ULTA
#I'll start with the cross channel.
Maybe <UNK> add, if there's anything I miss here.
But cross-channel shopping, is actually a pretty small percent of our shopper base today.
It's only about 6% of our guests or so.
And we love them because the cross-channel shopper is shopping more frequently, and spending more than a single channel shopper by far.
I would say that you can think about digital as the center of pretty much everything now.
Right.
So quite often, maybe somebody's discovering and researching online before they come into the store.
Whether they discover us online or in store first, I'm not sure if I can break that out, but I'd say probably mostly in-store.
Online tends to be very incremental to us as well.
Our guests love the experience of coming to the store.
The whole beauty enthusiast vibe is about trying things and increasingly experiencing services.
And then online, she's buying things that are kind of incremental to perhaps what she had even had time to discover.
We push out lots of emails ---+ not lots, but I mean, a appropriate number of emails to our guests, around new and exclusive and exciting products, and that tends to stimulate some online shopping as well.
So to your premise about, will that be a big area of growth for us in the future.
Absolutely.
Yes, as far as the new distribution center's concerned, again as <UNK> stated, we were very happy with the performance the team put in there, getting it off the ground successfully.
And you'll recall, the third quarter was really the first time we had it in service.
So it was less of a drag on gross profit margin in the fourth quarter, because the building was operating very effectively.
As we look towards 2016, again we'll have headwinds in the first half of the year, because of Greenwood being online.
Wasn't there last year.
It's still going to continue to scale up.
And then, in the second half of the year, we're going to ---+ we'll see more benefits there, as we lap Greenwood, but there we'll be taking online the new Dallas DC.
So you're going to have incremental headwinds there.
So as we look at next year, it's going to be a fairly challenging, I would say from a supply chain contribution perspective.
But we do expect to see merchandise margins continue to expand, so they will be a bit of a help there overall at the gross profit line.
Sure.
Three questions in one.
Okay.
You have the mic, I guess, you've got to run with it.
So mall stores are a small percentage of what we do today, but we have a fair ---+ about 10% of our stores, and we are very selective about when we should open up in malls.
And we're very ---+ I think we understand that model well.
There's certainly markets where that's an excellent piece of real estate.
We have lot of learnings about, even where inside the mall, how to think about where we're positioned, who we're positioned by, where ---+ how the doors open, et cetera.
So we'll continue.
I don't ever expect, it will become any much bigger than it is.
But certainly, we do not reject that, if feel like it's going to give us the kind of return that we need.
So think about that as a small-ish, I guess, opportunity going forward, but part of the mix.
Okay, that's malls.
Number two.
Service margins.
What was it.
I'm sorry, go ahead.
(multiple speakers)
Oh, okay.
Yes, I mean, I would say, we don't break out the margins specifically across the business, because of the labor involved, the margin on service is typically going to be lower than margin on retail products.
That guest though, who is coming to use services is going to be spending 2.5 times more than somebody whose not, so and buying a lots of retail products, coming frequently.
So in total, it's very incremental in terms of profitability to our business model.
[We're closed] out on ASR.
We're very happy to be able to announce that today.
Again, that would typically will begin, as soon as the open window for us occurs, which is early part of next week.
And that size, we would expect to be able to execute that over a course of 30, 45 days, roughly.
Well, we feel very confident that it's a good way to invest money.
We've had experience, again <UNK> mentioned, we crawl, walk, run.
I mean, that's the way we operate here.
So whether it's the new fragrance fixture that we referred to, we already have that installed in a number of stores.
We've monitored the results there, both from a sales and margin perspective, but also from a shrink perspective.
Right.
It's always a 360 degree view.
As far as the boutiques are concerned, again, we've had a long history there with a number of these brand partners.
And we've been able to measure incrementality and halo effect, and all those other things, when these are installed in our stores.
So we're very confident that they're going to produce excellent returns for investors over the long term.
What's not going right.
Finish with your question, <UNK>.
Here's the thing, we're really focused on the future, and where the world is going in the next ---+ I mean, maybe I'll be as bold to say 5 or 10 years, but thinking about what the innovations and/or ways to think about the way the guest expectation is going to continue to evolve and change, about seamless retailing and shopping.
So it's not a problem.
It's a great opportunity for us.
Because if, and I talked about this in the script.
But I've got a team of people and their teams that think in a very integrated guest-centric way and store associate centric way.
So we're thinking a lot about, how do we think about, just continuing to be ahead of the curve as it relates to the competitive environment, and the shopping expectations in the future.
So and there's no one answer to that, I guess.
So it's not like it's ---+ anything is broken.
It's a matter of where do we point ourselves for the future, and I mean that honestly.
I think I'm very, very pleased at how many things are going well.
We're not complacent about that.
We push ourselves very hard.
We are really focused on always improving.
Yes, as far as the CapEx, and long-term guidance implications are concerned, <UNK>, we're very happy with where we are today.
I mean, the business is performing very strong.
We're probably, we're a little bit ahead of where we thought we would be at this point in time.
