KCLarkin Posted March 20, 2020 Author Share Posted March 20, 2020 The operating leverage on retailers can be brutal Sure. But let's assume they keep all fixed costs and revenue goes to $0 for one year. They lose $1.5B. They have $400 M in cash. Some inventory. A line of credit. I think they survive. In this scenario, every department store is out of business. Duty free sales of cosmetics are zero. Ulta is ramping up delivery, etc. Link to comment Share on other sites More sharing options...
DooDiligence Posted June 12, 2020 Share Posted June 12, 2020 A "clean sheet" is a great thing for a keeper, but for ULTA, eek. This could go either way. They've been making strides in e-commerce but IDK, will trying on virtual makeup really work? I checked it out & it was funny as hell (TBF, I'm a dude & have never worn makeup & have no plans to start any time soon). This may just work for some shoppers though. www.wsj.com/articles/ulta-beauty-undertakes-review-of-its-1-254-stores-11591797600 Small position here. Link to comment Share on other sites More sharing options...
Guest roark33 Posted June 12, 2020 Share Posted June 12, 2020 My wife ordered directly from her make-up company during the shutdown, saved $15 vs Ulta price and had free delivery. It took like 2 weeks to come, but I expect brands to improve their ecommerce area, and for her, she knows what makeup she needs, so she will start ordered from direct from now own. (her order was only $45, so $15 was a big amount, i.e. was $60 at ulta). Link to comment Share on other sites More sharing options...
DooDiligence Posted June 12, 2020 Share Posted June 12, 2020 My wife ordered directly from her make-up company during the shutdown, saved $15 vs Ulta price and had free delivery. It took like 2 weeks to come, but I expect brands to improve their ecommerce area, and for her, she knows what makeup she needs, so she will start ordered from direct from now own. (her order was only $45, so $15 was a big amount, i.e. was $60 at ulta). What was the company she ordered from? Link to comment Share on other sites More sharing options...
Guest roark33 Posted June 12, 2020 Share Posted June 12, 2020 Lancome. Link to comment Share on other sites More sharing options...
DooDiligence Posted June 12, 2020 Share Posted June 12, 2020 Lancome. DTC, the internet is the great leveler. Link to comment Share on other sites More sharing options...
valueinvestor Posted June 12, 2020 Share Posted June 12, 2020 Lancome. DTC, the internet is the great leveler. Shopify. Link to comment Share on other sites More sharing options...
Guest roark33 Posted June 12, 2020 Share Posted June 12, 2020 You could tell that Lancome doesn't have their DTC game up to speed, it took almost two weeks and we had no notifications of it being sent or anything. But the huge price differential, and the ease of ordering does make me really think about these marginal purchases as a drag on Ulta going forward. Link to comment Share on other sites More sharing options...
KCLarkin Posted June 12, 2020 Author Share Posted June 12, 2020 You could tell that Lancome doesn't have their DTC game up to speed, it took almost two weeks and we had no notifications of it being sent or anything. But the huge price differential, and the ease of ordering does make me really think about these marginal purchases as a drag on Ulta going forward. Really surprised Lancome would risk channel conflict, especially with such horrible fullfillment. Link to comment Share on other sites More sharing options...
Guest roark33 Posted June 15, 2020 Share Posted June 15, 2020 https://www.ft.com/content/ab917d5d-e601-44ba-9a2c-53dbb2146dc7 Link to comment Share on other sites More sharing options...
kab60 Posted July 23, 2020 Share Posted July 23, 2020 Alliance Data Systems, of which Ulta is a major client, with fine Q2 results. They note that Beauty (and home decor) are strong categories despite c19. I have a position in Ulta and will buy more. I think they are uniquely positioned to come stronger out of this. Lower rent, better locations, departement stores hurting and JCP troubles a possible hit to Sephora. Clean balance sheet so a combination of high ROIC, SSS and new unit growth as well as buybacks can be a very powerful combination. And then international expension as a joker/option. Link to comment Share on other sites More sharing options...
kab60 Posted August 4, 2020 Share Posted August 4, 2020 Bullish take on Ulta: https://www.barrons.com/articles/why-ulta-beauty-shares-can-gain-55-portfolio-manager-51595612327 I suppose the bear case is that retail is dead, they mostly saturated the market with stores, membership growth slowing and if SSS starts trending in the wrong direction they're in for a lot of hurt. But this thing used to trade at plus 40xEPS, now at 16x2019. Also a story on how cosmetics retailers are remaking the sample experience in a world without touching: https://www.cnbc.com/2020/07/30/how-cosmetics-are-remaking-sample-experience-in-contactless-world.html Link to comment Share on other sites More sharing options...
kab60 Posted August 27, 2020 Share Posted August 27, 2020 Boom, smashed it. Not sure why market is so positive on the release, but comments look good - SSS only down a 'lil bit in August and actually made money in the Q. Link to comment Share on other sites More sharing options...
kab60 Posted November 10, 2020 Share Posted November 10, 2020 Interesting development - store in stores at Target coming next year: "Ulta Beauty at Target will debut at more than 100 Target locations starting in 2021, with plans to scale to hundreds more over time. The planned locations will complement Ulta Beauty's current store footprint, welcoming new guests to the brand and building upon Target's existing assortment of beauty options... With approximately 1,000 square feet of retail space, Ulta Beauty at Target will be prominently located next to the existing beauty section." https://seekingalpha.com/pr/18078751-target-and-ulta-beauty-announce-strategic-partnership Link to comment Share on other sites More sharing options...
KCLarkin Posted March 11, 2021 Author Share Posted March 11, 2021 Anyone still holding this? I've trimmed a bit to keep it a 10% position. Not looking forward to earnings today... Link to comment Share on other sites More sharing options...
kab60 Posted March 11, 2021 Share Posted March 11, 2021 I sold a 7 pct position last week at 327. I like it long term, but it's starting to look expensive. Figured there were better risk/rewards elsewhere. I'm a little nervous their margins will struggle to come back due to increased ecommerce, but it's an awesome company, and perhaps they can save some on rent. Just thought there were easier 15 pct hurdles to clear (basically swapped it for FISV). Link to comment Share on other sites More sharing options...
KCLarkin Posted March 11, 2021 Author Share Posted March 11, 2021 Thanks Kab. We are on the same page. I was a bit too greedy with the reopening play. Down $30 after hours. Link to comment Share on other sites More sharing options...
kab60 Posted March 12, 2021 Share Posted March 12, 2021 Better lucky than good. It has paid off in recent years to let momo help one a bit, but I think valuation is stretched considering their size and estimated number of stores as well as backing down on International. Just looked at the print, and I am not getting back in. I liked Mary and don't like the change in CEO. Link to comment Share on other sites More sharing options...
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