Ulta to 'proactively' close 19 stores, open 30 new ones

Dive Brief:

Ulta on Monday announced plans to close 19 stores permanently and again revised its store opening plan for the year due to COVID-19. The company now plans to open approximately 30 new stores in 2020, according to a company press release.
Store and salon associates impacted by the permanent closures will be reassigned if possible. The beauty retailer has also finished reopening its temporarily closed stores and has brought back about half of its furloughed associates.
In reopened stores, Ulta will require customers to wear face masks. Outside of physical locations, shoppers can also buy online, through the app, via curbside pickup or with buy online, pick up in-store.

Dive Insight:

In late May, Ulta first cut its store opening projection for the year, as the retailer faced extended closures due to the pandemic. Prior to May, the retailer said it planned to open 75 new stores in 2020. Then, that number was cut down to between 30 and 40. Now, the lower of those two numbers is the target.

Planning for any store openings in this environment speaks to the strength of the business, as many retailers have been forced to permanently shutter locations and shrink their footprint due to the financial toll of the health crisis. Ulta also paused store opening activity in the first quarter due to the pandemic and is resuming it in August, leaving the retailer with only five months of the year to pursue new store openings.

Rival Sephora also had plans for a big year of store openings — with 100 new locations in North America on the table. The retailer did not respond to Retail Dive's most recent request for comment on how the pandemic has impacted those plans. In April the company said it had nothing further to share on the topic.

For its part, Ulta CEO Mary Dillon pointed to the permanent closures as proactive, and a move that would hopefully set the retailer up even better to expand in the future.

"We anticipate COVID-19 will influence longer-term market shifts and create new real estate opportunities, supporting our ambition to ultimately operate between 1,500 to 1,700 Ulta Beauty stores in the U.S.," Dillon said in a statement. "To do so, we are proactively optimizing our real estate portfolio and have made strategic decisions to temporarily reduce new store openings and close a limited number of stores this year. Overall, our real estate portfolio generates healthy returns, and this limited and targeted approach to closing stores will position Ulta Beauty for even stronger financial performance in the future."

Indeed, the retailer is looking at further store expansion in 2021. The company said it is currently anticipating new U.S. stores next year, and an entrance into the Canadian market with "a number of stores" there.

"Our differentiated operating model, strong brand, dedicated associates, and engaging guest experiences continue to reinforce our optimism in long-term opportunities to increase market share and expand our retail footprint over time," Dillon said.