ULTA
#Great, thank you.
Thanks for asking about that.
I just want to give a little plug.
I'm really proud about our team, having really worked this for over a year, and it's a very cross functional effort, as you can imagine, to prepare an organization to launch something like this, and we're off to a strong start.
And the good news is, we based it first and foremost on guest insight which is our guests are very interested in this program because it gives them an opportunity to just get more points at Ulta Beauty, but also for us obviously, it's creating more loyalty, more increasing her share of wallet going to us.
So that's all great.
And we are not going to get into parsing apart all the details of the deal.
ADS is a great partner.
I will say they manage the program for us and take the credit risk, so that's great, and more to come.
So our CRM team is really the folks who really own this project, and you can imagine, they've got a lot of ideas about how to leverage this going forward to drive growth.
So more to come on that, and we feel good about where we are.
Thank you, <UNK>.
Well the good news is that everything we sell, almost everything we sell is highly replenishable.
But the great news is that our guest, the beauty enthusiast, is really not interested in just the same product every time.
There's categories she will need to replenish when she's out, there might be a couple items that she's quite attached to.
But I'll tell you for the most part our guests are really coming in and loving to try new products.
She loves trends, she loves newness, she loves great new products that are launched by our brand partners.
So what we're finding is that very little of the business is one-for-one replenishment.
And if that becomes bigger, perhaps, in the future, we're always looking at that, to see if there's a way we can make it even easier for her.
But what she seems to be responding to is the breadth of innovation newness.
And if you look, for example, at our e-commerce guest, the guest who shops online and in store, again, some of our best guests, they spend significantly more than somebody who is not buying online, and what she's tending to buy is in response to things that we're bringing to her attention via e-mail.
So it's usually new products or exclusives, or new trends.
So again, I don't have anything against replenishment, I love the fact that we're replenishing our products a lot, but the one-for-one piece is something that's not a big part of the business.
The basket for the loyalty guests.
It basically represents what we quoted in our prepared remarks, <UNK>.
So again, the loyalty program is more of an 80% of our total sales, and so when we're looking at those metrics, that's basically what it represents.
Yes, that's something that we've kicked around from time to time with our Board of Directors, again thinking about all options, on being as shareholder friendly as we can be, whether it's capital allocations or things like stock split.
So surprisingly, I've only gotten this question maybe two times in the three-plus years I've been here, and it's been at the annual shareholder meeting, right.
So it's usually a local retail holder that would ask that kind of question, so generally speaking, most of our shares are held by big, large investment funds and houses, and most of those folks aren't that interested, based on our Q&A with them about entertaining a stock split.
So it's nothing that's on the front burner, but of course, it's something we'll always be ready to consider.
Yes, well let me start by saying, as a category beauty has been growing for multiple years.
It's a strong, it's up last quarter, was up 5%, prestige was up higher than that, but all growing, as you said makeup growing, the lead in terms of growth.
Skincare, every category we saw growth last quarter.
So the good news is, we're in a category that's growing.
As we look at consumer trends going forward and <UNK> touched on this, but younger women, Millennials, Hispanic women, fastest-growing segment of our population, there is a propensity we think for the beauty category for all those to continue to play a very important role for overall spend of her money, and how she spends her time, so that's all good.
And the great thing is that innovation comes from companies large and small.
It's probably the most exciting consumer category, I think, that exists, because innovation comes from many different sources.
And we positioned ourselves to hopefully be a great partner for brands to do business with, and we offer this variety of product categories and price points.
So I think that also helps to sort of insulate us as the subcategories go up and down, and <UNK> talked a little bit about those categories, we're trying to look out multiple years, thinking where do we place our bets, but knowing that really innovation is coming from many sources and we think the foundation of growth is there for us.
I know, it gets a little ---+ you look at quarters and you try to stack them together.
We look at the single, the double, the triple stack, every which way you can look at the comp.
There's nothing extraordinary that sticks out in any one.
Each quarter is a unique set of opportunities and challenges.
I would say generally speaking, the back half of the year, we feel really great about the boutiques, right.
The tail wind we're going to get from that finally all being installed.
There's a great pipeline of newness coming, and we believe we've got a great set ready to go for holiday, both on the assortment and the way we have our stores set up, and our gift card program.
