Chief Executive Officer at Ulta Beauty
Thank you, Kiley, and good afternoon. Fiscal 2022 is off to an outstanding start with the Ulta Beauty team delivering another quarter of excellent performance on top of last year's record results. For the quarter, net sales increased 21% to $2.3 billion. Comp sales increased 18%. Operating profit increased to 18.7% of sales and diluted EPS increased 54% to $6.30 per share. During the quarter, all major categories exceeded our expectations and we increased our market share in Prestige Beauty based on point-of-sale data from the NPD Group.
We also increased the number of members in our Ultimate Rewards Loyalty Program, introduced innovative digital experiences for our guests and continued to execute major strategic projects, including investments in new stores, supply chain and technology infrastructure, all while successfully navigating supply chain challenges, a tight labor market and operating cost pressures. I want to express my sincere appreciation to all of our Ulta Beauty associates for their collaborative efforts to create great guest experiences, execute against our plans and deliver these outstanding results.
Consumers continue to be highly engaged with the beauty category as they participate in more in-person activities, engage in more travel and lean into experiential spending. And while macroeconomic pressures, such as rising inflation are top of mind for consumers, their resilience and emotional connection to beauty continues to drive the recovery of the category.
This consumer demand, paired with strong execution of our strategic priorities, fueled our exceptional results. Looking at our operational performance for the quarter, I will focus on the progress we are making with our consumer-facing priorities and then share an update on our optimization efforts. Let's start with our first strategic priority to drive disruptive growth through an expanded definition of All Things Beauty. From a category perspective, fragrance and bath, hair care, makeup and skin care all delivered double-digit comp growth against the first quarter last year.
Importantly, sales of makeup exceeded pre-pandemic levels in both mass and prestige cosmetics. The makeup recovery is progressing faster than we expected coming into this year. Compared to the first quarter of 2021, prestige cosmetics outperformed mass cosmetics, driven by new and expanding brands and a strong 21 Days of Beauty event. From a trend standpoint, foundation, concealers, eyeliners, and lipstick continue to deliver strong comp growth.
New brands like Fenty Beauty, R.E.M. Beauty by Ariana Grande and Tresluce, a mass cosmetics brand founded by Latin Musician, Becky G, contributed to growth during the quarter. While new product launches from a wide range of brands, including Clinique, Lancome, NARS, e.l.f. and NYX also delivered strong sales growth.
In addition, this quarter, we expanded MAC into 233 additional stores and introduced Chanel Beaute into 104 stores. Even as they increase makeup usage, beauty enthusiasts, are maintaining their skincare routines. As a result, skin care delivered another quarter of strong double-digit sales comp on top of robust double-digit growth in the first quarter last year. Moisturizers, eye serums, and acne treatments continue to drive category growth in the quarter.
We also saw strong growth in sun protection and sun self-tanning as the consumers increased travel and social activities. Newness continued to appeal to guests with new brands, including Drunk Elephant, Fresh, Supergoop and Good Molecules, as well as new products from TULA, StriVectin and First Aid Beauty, contributing to the category growth during the quarter. And established brands, including Peter Thomas Roth and La Roche-Posay continue to benefit from engaging social media content.
Hair care delivered another quarter of double-digit growth, driven by strong guest engagement with newness and our core assortment, as well as successful salon backbar takeover event. Trends focused on hair health like damage repair, color care and scalp treatments continue to resonate with guests and interest in hair styling aids increased with the rise of social occasions.
New brands like OLAPLEX, as well as new product launches from [Indecipherable] and Briogeo, contributed to category growth in the quarter. And Dyson's Airwrap styling tool continued to be a member favorite. Guests continued to engage with core professional brands like Redken, Pureology and Biolage and our salon backbar takeovers drove strong growth for FEKKAI and IGK as our stylists engaged guests with these brands.
