Ulta Salon, Cosmetics & Fragrance operates more than 870 beauty stores nationwide. About a third of its locations are in Illinois, Texas, Florida, and California. Ulta stocks more than 20,000 prestige and mass-market products, including cosmetics, fragrances, skin and hair care products, salon styling tools, and accessories. Stores offer hair salon services, as well as manicures, pedicures, massages, waxing, and other beauty treatments. In addition to its brick-and-mortar presence, the company markets more than 20,000 products and more than 500 brand names through its e-commerce site. Ulta was founded in 1990 by Terry Hanson and Dick George.
Ulta operates about 870 stores across 48 states. Illinois, Texas, Florida, and California make up more than a third of its stores network.
The retailer operates its business through one reportable segment. Ulta combined its three operating segments -- retail stores, salon services, and e-commerce -- into one reportable segment, because it determined that each previous segment boasts a similar consumer, economic characteristics, nature of products, and distribution methods.
Ulta's operations are supported by three distribution facilities located in Illinois, Arizona, and Pennsylvania. (A fourth is slated to open in the Dallas area in 2016.) The retailer carries more than 20,000 products and replenishes its stores with less-than-case quantities to allow it to ship less than an entire case when only one or two of a particular product is required. Its distribution facilities use warehouse management and warehouse control software systems, which has been upgraded or installed during the past three years.
Sales and Marketing
The retailer fills its stores with help from some 300 product vendors, which altogether offer more than 500 brands. Its top 10 vendors include the likes of Bare Escentuals, Procter & Gamble, Coty, and L'Oréal.
Ulta has experienced unprecedented growth over the years, with revenues peaking at $3.92 billion in 2015, a company milestone. The historic growth for 2015 was primarily fueled by a spike in salon service sales due to the opening of 100 net new stores sales during the year.
Profits also surged to a record-setting $320 million in 2015 as a result of the additional revenue coupled with a spike in interest income, resulting from short-term investments with maturities. After steadily growing the last several years, cash flow from operations dipped by 5%, mainly due to changes in working capital in merchandise inventories, due to the opening of the new stores.
Ulta's ultimate goal is to grow its US stores network to approximately 1,200 locations. It aims to continue opening stores in markets where it currently operates and in new markets as it tracks its long-term target of 15% to 20% new store growth rates.