Ulta's e-commerce accounts for 55% of quarterly growth

Ulta (NASDAQ:ULTA) announced that second quarter sales were up 22.2 percent to $734.2 million, and comparable sales increased 9.6 percent. A large portion of that growth came from e-commerce, which is up 54.9 percent.

The successful quarter was attributed to new products and the growth of e-commerce. In the next five years, the retailer expects e-commerce to account for 10 percent of overall sales.

The company added several new features to the website in the latest quarter, including online booking capabilities for in-store salon appointments and live chats with vendor partners on the site. Ulta also launched its first iPad app in May to allow shoppers to browse and share products.

"We were very pleased with the balance between transaction and ticket increases, with transactions up 5.8 percent and ticket up 3.8 percent," said Scott Settersten, CFO and assistant secretary of Ulta. "The ticket increase was driven by a modest increase in units per transaction, but mostly by higher average selling price due to strength in prestige categories and less discounting overall. Retail-only comparable transactions increased 5 percent, a significant acceleration compared to the first quarter."

The company expects total sales in fiscal 2014 to increase by 20 percent.

Ulta is still on target to open 1,200 new stores, at the pace of about 100 a year in the next 12 years. While the company will continue to expand its 10,000-sq.-ft. store formats, it spoke of also implementing smaller stores into the mix.

"If we find the small format of interest, those would largely be incremental to our 10,000-sq.-ft. format," said Mary Dillon, CEO, Ulta. "We're starting those in some rural [ph] markets and in the future potentially urban markets."

Ulta won't be alone in its interest in smaller formats. Many other retailers, including Target, Walmart and DSW, are introducing and growing their smaller-format, city-center stores.

Dillon said mobile would be instrumental in relating in-store opportunities to customers.

"Probably one of the biggest opportunities for us with mobile is the ability for [the customer] to be learning about content, about brands and products and services, whether [he or she is] in our store and not in our store, or outside of our store, as well as for our associates," Dillon said. "Mobile transactions are continuing to grow as a percentage of our transactions, and we'll expect that to continue to happen."

For more:
-See this Seeking Alpha transcript

Related stories:
Ulta to add 100 stores
Walmart debuts first Walmart To Go convenience store
Kroger to add an additional market, focus on urban-format stores  
Walmart steps up small store growth, reports dismal Q4 earnings
Macy's to expand click-and-collect, pilots same-day delivery

Suggested Articles

Costco changes up its menu items, and Alibaba and Guess partner for a physical store.

Janey Whiteside, Walmart's new chief customer officer, is well acquainted with the importance of customer service in modern retail.

Whole Foods will offer deals on Amazon's Prime Day, and tariffs against China are causing pricing hikes.