Ulta Salon (ULTA)

poinkie (53.82) Submitted: 6/04/08 4:42 PM : Start Price: $14.83 ULTA Score: -4.50

I went to the mall and watched every tween, teen, & mom stop by the store; the only bags in the mall were orange ULTA bags. Several "metro" male friends have been shopping here for years. I visited 2 other stores & saw steady streams of mini-vans full of moms & daughters stop in to shop. The business model (value name brand cosmetics & sundries with a salon) makes sense in this tight economy and CEO Kirby mentioned, the client is not trading down on quality - she is choosing to pay less for the same salon/department store cosmetic brands. A risk is growth too fast (average 18 stores per quarter), but they kept the pace last year. Inventory levels have been a question as well but Kirby has answered reasonably citing new distribution centers. Cost of goods has remained flat. Good focus on 2nd & 3rd tier cities for growth & good store locations are training the next generation of shoppers to visit specialty value retailers like ULTA.

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