Despite the uncertainty and disruption created by the COVID-19 pandemic the U.S. retailer sees growth opportunities in the future. As of today, Ulta Beauty has completed its phased reopening process and began welcoming back furloughed employees consistent with individual store operational needs. “To date, approximately 50% of those furloughed in April have been reactivated”, said the company.
As different parts of the U.S. territory manage rising COVID-19 cases, Ulta Beauty explained to be maintaining a close monitoring of government and health guidance as well as local case prevalence to inform nimble actions where necessary. In addition to already enforced safety standards, Ulta Beauty now requires all customers and associates to wear facial coverings when in stores.
Real estate optimization
While new store activity was temporarily paused in the first quarter due to COVID-19; openings are expected to resume in August 2020.
Ulta even anticipates the pandemic “will influence longer-term market shifts and create new real estate opportunities ”, thus supporting the retailer’s ambition to ultimately operate between 1,500 to 1,700 Ulta Beauty stores in the U.S.
“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,” said Mary Dillon, chief executive officer.
After evaluating its existing store portfolio, the company plans to permanently close 19 stores in the second and third quarter of fiscal 2020. Ulta said it intends to reassign affected store and salon associates where possible. Despite this decision, the company expects to close fiscal 2020 with approximately 30 new stores compared to the previous year.
As new store opening plans in the U.S. are finalized for fiscal 2021, the company says it will make its entry to Canada with a number of stores in mid-2021.