Ulta Beauty CEO Dave Kimbell on Long-Term Growth Strategy for 2025

When the going gets tough — the tough double down.

Such was the message Ulta Beauty chief executive officer Dave Kimbell delivered during the retailer’s 2024 Investor Day, acknowledging the realities of a fast-changing competitive environment and laying out Ulta’s strategy for the next three years.

“We have a strong position in a growing and dynamic category. We have a proven business model and we’re investing to make it even stronger,” Kimbell said. “We have clear strategies to drive growth. We have a powerful team and culture and are ready to go. I’m very optimistic about growth.”

Kimbell’s confidence comes during a challenging period for the company. In August, it lowered its full-year outlook for 2024 after missing Wall Street forecasts on the top and bottom lines in the second quarter.

Going forward, Kimbell pledged to deliver 4 to 6 percent net sales growth from 2026 and beyond, targeted operating margin of about 12 percent of sales and low-double-digit diluted EPS growth.

However, he and chief financial officer Paula Oyibo cautioned analysts that 2025 results are expected to be more in line with 2024, with operating margin anticipated to be below 12 percent but remain above 11 percent and comp store sales growth of three to four percent.

While Ulta’s stock dropped modestly on the news, about 3 percent, Kimbell and his leadership team laid out an aggressive strategy to reignite growth, including increasing its U.S. store count by 200 doors over the next three years, opening its first international market in Mexico in 2025, doubling down on wellness and exclusivity in its merchandising strategy and amplifying its loyalty program with a key partnership with Adobe to drive real-time automated personalization around everything from product recommendations to content curation.

“We have clear strategies that set us up to drive market share and continue to lead the beauty industry and most importantly deliver a great experience for our guests,” Kimbell said during an exclusive interview with WWD. “That is our focus and if we continue to do that as we have done for 30 years, we know we will be successful and continue to gain share.”

Oyibo said that Ulta will continue to invest in the business, particularly around new store openings, which have remained strong and delivered returns of 20 percent on average. The company plans to open 200 stores over the next three years, both in existing markets like Dallas, Phoenix and Denver, and smaller markets like Del Rio, Texas, Jasper, Ind., and Wilson, N.C. It has developed a smaller, 5,000-square-foot prototype for such locations.

“We do not believe the market is oversaturated,” said Kecia Steelman, chief operating officer, noting that the U.S. beauty market has grown by more than $20 billion since 2021. “We see a clear pathway to 1,800 stores in the long term. New store expansion drives incremental growth, even with a more dynamic and competitive landscape.”

That landscape includes the addition of about 1,000 new points of sale for prestige beauty in the U.S., including the expansion of Sephora at Kohl’s. Ulta executives report that about 80 percent of its fleet now overlaps with a competitor, one of the factors that has contributed to its performance this year.

Still, executives are bullish that opportunities remain in mature markets, citing Dallas as an example, where Ulta has grown its store base by 20 percent and expanded its market share by 450 basis points.

Ulta’s first international expansion into Mexico is also slated for 2025 via a partnership with Grupo Axo. “The beauty market there is very strong and we already have strong brand awareness,” Kimbell said. He declined to provide timing or specifics around the launch, but did say he believes the market can sustain about 100 stores over time.

Hispanic consumers in the U.S. also present a growth opportunity for Ulta — just one of the demographic cohorts that the retailer is targeting as it aims to leverage and grow its Ulta Beauty Rewards loyalty club membership from 44 million to 50 million in 2028. Currently, 95 percent of all sales are transacted by members, and their spend increased 11 percent year-over-year.

Chief marketing officer Michelle Crossan Mattos unveiled a partnership with Adobe to enable Ulta to leverage its extensive data analysis of shopper behavior to more effectively personalize at scale. “Loyalty is a key differentiaor and a critical pillar for building that is personalization,” she said. “Our North Star is an automated real-time personalized engine that can curate content based on signals from within our walls and outside.”

As an example, she cited a customer who might be searching for a concealer one day and Halloween makeup the evening before. “Through this partnership — we can take both of those signals and when you go into a social media channel we can serve up content to you that is curated based on Halloween trends and also brands that you love already and have probably bought already,” Crossan-Matos said. “And if you go to our app or web — you will instantly see a ‘For You’ recommendation. You’ll also be followed up with an email. This can unlock the growth in our loyalty program. We are personalizing at scale and unlocking value.”

