Why Ulta is, in the Words of one Analyst, "Future-Proof for when Times are Rough"

One expert claims that Ulta (ULTA) is standing out among shops as the demand for cosmetics is still strong.

According to Jessica Ramirez, a research analyst at Jane Hali & Associates, "the consumer has a variety of motives to buy beauty" (video above). In addition to being a fantastic category right now, Ulta has a very modern retail strategy in place that makes it future-proof for when times are tough and other retailers are having problems with other aspects of their businesses, such as too much inventory or promotions.

In the third quarter, Ulta's earnings and revenue were above forecasts, and the cosmetics shop revealed that comparable sales increased an astonishing 14.6% year over year.

In Q3, they were "running a very clean promotional company," according to Ramirez. "And overall, the stores are looking wonderful — I mean, digital, omnichannel"

An Ulta Beauty section in a Target store as part of the retailers' partnership. (Photo: Target)

The "unique" partnership between the beauty shop and Target (TGT) was also mentioned by the analyst as a positive.

According to Ramirez, "it complements each other on each side." "You can bring this customer into Target and show them these new brands that Target might not carry but Ulta might. So that's rather lovely, in my opinion."

Ramirez also emphasized Ulta's proactive use of the "drop model," which relies on exclusive collaborations to build buzz and increase traffic. According to her, that is a part of a larger movement in the beauty sector.

Ramirez stated, "Ulta started catching on quite a while ago, and I thought it was absolutely amazing. "One of the largest [collaborations] we frequently see is, in my opinion, with Kylie Cosmetics. Ulta was the first to successfully secure that."

Kylie Cosmetics are displayed at Ulta beauty on November 18, 2019, in New York City. (Photo by David Dee Delgado/Getty Images)

In the third quarter, Ulta expanded its roster of original partnerships. These products, which specifically target Gen Z customers, featured new items from Lisa Frank and Disney Parks (DIS).

Even though Ulta experienced a rise in its online sales during the pandemic, the company is now concentrating on enhancing its in-store offerings, including brow and lash services, makeup application, hair styling, and more.

In order to keep the customer in the store and give them a reason to trust them more, they are "really trying to engage with that consumer," according to Ramirez.

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