Ulta Beauty, Inc. (NASDAQ:ULTA) Q4 2023 Earnings Call Transcript

Anthony Chukumba: Thank you so much for taking my question and let me add my congratulations to Scott as well. It’s been a pleasure working with you all these years. So my question was on the luxury brands. I guess just two parts to the same question both pretty quick. First off, how do they perform relative to your expectations in 2024, and what are your expectation in terms of additional luxury brand rollouts in 2023, and then what do your expectations for additional, luxury brand roll outs in 2024? Thank you.

Dave Kimbell : Great. Well, thanks for the question. Yes, luxury, as I said, was one of many initiatives last year to drive engagement, and we’re really pleased with establishing that more firmly with some of our existing partners, including Chanel, but Dior, Natasha Denona, Pat McGrath and so we see strong performance and we’re really pleased with how our guests are engaging in that part of the business. We had a lot of confidence going in because of existing relationships with brands like Chanel then by elevating and expanding it, it has really, we believe met our guest needs and they’re excited about it and further demonstrates our ability to deliver all things beauty, from all price points, including luxury. We’re not sharing any specific launches of anything beyond what I’ve already shared today.

More broadly, as I said, with Nunu’s, we have a steady stream of Nunu’s throughout the year and we’ll continue to innovate. Specifically within luxury, our focus is continuing to grow in partnership with the brands that we’ve launched and find new ways to expand those businesses and delight our guests with them. We’re really pleased and proud to have that experience in our stores.

Kiley Rawlins: Operator, can we have the last question, please?

Operator: Our final question comes from the line of Adrienne Yih with Barclays.

Adrienne Yih: Thank you very much. Good afternoon. Scott, congratulations. It’s been great and thanks for all the help over the years. This question is maybe for Dave or Kecia. Can you talk about the promotional environment that your guidance is under for 2024? Is it expected to sort of remain in maybe the first half and then abate or kind of pre-exist all year long and whether it was more from prestige? Are you concerned that there perhaps is a longer-term shift to mass or prestige from younger or more price-sensitive consumers? And then Scott and Paula, just a quick one. In your four to five comps, what are you expecting in terms of any ASP increases this year and what’s the rationale behind the low single digit mid-single digit comp in the back half? What’s going to drive the acceleration? Thank you very much.

Dave Kimbell : So, yes, just on the promotional environment, I probably won’t answer every one of your detailed questions because we’re not going to break it out that way exactly. What I’ll say more broadly is we’re not expecting that the promotional environment is going to significantly intensify and become irrational. We are in a competitive environment. That’s for sure. And we are focused on ensuring that we’re delivering on our leadership position. So as we look forward, we would anticipate and we have in our plans the ability to drive our business, which includes marketing, store labor, digital experiences, and promotional activity as appropriate. But not an expectation more broadly for a significant step. And we do anticipate, as we saw in 2023, that it will still remain well below 2019 levels.

The mass to — mass, prestige question. Yes, we see opportunity across both parts of the business. Yes, consumers are engaged, and young consumers are engaged in mass, but they’re also engaged in prestige. They’re loving our luxury experience. So it’s really not so much about price or promotion necessarily as what brand is really delivering great innovation, great marketing, engaging with them in social media. Those brands will win regardless of the price points. Paula, do you want to give a little color on some of the four to five?