US-based beauty retailer Ulta Beauty will reduce expense plans, suspend new hires and defer pay increases for all corporate and store associates in a bid to preserve the company’s financial liquidity while its stores remain closed due to COVID-19.
The company will also reduce capital expenditure plans, particularly in relation to its planned new store openings.
As reported, Ulta announced in March that it would open 75 new stores, remodel or relocate 15 stores and refurbish 42 locations in 2020. Due to the impact of COVID-19, though, the company says it no longer expects to open 75 new stores and is working on an adjusted plan for new store openings, relocations and remodel projects.
Ulta will also moderate the pace of investments to build international capabilities. However, the company still expects to have an omnichannel presence in Canada in 2021.
The company will also align inventory receipts with current sales trends, prioritize expense payment obligations to focus primarily on essential services and suspend its stock repurchase program.
Ulta closed all its stores on March 20 and originally said they would remain closed until March 31. The company has not confirmed a reopening date in its update, but says it is following authorities’ guidance on the situation.
As reported, Ulta Beauty drew down $800m under its $1bn revolving credit facility on March 18, 2020.
Ulta Beauty ceo Mary Dillon said: “A few weeks ago, we made the difficult decision to close all of our brick and mortar stores to help contain the spread of the coronavirus. Since March 20, Ulta Beauty has been a digital-only business. Although we do not expect to fully offset the revenue impact of our store closings, the multi-year, strategic investments we have made to enhance our omnichannel and supply chain capabilities, combined with the ongoing commitment of our distribution associates, have enabled us to support increased e-commerce demand and guest engagement. As we continue to support our essential e-commerce operations, we are taking actions in parallel to ensure that we maintain our financial strength and flexibility in the near term and position Ulta Beauty for long-term growth.”