Loyalty is core to Ulta’s long-term success, CEO Dave Kimbell told investors on its most recent earnings call last week.
Cosmetics brand Ulta reported that it had more than 44 million active customers in its loyalty program Ulta Beauty Rewards in its fiscal second quarter ended Aug. 3. This is a 5% increase over last year, Kimbell told investors according to a SeekingAlpha transcript.
“With more than 44 million active members, our loyalty program is a strategic asset that provides us with unique insights across categories, price points and channels and enables us to drive traffic and spend per member,” Kimbell said.
Ulta has a tiered loyalty program, in which shoppers earn at least one point for every dollar they spend. If shoppers spend more than $500 annually, they are in the “platinum” tier which gives them 1.25 points per $1, among other perks; $1,200 in annual spend unlocks the “diamond” tier, which gives members 1.5 points per $1 and even more program benefits, such as free shipping with a $25 purchase.
“We continue to attract new and lapsed members to our loyalty program, while maintaining strong retention of our existing members,” Kimbell said.
“Importantly, we continue to experience healthy growth in our platinum and diamond members,” he added.
Ulta’s Q2 2024 earnings miss mark
Ulta’s loyalty program growth is a bright spot for the brand, as the retail chain reported challenges in its category and revenue earnings short of expectations. For its fiscal Q2 2024, Ulta reported:
- Net sales increased 0.9% to $2.55 billion compared with $2.53 billion in the year-ago period.
- Comparable store sales decreased 1.2% compared to an increase of 8.0%.
- Net income was $252.6 million compared with $300.1 million.
- The Ulta app accounts for roughly 66% of its ecommerce sales.
“Leveraging its powerful loyalty program” is one of five areas Ulta highlighted in its earnings call to drive better performance in future quarters.
Ulta plans to drive more awareness of its loyalty program and more connection with consumers in the program through member-only events, social engagement and marketing.
An example of this was in May, when it had a member-only event called Member Love, which rewarded members with extra loyalty points for purchases in certain categories. This initiate “delivered healthy member engagement and higher spend per member,” Kimbell said.
These events and further making its shoppers connected to the brand will engender loyalty and help power Ulta’s long-term success, Ulta said.
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