As more young women say “No, thanks” to makeup, Ulta Beauty is making a major move into the natural look, announcing a partnership with retailer Credo Beauty.
Credo, founded in 2014 by former Sephora execs, is a
powerhouse in the natural cosmetics line. Known for its high standards for ingredients and sourcing, it
operates a small number of brick-and-mortar locations, but is primarily a direct-to-consumer brand. And customers count on it for the industry “Dirty List,” detailing some 2,700 ingredients it won’t allow in the brands it carries.
The new partnership puts Credo offerings in 100 Ulta stores and on the Ulta website. There are products from eight different brands curated by Credo, including EleVen by Venus Williams x Credo SPF, Innersense Organic Beauty and One Love Organics.
The move should help Ulta in its ongoing efforts to appeal to younger women, who are increasingly less interested in color cosmetics and more interested in good-for-the-earth skincare.
“As a trailblazer in ingredient authenticity and transparency, Credo Beauty is the perfect partner for us as we continue to evolve our clean beauty offerings for guests,” says Monica Arnaudo, Ulta’s chief merchandising officer, in its announcement. The company claims that “ninety percent of Gen-Z shoppers intend to buy clean beauty products in the next year.”
The Bollingbrook, Illinois-based Ulta is still in the midst of reopening its 1,200-plus store fleet. Oppenheimer & Co., which recently hosted the company for an investor presentation, says that about 90% of Ulta stores are open, with 1,100 stores doing curbside business and more than 800 full retail stores open. Some 800 stores are offering full salon services, writes Rupesh Parikh, an Oppenheimer analyst who follows Ulta.
“Management commentary suggests continued confidence in the longer term but cautious optimism near term given the evolving coronavirus pandemic,” he says. “We think the tone at our conference reflects an increasingly uncertain market and limited visibility on the ramp to pre-coronavirus levels of financial delivery.”
And while he sees the retailer as eventually emerging with market share gains as a result of the pandemic, “the timing is harder to pinpoint.”
Last month, Ulta reported that net sales for the first quarter fell 33% to $1.17 billion, from $1.74 billion in the same period in 2019. It posted an operating loss of
$101.5 million, compared to operating income of $237.5 million in the year-ago period.