Consumer strong engagement with the fragrance category continued, driving double-digit growth on top of a phenomenal results last year. Exciting newness, a strong Valentine's Day and strategic events, including 21 Days of Beauty and Spring Haul, contributed to this performance. The in-store launch of Ulta Beauty exclusive Billie Eilish, as well as newness from Gucci and Carolina Herrera resonated with guests, and our monthly fragrance crush program drove growth for established brands like YSL and Valentino.
In addition to driving core category growth, we are investing in key cross-category platforms to drive guest engagement and market share growth. Since launching Conscious Beauty in 2020, we have continued to expand brand participation, increase guest awareness and drive trial. At the end of the first quarter, more than 280 brands offered certified products in at least one pillar. And while we continue to certify existing brands and SKUs, many new brands are launching with certification in place. One such example is Andrew Fitzsimons, a hair care brand that offers proprietary bonding technology at accessible price points, which was certified across all four pillars when it launched in the first quarter. Another example is Sk p, an Ulta Beauty exclusive hair and body care brand packaged in a fully recyclable, shower-friendly paper beauty carton, which also launched in the first quarter.
Moving now to our efforts to continually expand and support our assortment of bipack brands, we launched five new bipack brands, BeautyStat, Rosen Skincare, Fenty Beauty, Tresluce Beauty and Mielle Organics. We also expanded Black Girl sunscreen into all stores. To promote trial, we introduced a spotlight display in select stores to showcase our bipack founders. In recognition of Black History Month, we launched a compelling omnichannel campaign to recognize, celebrate and support the black community and black-owned brands.
We feature black-owned brands in stores and across enhanced digital and print channels, and we offered compelling loyalty rewards on black-owned brand purchases to drive awareness. Finally, our wellness shop continues to resonate with guests as they prioritize self-care and wellness journeys. We recently expanded the shop to an additional 266 stores, now reaching about 55% of our fleet and refreshed the digital landing page on ulta.com. With easy ways to explore our curated assortment and helpful tips about easy self-care routines, guests can now more readily incorporate wellness into their busy schedules.
Turning now to our efforts to evolve the omnichannel experience through a connected physical and digital ecosystem, all in your world. Store traffic trends were strong in the quarter as guests capitalized on their preference for in-store shopping with fewer COVID restrictions in place than last year and store capacity returned to normal levels. While store traffic is still below pre-pandemic levels, the trend is improving. As a core differentiator for Ulta Beauty, beauty services deepen engagement and loyalty through human connection.
Consumers are resuming their beauty service routines as they participate in more in-person activities. In the first quarter, our beauty services delivered double-digit comp growth, primarily due to increased capacity and new offerings, including OLAPLEX repair and protect and Express Color by Redken. To meet growing guest interest and services and experiences, we continue to expand our in-store events and enhance our service offerings.
In April, we relaunched makeup services in all stores, just in time to support special events such as proms, graduations and weddings. As guests are coming back to shop in stores, they are also maintaining their use of convenient engaging digital channels. Reflecting these trends, we continue to enhance our omnichannel offerings, including buy online, pickup in store and same-day delivery. During the quarter, BOPIS increased 26% to 21% of e-commerce sales compared to just 16% last year. While still limited, guests are increasing their use of our same-day delivery options. Based on engagement trends, we recently expanded same-day delivery to five new markets, including New York City. And today, about 30% of our stores offer guests this convenient option.
During the first quarter, we continued to expand and enhance our digital experiences. As part of our digital store of the future journey, we introduced a new homepage for both ulta.com and our mobile app. We also launched two virtual try-on tools, each powered by technology developed by companies we have invested in through our digital innovation fund. First, we launched GLAMlab Skin Advisor 2.0, powered by global artificial intelligence start-up, pot.ai. This best-in-class skin analysis technology enables us to provide guests with a more accurate skin diagnosis, which has resulted in stronger satisfaction with the tool. We also launched GLAMlab hairstyle try-on powered by Restyle, a beauty tech start-up that uses artificial intelligence and machine learning to enable virtual try-on of more than 50 different hair styles, including options by gender and texture.
