With coronavirus spreading at an alarming rate, retailers are undertaking measures to improve financial position amid the crisis. In this regard, Ulta Beauty, Inc. ULTA recently issued another business update related to the coronovirus outbreak. The company, which previously drew down $800 million under its revolving credit facility, has undertaken various other measures to enhance its financial flexibility amid the crisis.
In the latest press release, Ulta Beauty informed that it has been undertaking expense-control measures, suspending new recruits along with postponing merit increments for all corporate and store associates. Moreover, the company is reducing various investments during the coronavirus crisis. Nevertheless, Ulta Beauty is on track with its plan to have an omnichannel presence across Canada in 2021.
Apart from these, the company has been reducing capital expenses. Although management plans to open new stores during the year, it no longer anticipates opening 75 new stores in fiscal 2020. Among other moves, Ulta Beauty also suspended its share buyback plans.
The coronavirus outbreak, which is spreading at a rapid rate, has infected more than 1,000,000 people worldwide and the death toll has crossed 60,000. Retailers are under major pressure with companies shutting stores, limiting store hours and withdrawing their guidance. In fact, companies are bound to keep stores shut for extended durations with the situation getting worse with each day.
Along these lines, Ulta Beauty in an earlier press release stated that all stores will remain temporarily shut until it is safe to reopen them again. Nonetheless, shoppers can keep purchasing online via Ulta Beauty app or ulta.com. Notably, Ulta Beauty’s strategic investments to enhance omnichannel as well as supply chain capabilities have been aiding the company’s performance amid increased e-commerce demand.
Well, other companies like Nordstrom, Inc. JWN , Guess?, Inc. GES and L Brands, Inc. LB have undertaken similar steps to extend their store closure plans tocontain the further spread of the deadly coronavirus.
Coming back to Ulta Beauty, management had earlier stated that it will continue to make payments to its store and salon associates through mid-April along with offering benefits to workers who have currently enrolled. Apart from these, the company has been offering a $2-per-hour wage premium to associates who continue to work in distribution centers to support the e-commerce business amid coronavirus. Meanwhile, Ulta Beauty enhanced the sanitization process and is undertaking various practices like social distancing as precautionary measures in its distribution centers.
Moreover, Ulta Beauty had previously announced the withdrawal of its recently-provided guidance for fiscal 2020, given the current situation and its unpredictable impact on revenues as well as costs.
We note that shares of this Zacks Rank #4 (Sell) company have plunged 55.7% in the past year compared with the industry’s decline of 53.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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