Beauty Makeover? Ulta Could Close Underperforming Stores As It Rethinks Its Beauty Business

Cosmetic retailer Ulta Beauty (ULTA) is reportedly undergoing a review of its over 1,200 stores amid the coronavirus pandemic.

The company could close some stores in the months ahead as it looks to overhaul its approach and possibly rid itself of underperforming stores with higher rents, The Wall Street Journal reported. Ulta is also using this opportunity to negotiate better lease terms with its landlords and relocate some stores to more attractive locations, the news outlet said.

“If you did this with a white, clean piece of paper, how would you reorganize your store fleet?” Scott Settersten, chief financial officer at Ulta, told the WSJ.

According to Settersten, Ulta has plans to open 30 to 40 new stores in 2020, which is half of its previous plan before the coronavirus hit. Ulta is also reportedly looking to reserve cash, like most retailers, and has reopened over 650 locations with more than 900 offering curbside pickup after closing all of its stores due to state stay-at-home orders.

Ulta, which was known for its ability to walk into a store and test the makeup, has had to rethink its business strategy, shifting to digital makeovers as it no longer can freely allow customers to try before they buy to help prevent the spread of COVID-19.

The coronavirus also took a big hit to Ulta’s quarterly sales, with stores closed. The company reported a quarterly sales decrease of 33% to $1.2 billion in May. Losses for the company were $78.5 million for the quarter compared to a profit of $192.2 million a year earlier.

Shares of Ulta stock were up 0.08% as of 11:32 a.m. EDT on Friday.