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Ulta Beauty (ULTA) Sets Financial Targets, Updates Core Priorities

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Ulta Beauty, Inc. ULTA unveiled its long-term financial targets for fiscal 2022 through 2024. Apart from this, the company offered an update on its strategic priorities, reflecting on the evolution in the consumer and beauty category.

Let’s delve deeper.

Long-Term Financial Targets

For fiscal 2022 through 2024, Ulta Beauty expects total net sales growth of 5-7% on a compound annual growth rate (CAGR) basis. Management expects comparable sales to increase 3% to 5% per year, while its net new store growth is envisioned at 50 stores annually. As a percentage of sales, operating profit is likely to be between 13% and 14%. It anticipates earnings per share growth of low-double digits at CAGR. The company anticipates incurring capital expenditures (as a percentage of sales) in the band of 4-5%.

Zacks Investment Research
Zacks Investment Research

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Focus on Strategic Priorities

Ulta Beauty provided an update on its strategic framework, with an aim to become the perfect destination in the beauty category. Through the framework, it expects to become the most desired retailer as well as increase market share and enhance profits. The strategic framework incorporates elements like evolving omnichannel experiences via connected physical and digital ecosystem, All In Your World. It is on track to strengthen its presence in the beauty journey for customers as the Heart of the Beauty Community. Management expects to optimize its operations as well as drive growth by widening the definition of All Things Beauty. Apart from these, the company strives to boost organizational talent and strengthen culture.

The company’s "Beauty to Go" plan promises to provide quick and convenient access to beauty products via buy online, pick-up in store (BOPIS) orders. It will launch same day delivery across select markets. The company is partnering with Google to leverage its GlamLab Virtual try-on tools across the former’s Search and YouTube platforms. Ulta Beauty also announced strategic investment and partnership with a leading AI retail technology company, Adeptmind.

Ulta Beauty’s new Digital Innovation Fund, worth $20 million, will help it associate with innovators, entrepreneurs and early-stage investors among others. The company is launching a new business model — UB Media — to drive growth. It is fully committed toward improving guest engagement and personalization capabilities as well as deepening its member engagement and loyalty.

The company intends to upgrade the Enterprise Resource Planning (ERP) platform as part of its multi-year, business-led transformation called Project SOAR. Apart from this, it is on track to achieve multi-year cost savings of $150-$200 million, with an aim to invest the funds across growth areas in the future.

The Zacks Rank #1 (Strong Buy) stock has surged 56% in the past year compared with the industry’s growth of 10%.

3 Key Retail Picks

Build-A-Bear Workshop, Inc. BBW, currently sporting a Zacks Rank of 1, delivered a significant earnings surprise in the last four quarters, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

DICK'S Sporting Goods, Inc. DKS, currently carrying a Zacks Rank #2 (Buy), delivered a significant earnings surprise in the last four quarters.

Tractor Supply Company TSCO, currently carrying a Zacks Rank #2, has a trailing four-quarter earnings surprise of 22.6%, on average.


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