Sometimes I wish someone would just come out and say it: Ulta Salon (ULTA) is riding one of the great secular waves of our time -- the fear of having your picture taken at any given moment. No one can risk going outside their door believing by the end of the day they won't be on someone's Facebook page or been snapped or Instagram-ed somewhere.
Or, if they are selfie hounds, they know they have to look their best from the get-go.
I am not by any means denigrating Ulta, it is one of the more amazing operators of our time. You do not get 15.2% comparable sales growth on top of 11.42% comps without being just about the best at what you do. When 10% of that growth is traffic, at a time when going to a brick-and-mortar store at a mall seems like yesteryear, and 3.8% is ticket, meaning you can charge more than before, you are doing something very right.
But the simple fact is that the better the cellphone screen, the higher the resolution, the stronger Ulta's results will be. Ulta's Mary Dillon just seems a lot wiser to it, although I bet if we saw the J.C. Penney (JCP) savior's numbers -- I am talking Sephora -- we'd be startled, too.
Everything they do at Ulta has a hint of this to it. For example, its big promotion that hyper-charged sales this quarter? "Pamper her with Pretty", which is basically about younger girls and women teaching their mothers the value of make-up in a selfie age.
Ulta's got all ranges of price points, and they have shrewd partners like Estée Lauder (EL) that will actually set up their own sections in Ulta and do some amazing training.
The key there? What kind of training can Growth Seeker portfolio name Amazon.com (AMZN) do? No better than it can do at "doing" someone's hair or eyebrows, as the salon does in the back.
Make-up's expensive and Ulta customers are frugal, which is how you have 19.4 million members of a rewards club up 25% year over year.
Plus, there is much more room to grow. Inner city is under Ulta-ed. Dillon says that they only have about 5% of the make-up wallet and there are 50,000 other places to get make-up, when she wants there to be only one destination. She's competitive enough that maybe she can pull it off.
The bottom line? When you get 10 analysts, 10 different analysts, start their questions with "Congratulations", you know that something bigger's going on than just retail.
You are dealing with a generational wave of strength: the desire to look good for the camera. Dillon should send Tim Cook, the CEO of Action Alerts PLUS portfolio holding Apple (AAPL), a note of thanks. You can't leave home without either the iPphone, or your Ulta make-up.