So we're very bullish on the back half of the year.
Okay, well I'll start with the store piece first and certainly this will be something we'll talk more about in October.
I think the dynamics have been happening have been happening for some periods of time, in terms of how people shop for beauty.
So that's not new to us.
It's encouraging to us.
As we look at the how our stores are performing today, the store classes getting stronger, even after this many years of being in business, that's really encouraging.
And we think that everything that surrounds how we're doing business, driving awareness, giving the great products and services are all enhancing that.
So I feel good about that.
We had, we think that our 10,000 square foot store has plenty of growth ahead.
We're also looking at smaller markets, urban or suburban downtown type formats.
So all those things we feel, given frankly the fact that we only have a 5% share of this really enthusiastic beauty shopper, provides us plenty of runway for growth.
So we'll talk more about this, but we certainly have done a lot of work and analysis, and feel confident we can drive market share growth frankly, both through comp store growth as well as new stores.
As far as the CapEx related to boutiques, again, I just want to remind folks that the boutiques were always in the plan back in 2014, when we rolled out the five-year financial targets.
There was an assumption in there for boutiques, over those five years.
We just accelerated that, so we pulled it forward.
2016, a big step up, roughly $80 million as you mentioned.
That will repeat next year into 2017, so we're viewing it as a two year cycle.
And at that point we'll have again those two great brands in the majority of our comp stores, and it will be just about new store build up from that point.
Yes, you know, talk about parsing.
I like that.
We're not going to get into details on that today, except to say we feel confident about reaching the target that we set out, back a couple years ago, and frankly at a much bigger scale of business today, right.
With a lot more complexity, so I'd stand by that description.
Okay.
#ThatsHowILip.
I like it, thank you.
So with the e-commerce just to be clear, so we service e-commerce out of four buildings today.
So Chambersburg out East, Romeoville here locally in Chicago, and the two new, Greenwood and Dallas.
And so again, nothing's coming direct from the vendor, so we're doing all of that.
The new buildings are just much more efficient.
They are designed to actually do e-commerce, pick and fill and ship processes, unlike the older buildings, which were retrofitted and not quite as efficient.
So we're happy to see that and we're showing the benefits show up in the P&L as currently, and as we think about the future, so we're very excited about that.
As far as in-stock rates overall, that's something that we ---+ that's priority number one, when we think about the guest experience in our stores.
And that's part and parcel of all of the investments that we've been talking about for the last couple years, whether it's distribution centers to help the throughput there, capacity and capability overall, but also we are doing a lot of work behind the scenes with merchandise planning tools, SWIFT we talked about.
Master data, managing that better.
Floor planning and space planning tools are going online, as well, to help with in-stocks overall.
And then our team internally here is a lot of individual projects, and look sees going around how we can do a better job.
Just making sure we go extra heavy on A and B SKUs so we don't disappoint folks, and how can we be more effective with some of the C, D, E and F SKUs, in stores, and how we better align ourselves on that.
So all oars are in the water when it comes to in-stocks and inventory productivity across the enterprise.
Well, we aren't complacent about our results, so I'll say that.
But I will tell you that as we look at it, our results have been pretty consistent, I would say across regions, period to period, pretty consistent.
So then you just saw the kind of comps we've delivered.
So we're seeing that a strong consumer sentiment, right.
And I think that it's because we continue to benefit from the fact that we're in a category that's important to our guest, and I mentioned this earlier, it's replenishable, it's affordable indulgence, and beauty is popular right now, in many ways, in terms of culture and social media.
So you combine that with being in a range of categories and price points, even if somebody is a little bit more pinched, you can get great product at a lower price from us, and in partnership with our brand partners, we are continuing to excite her with newness.
So I feel like our results would say there's certain pockets of consumer spending that are quite strong, and we see that macro for the category of beauty as well.
But we'll just continue to watch it closely.
The location.
Thank you.
I just want to thank everybody for your interest in Ulta Beauty, and we look forward to seeing you in a few weeks at our <UNK> day.
Importantly, I'd also like to thank all of the Ulta Beauty associates for delivering yet another terrific quarter.
Take care.