“By expanding and engaging more guests, we will drive growth. It’s a loyalty flywheel,” said Kimbell, noting that when a store-only guest starts shopping online their spend more than doubles. Currently, about 20 percent of Ulta’s turnover is done via e-commerce, which Kimbell also said will increase. “Our focus is on growing the total omnichannel experience. We don’t look at e-commerce penetration as a key metric, but we do look at growth in both channels and making sure we deliver an experience that meets guests when and where they shop,” he said. “We do think e-commerce will grow faster than stores over the next few years, so penetration will increase, but the goal is to drive growth in both channels.”

One key way to do that will be via its brand strategy. The strategy is to focus on established, emerging, new and exclusive brands — with an emphasis on “supercharging” exclusivity and newness, which drives 20 to 30 percent of revenues, said chief merchandising officer Monica Arnaudo. “Our assortment strategy fuels growth, differentiation and guest love,” she said.

Currently, about 40 of Ulta’s 600 brands are exclusives and another 65 brands produce products that are exclusive to the retailer.

“It’s important that we have exclusivity — it’s an investment that we make in the brands and they make in us,” said Arnaudo, noting that key criteria include does the brand fill a need in Ulta’s assortment, have a compelling founder and/or innovation story, the infrastructure to support retail expansion and traction on social media.

“We have a history of supporting and nurturing brands that come in exclusively to us, and it’s an area we see an opportunity to amplify even more and invest in, both financially and with the team and our bandwidth,” she said.

In terms of category growth, Ulta is focused on driving key trends, like the skinification of makeup and hair, the surge in K-beauty and growth of clinical and derm-backed skin care; specialty treatments, curly and coily hair and scalp care in hair care, and men’s and body mists in fragrance.

Arnaudo also declared the plan to win in wellness. “The market is large and growing quickly, reaching almost $400 billion in 2023 and a growth rate of 12 percent,” she said. “It is incredibly fragmented with no retailer established as a true leader.”

Executives believe that wellness can rival skin care in terms of size. Plans call to lean into categories including nutrition and supplements, intimate care, mindfulness and sleep. “We also see a lot of opportunity to support women through their life stages, from period care to menopause,” Arnaudo said.

Thus far, key wellness brands at Ulta include Lemme, Love Wellness, Liquid IV, Moonjuice, Foria and Womaness.

The focus on wellness is reflected in the expansion of The Joy Project, which introduced the Ulta Beauty Community platform last week on World Mental Health Day, as well as a council with Deepak Chopra and a new podcast series. “Our research shows that the growth in beauty and wellness ladders up to happiness and joy,” Crossan-Matos said. “That is why we are leaning into this. As Monica and her team build wellness, we have this equity platform that guests are telling us is unique and ownable for Ulta Beauty.”

Crossan-Matos is also strengthening Ulta’s ties with creators, to improve its social media presence and drive its cultural relevance. “A future focused approach has to be based on relevance, not awareness,” she said. “If you are not relevant in the new world of social, you will never drive awareness.”

Ulta will focus on building its creator network, both external and with its own 50,000 in-store associates, whom Crossan-Matos called an “army of joy advocates.” And the in-store experience is also being rethought, with an emphasis on the experiential, through hair, skin, brow and makeup services, and an increase in the number of in-store events.

The reaction among analysts to Ulta’s three-year strategy were mixed, with most focusing on the tempered guidance for 2025. “The headlines here are mixed,” wrote William Blair analyst Dylan Carden, writing it was unclear whether the lowered expectations are symptomatic of a softening beauty market or an attempt by executives to set an achievable bar.

“High-quality story but bumps persist,” wrote TD Cowen’s Oliver Chen. “Investors still walking away with questions,” echoed Ashley Helgans of Jefferies.

Kimbell, though, remains bullish, even with the increased competitive pressure.

“I remain confident in our model and our ability to execute and win in an increasingly competitive category,” said Kimbell, noting more than 1,000 points of distribution have been added in the U.S. over the last three years. “We know beauty and beauty enthusiasts better than anyone and we are committed to celebrating and championing beauty in all of its forms.”