We also introduced innovative AR and virtual reality experiences to support our launch of Fenty Beauty and r.e.m. Beauty. Finally, we continue to enhance and expand our partnership with Target. This leading partnership is part of our long-term strategy to build brand loyalty and engagement with Ulta Beauty. We are seeing existing ultimate reward members take advantage of the convenience of shopping while earning points at Ulta Beauty at Target. And we are leveraging Target's strong traffic to introduce Ulta Beauty and Ultimate Rewards to new guests. During the first quarter, we opened 26 Ulta Beauty at Target shops, ending the quarter with 127 locations. One of our priorities in 2022 is to leverage marketing to build engagement as we scale.
As an example, in support of our 21 Days of Beauty event, we co-created brand-relevant digital and in-store communications with Target to support this strategic Ulta Beauty event, which resulted in strong performance and guest engagement across both channels. Moving to our efforts to drive love, loyalty and emotional connection with Ulta Beauty by expanding and deepening our presence at the heart of the beauty community, during the first quarter we continued to optimize our marketing mix to reach guests through the most relevant channels and platforms. We leveraged audience data to execute a targeted digital-first approach to 21 Days of Beauty and Spring Haul, driving greater awareness and increased sales.
We launched content partnerships to engage new audiences and increase awareness of our cross-category platforms, and we created innovative marketing campaigns to support key brand launches. We ended the quarter with 37.7 million active members in our ultimate rewards loyalty program, 17% above the first quarter last year. This increase was primarily driven by continued member reactivation growth, new member acquisition and strong retention. Our strategy is to reengage lapsed members, many of whom dropped off during the pandemic are delivering results. Additionally, new member conversion remains strong in stores and online conversion rates are improving, as we increase the visibility and value of ultimate rewards throughout the guests online journey.
I'm also excited to share that we launched UB Media, our retail media network. Through UB Media, we will harness the power of our exclusive first-party data to transform the way brands connect with beauty enthusiasts. Building on our successful digital marketing partner program, UB Media offers brand partners an enriched portfolio of advertising products and channels, as well as enhanced measurements in reporting, including audience and creative insights.
The media network offers advertising, access fee display, video search, product listing ads, social and influencers on both open web platforms and Ulta Beauty-owned properties. In addition to unlocking a new income stream while helping brand partners build digital campaigns to effectively engage audiences, we expect to see sales benefits as campaigns lead consumers back to Ulta Beauty properties to transact. Underlying these customer facing priorities is a focus on to drive operational excellence and optimization. Last fall, we shared our updated supply chain strategy, including our plan to build market fulfillment centers, or MFCs, to supplement our existing DC network capacity and provide greater speed to stores and e-commerce guests in specific markets.
We recently broke ground on our first MFC in Greenville, South Carolina, and expect the facility will be fully operational in the third quarter next year. In addition, our planned retrofit of our full service distribution center in Greenwood, Indiana is on track to be complete in the second quarter of 2023. I am confident our infrastructure investments, including key supply chain and IT investments, will enable Ulta Beauty to continue to deliver strong results and capitalize on future growth opportunities.
In closing, a few weeks ago, I had the privilege to welcome nearly 2,000 members of the Ulta Beauty team to our annual field leadership meeting, bringing together our general managers, district managers, field support teams and brand partners for several days of recognition, leadership development and product education. The excitement was palpable and the optimism about our future was truly inspiring. We celebrated everything we have accomplished throughout the last two challenging years and set the stage to deliver on the incredible opportunities ahead for Ulta Beauty. I left the event even more excited about all we can do together as one Ulta Beauty team to redefine how the world sees and expresses beauty.
As we look forward, the world around us continues to be dynamic. Product prices and operating costs are rising and consumers are increasingly concerned about the impact of inflation. While it is difficult to forecast how inflation may impact consumer behavior going forward, we are monitoring guest engagement and remain encouraged by the underlying trends we see in our business and in the beauty category. I am confident our team will continue to navigate near-term pressures, and I remain excited about the long-term opportunity for Ulta Beauty to continue to deliver profitable growth. And now I will turn the call over to Scott for a discussion of the financial results. Scott?