The boutiques were in our five year guidance.
I mean, they were inherently built in there, but we are pulling them forward.
So there is an acceleration here.
We expect, again those investments, we demonstrated that they paid great dividends for investors over the long-term.
So the CapEx specifically for next year, you can expect it to stay elevated.
This boutique, this strategy we have in place with our brand partners, is a multi-year rollout.
So we're going to touch as many of our comp stores.
And again, that's what that $80 million is basically referring to as our existing store base, so try to touch as many of those over the next couple years as we can.
Yes, thank you, Matt.
No, I'd reiterate what we've said, which is that and you just recapped it, 1,200 stores, full size, kind of prototypical.
We see a very clear sign of sight to that.
We've also said that, beyond that, the small market opportunity probably represents another couple hundred.
We're in the process of refreshing our real estate view, and we're going to start to take a more specific look at the opportunities beyond that, so urban, or downtown, suburban type pieces of real estate.
So I guess, I'd just say, stay tuned on that.
We'll continue to refresh that view.
But I feel very optimistic about our ability to continue to drive market share growth.
So whether it's in terms of square footage or on a comp basis, we have ---+ if you step way back, we have only 5% share of the spending of the beauty enthusiast today in the US.
And it's ---+ beauty is highly fragmented.
You can buy beauty products in thousands and thousands of places across the country.
But we know that we've hit a sweet spot, with a group that's actually frankly, really strong, and growing in terms of the beauty enthusiast segment.
So we're differentiated.
They like us.
So we're never going to get complacent about building out too much, but we certainly don't want to underestimate the possibility here.
So I feel good about the targets that we've communicated.
If that changes, certainly we'll refresh that, but we're continually looking at it.
And the other thing I'd say is that, reiterate, new store productivity very strong, cannibalization, very low, too low to even be material, and it's actually gotten less, which is great.
I'd like to mention that real estate opportunities, very strong out there for us.
And everything we just talked about, as it relates to driving brand awareness of Ulta, only helps every store that we open you now.
And we've got people who kind of know more about the brand than they did a couple years ago.
So I think all those factors are very positive for us.
Yes, I guess, the one thing I would say right off the bat is, we're batting 1,000 here.
I mean, we've got a pretty good run the last few quarters, and you can't always plan for everything to go perfectly every quarter.
So as we look out towards 2016, I mean, the combination of the DCs, we feel very confident now.
We executed very well in Greenwood.
We expect to do as good or better with Dallas coming online next year.
Again, I won't break out basis points of headwinds or tailwinds from each one of those, but directionally we feel very confident that these are going to deliver the kind of benefits that we expected upfront, and that we described back in our Investor Day presentations.
I mentioned merchandise margins a little earlier here.
Again, the core, the mix of the business is very strong in retail.
All these new brands that are coming in, we've got generally very strong terms with our vendors.
Pulling back on some of the broad discounting things, and doing things more direct and focused with our customers are only going to help drive merchandise margins higher in the future.
So net-net, we feel very confident that we're going to deliver at least flattish next year, and we're hoping that we're going to be able to do better, similar to what we did in 2015.
Yes, let me start off with the mix.
So next year, basically new versus existing is consistent, kind of where we've been the last couple years.
It's about 70% existing, 30% new.
The one place we are seeing a bit of a change is in the types of centers.
So new centers versus existing centers, so the last couple years, it's been 80/20 existing, 70/30 existing.
Next year, we see it ticking down a little bit to 60% existing center versus 40% new.
So that's a great sign, to have new developments coming out of the ground.
Yes, Dan.
Yes, I guess, the answer to the first part of the question, yes.
It was, again, it wasn't any one thing, Dan.
It was a total team effort in the fourth quarter, stores, e-commerce team, DCs, merchants, planning, everybody in the corporate support area, just really executed at a very, very high level.
The merchants picked the winners.
The store teams did a great job selling gift cards.
E-commerce mix was better than ever.
Things that we had been telling investors, we were going to improve on, the mix overall was good.
Just improved focus on giving the customer what she wants, right.
So pulling back and being more focused on some of the discounting tactics that we use.
And overall ---+ and the DCs, just ---+ and the work that our teams put in this year, to not only get Greenwood open, but to improve the existing buildings was just beyond what we expected.
So it was just really spectacular performance overall.
Yes, our 53rd week is actually the following year.
It's going to be 2017.
So just to make sure we're consistent there.
Yes, so for 2016 now, are you referencing accelerating.
(multiple speakers)
Yes, that is.
It's consistent.
I think <UNK> mentioned earlier, we're not changing our long-term guidance.
We feel confident in the trajectory of the business.
We think there's a lot of benefits, coming out of these supply chain investments that we're making today.
So merchandise mix going up, supply chain efficiencies kicking in, in a meaningful way in 2017, we feel very confident that we're on target.
I would like to just wrap up which thanking our 26,000 Ulta Beauty associates.
You delivered a fantastic year, and I look forward to continuing our terrific momentum throughout 2016, and thanks to all of you for your interest in Ulta Beauty.
