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Hola, Mexico: Ulta Beauty's 2025 Expansion Plans

Published March 19, 2024
Published March 19, 2024

Ulta Beauty is on a mission to expand its physical footprint across borders. The retailer, which currently has 1,408 stores across the US, recently reported its Q4 2023 fiscal results, alongside a plan to launch into Mexico in 2025, where beauty's market worth currently stands at $9.46 billion.

"The Mexican beauty market is sizable, growing, and has significant beauty opportunity," said CEO Dave Kimbell. "Our research suggests there is a healthy awareness of the Ulta Beauty brand with local beauty enthusiasts, and we also see strong engagement in stores located in geographically adjacent markets."

Although minimal details were shared of the exact dates, number of doors, and so on, Kimbell shared that the expansion will be executed through an "asset-light" partnership with Axo, an operator of global brands, which he described as highly experienced. "International expansion represents an incremental, long-term opportunity for Ulta Beauty to extend our reach and leverage our differentiated value proposition," Kimbell added.

The news comes after another strong year for the retailer, which saw sales grow 9.8% to $11.2 billion. In 2023, Ulta's comps rose 5%, alongside a net income increase of 3.9%, reaching $1.3 billion. 2023 Q4 also produced elevated figures, with holiday season sales rising 10% and comps growing 2.5%. 

Ulta will join an already-established beauty retail presence in Mexico. This includes the retailer's top competitor, Sephora, which entered the Mexican market in the fall of 2011, opening a 5,400-square-foot  store in Antara Fashion Hall in the Polanco section of Mexico City. Sephora currently has 32 stores in Mexico, with plans to grow to 60 by 2027. Ulta will also be competing against Mexican beauty destinations, including department stores Liverpool and Palacio de Hierro and Walmart subsidiary, Superama. 

"There is no doubt that the days of heady increases in beauty are behind us," Managing Director of GlobalData Retail, Neil Saunders, told Retail Dive. "Consumer spending is under more pressure, and there is a lot more competition thanks to the expansion of rivals like Sephora and Target, as well as a raft of DTC specialists. Against this backdrop, Ulta's forecast suggests it will more than hold its own in the year ahead, which, in our book, is a good result.”

Ulta’s Mexico expansion plans surfaced after talk of intent to launch in Canada back in 2019 under previous CEO Mary Dillion; however, due to the pandemic, these plans never materialized. Instead, the retailer focused on its US operations and "omnichannel capabilities," including online shopping, which had seen a decrease due to Covid-19-induced footfall loss.

Before taking on Mexico in 2025, Ulta Beauty has plans to continue its US expansion in 2024, opening between 60 and 65 new stores nationwide. The retailer predicts net sales of $11.7 billion to $11.8 billion and diluted earnings per share of $26.20 to $27 for the upcoming fiscal year, 2024.

Ulta Beauty's expansion into Mexico has the potential to enrich the country's beauty retail landscape further, offering consumers greater choice, convenience, and access to high-quality beauty products and services. However, the retailer must stay on top of its game to solidify its success in the region.

"After careful evaluation of many market opportunities, we really felt like the Mexican market is the next step for Ulta Beauty. Our border stores are performing really, really well, and I just think it's the next natural step for us as we continue to expand internationally," concluded Kecia Steelman, Ulta Beauty President and COO.


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