The Ulta Beauty team delivered 17.4% topline growth to $1.54 billion on comp sales growth of 8.1% for the first quarter of 2018 ended May 5. Sales were driven by several factors, including sales of mass cosmetics; continued strength in skin care, fragrances and prestige boutiques; and sales of prestige beauty brands, with new, smaller brands taking some share from larger brands. Here, some highlights from the retailer’s call with the financial community, which included comments from Mary Dillon, Ulta Beauty Chief Executive Officer, and David Kimbell, Chief Merchandising and Marketing Officer.

1. Loyalty Pays: At the end of Ulta Beauty’s Q1, its loyalty program, Ultamate Rewards, posted 28.6 million active members, up 17% year-over-year. The program continues to grow rapidly “as we add benefits and enhance our CRM capabilities to make it even more relevant and personalized, while our store teams remained focused on converting new guests into highly engaged members,” said Mary Dillon, Ulta Beauty’s Chief Executive Officer.

2. Partnerships Push Marketing Success: During the quarter, Ulta Beauty focused on programs to support its private label range, as well as Spring Newness, and its signature 21 Days of Beauty promotion. “We leveraged digital partnership and PR to elevate and position the Ulta Beauty collection as a contemporary and trend-right brand. This included partnering with Cosmopolitan to execute a new first to market video series with editor Carly Cardellino, and shoppable Facebook posts,” said Mary. To celebrate Spring Newness, Ulta Beauty increased its focus on digital and social with partnerships with Bustle, PopSugar and Refinery29, and streamed audio with Spotify and Pandora. For 21 Days of Beauty, the retailer launched a partnership with Waze, the crowdsourcing navigation app, and drove navigations to the store via branded pins and takeovers. Overall, media spend by the retailer is shifting more into digital, streaming audio and streaming television to align with beauty enthusiasts’ digital-first lifestyles.

3. Mass Appeal: Mass cosmetics, after a significant step up in its growth rate in the fourth quarter, accelerated further in the first quarter, reflecting a major reflow to categories completed earlier in the year. The reflow highlights several new brands, including direct-to-consumer brands, Morphe and ColourPop, which are available in a retail environment only at Ulta Beauty. Morphe will expand to all doors in Q2 from about half of Ulta Beauty’s stores currently.

4. Prestige Performance Mixed: Mary said Ulta Beauty “continues to drive very strong growth with prestige boutique brands, which are contributing about a third of overall comp.” About 132 of the planned 675 new boutiques featuring MAC, Clinique, Lancome and Benefit have been added so far this year. Performance of the prestige cosmetics category, excluding the aforementioned brands, is mixed with some brands overperforming and others seeing more muted growth. Top performers include Tarte, Estée Lauder, NARS and Anastasia.“One of the most exciting new brands is Chanel Beaute, which is off to a terrific start in the first few stores. We and the brand are so pleased with the early results that we are now planning to accelerate the number of stores this year compared to our initial expectations,” said David Kimbell, Ulta Beauty’s Chief Merchandising and Marketing Officer. Another addition is a new brand called Flesh, developed by Linda Wells, Chief Creative Officer of Revlon and Founder and Former Editor-in-Chief of Allure Magazine. Flesh is Revlon’s newest foray into prestige beauty and Ulta Beauty will be the first to exclusively launch this brand. Offering 40 shades of foundation, the brand stands for diversity and inclusively.

5. Service Spike: In services, salon sales increased 10.1% and comped 3.2%, driven by average ticket increases. During the quarter, the retailer rolled out a services optimization model to deliver guest satisfaction better than ever before, including updates to menus, pricing, career development and compensation models, as well as additional education and support for salon teams. In skin services, Ulta Beauty rolled out its latest skin care service model, Skin Bar, in 22 stores. This new model offers quicker services and is designed to meet the demands of guests’ busy lifestyles.

6. Ulta.com Stays Strong: E-commerce grew 48%, maintaining strong momentum and representing 10% of total company sales. Total site traffic grew 38%, while mobile traffic was up 52%. Significant growth in e-commerce is coming from brands that are available only online or in limited distribution in stores, as well as from growing use of store-to-door initiatives that allow customers to purchase items online while shopping in stores to be delivered to their home.

7. Category Outlook: David Kimbell, Ulta Beauty’s CMO, said, “As we look across the prestige landscape, there’s definitely changing dynamics as some of the big brand face new competitors from smaller independent brands, and we’re having a lot of success with those and in rolling those out across our portfolio. We see Dose of Colors being one brand that started small and we’re rapidly expanding that, and brands like Storybook, Beauty by POPSUGAR, Dominique Cosmetics, which is online only right now. Then also a brand like Morphe, which kind of spans in between kind of mass and prestige from price and an engagement standpoint. So, we’re taking a holistic push across all aspects of the portfolio and we are optimistic about the collective impact of those changes throughout the rest of the year.”