Ulta Beauty gets sales boost from skin care

Skin care is driving sales for Ulta Beauty.

Total sales for the cosmetics retailer grew 8 percent from last year to $1.68 billion for the third quarter, the company announced Thursday on an earnings call. And with declining makeup sales, the trend toward natural beauty products has helped the company drum up earnings in skin care and hair categories.

“We believe the makeup category in the U.S. is experiencing a down cycle. Like other consumer categories,” Mary Dillon, CEO of Ulta, said on the earnings call. “We're seeing interest in a more natural look, which is different than bare face, and actually requires multiple products to create a neutral and glowy look.”

Cosmetics made up 51 percent of sales for the quarter, down by 200 basis points from last year, according to Ulta. Skin care, fragrance and beath product sales increased to 21 percent of total sales meanwhile.

Skin care continues to be one of Ulta’s strongest growth categories led by recently launched brands like Kylie Skin, under Kylie Jenner’s beauty empire Kylie Cosmetics. She recently sold a controlling stake in her startup to Coty Inc. for $600 million.

Ulta said it's added more than 30 new skin care brands. It’s also invested in customized experiences, launching a “skin bar” model where customers can get quick services like a 10-minute express facial or 20-minute mineral infusion so users can try different brands such as Kiehl’s, Dermalogica and Murad. The retailer has implemented licensed estheticians on-site to give customers personalized recommendations and a spa-like experience on demand.

Ticker	Security	Last	Change	Change %
ULTA	ULTA BEAUTY INC.	394.06	+7.42	+1.92%

Dillion credits social media and its influencer culture for the rise in the natural beauty movement, which enables consumers to learn more about products, ingredients that are in them and how they look on a number of different skin tones. Ulta launched its first-ever Tick Tock campaign in support of the launch of “Stranger Things” star Millie Bobby Brown’s natural beauty line, Florence by Mills.

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Makeup sales in the U.S. declined 4 percent to $1.8 billion in the first quarter, while more natural skin care products like tinted moisturizers and setting sprays to brighten skin became the fastest-growing segment within face makeup, according to market research firm NPD Group. Meanwhile, sales of skin care, grew 5 percent to $1.4 billion with men’s and women’s skin care markets growing by 5 percent, according to the report. And natural brands made up 27 percent of skin care sales earlier this year, showing there’s continued demand.

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