because it reminded me of something I had just recently learned.

Free or Best Offer. 

I think a few of my freelance fashion colleagues feel like this chest of drawers.

Free or Best Offer Chest of Drawers Photo

Just as this season’s shows were winding down, I reached out to a couple of my freelance makeup artist friends.  Knowing how busy they are during shows, I did not expect to hear back for a couple more weeks.  I routinely figured that they would finish their shows, get their post-show rest and then we would catch up.

Except that I did hear back from a couple of them immediately.

What the heck was going on?

The shocking answer is that they were barely booked this season!  This update was coming from some very highly talented freelancers.  Their talent was always booked solid during fashion and award seasons.  This was shocking news.

They have also come to rely heavily on the income, camaraderie and contacts each fashion season brings.

No doubt, live streaming fashion has been AWESOME for the wanting consumer.  Its AWESOME for the brands too.  Via the multitude of live media outlets, brands are sharing their essence and value in real time.  It does not come cheap for the brands though.

Last year, WWD reported, “ the bulk of beauty brands paying designers for show sponsorships anywhere from $5,000 for a lesser-known fashion label to $50,000 for a more established one — plus supplying the products — the question is: Do the beauty companies reap rewards?  The answer is a resounding “yes.” 

And for their $50K, you know that the big corporate brands are bringing in their own armies of celebrity stylists and entourage.  This leaves little to no room for the talented freelancer.

I’ve been told that this year was the biggest yet.  Big companies totally dominated backstage at the shows.  Can’t begrudge anyone, let’s face it, they are marketers and paid heavily for the opportunity.

Major change brings on major change.  In hyper-available “real time” where items, looks and trends are immediately available to the public, there will be equal evidence of the immediate winners and losers at this new game.

Tresemme 2016

Is it working for the brands?  Yes.

 

“From our research at Unilever, we know that the content we develop around fashion week has a

really strong ROI,” said Jen Daly, marketing director of salon-inspired hair-care brands at Unilever, who noted that since 2013, when TRESemmé concentrated its efforts in New York as the official hair-care sponsor of fashion week, the brand has seen the growth rate of its styling business increase five times.  “[For our consumer], the hair resonates more than the designer.”

 

 

Karl_Lagerfeld_Cannes (1)

Karl Lagerfeld recently shared his opinion with The Business of Fashion.

“It’s a mess,” said Lagerfeld backstage after the Fendi show, when asked about the lack of consensus amongst members of the fashion industry in the US, UK and Continental Europe on the value of consumer-facing fashion shows…..

“Chanel makes six collections per year, but I make already one — the capsule — that is not shown to the press, to nobody. The day it comes out is the day the stores get a document. Now I want to do something else — perhaps it’s too early to talk about it — to make a special collection only for the [Internet].  Fifteen things, you buy them and you get them immediately.”

 

Many shows are now also opportunities to immediately buy. No more 6 months wait until it hits the retail floor.  This is fantastic for consumers and brands.

So, what will Live Streaming most likely mean to the freelancers?

Maybe many talented freelancers will be left out of the stream.

headshot-from-christmasChristine C. Oddo is the author of The Christine Report blog and founder of Madison Luxe Group; a beauty and luxury retail sales, product development, brand curation and digital strategy agency.

Inquiries to christine@madisonluxegroup.com

www.madisonluxegroup.com