IR in Focus | Season 3 | Ep. 3 - Beauty and Business: Kiley Rawlins on Ulta's Investor Relations Strategy

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Carmen [Host]: Welcome back to IR in Focus, the show where we dive into the latest trends and strategies shaping investor relations and corporate issuers. I'm your host, Carmen Lilly. In the next twenty minutes, we'll be diving into IR workflows in the intersection of strategy and investor messaging. With me on this discussion is Kiley Rawlins from Ulta Beauty. Welcome, Kiley.

Kiley Rawlins: Thanks, Carmen. I'm excited to be here.

Carmen: I am so glad to have you on the podcast to have this discussion today with you. Now before we get started, I would like to introduce you to my audience. Kiley Rawlins joined Ulta Beauty in 2019 as vice president of investor relations and was named senior vice president of of investor relations in January of twenty twenty five. Prior to joining Ulta Beauty, Kiley served as vice president of investor relations for the Michaels Companies from 2016 to 2019 and vice president of investor relations for Family Dollar Stores from 02/2005 to 2015. Kiley received a bachelor of science degree in commerce from the University of Virginia, go Hoos, and is a chartered financial analyst. So thank you for being here today, Kiley.

Kiley Rawlins: And thank you for having me.

Carmen: So I wanted to open the conversation with just some light context to introduce you an Ulta Beauty standing in the market. So to kick us off, for those who may not follow Ulta Beauty closely or maybe not familiar with the beauty markets, how would you describe the the company's role in the beauty industry today?

Kiley Rawlins: Yes. So Ulta Beauty is the largest specialty beauty retailer in The US with nearly 1,450 stores and a vibrant digital business. You know, what is really unique about our model and and to the credit of our founders, we you know, when we opened the first Ulta Beauty store nearly thirty five years ago, We brought together, brands normally found at drugstores and brands only found at department stores to create a really unique and elevated shopping experience for beauty. And in addition to the brands and the products, we added services. So we have a full service hair salon in almost every store. We offer brow services, makeup services, skin services, and select stores. And so we really have created a holistic beauty experience with an assortment that includes entry level brands like CoverGirl and Maybelline and e. L. F, all the way to luxury brands like Chanel and Dior and Gucci and everything in between. And and, you know, we've created something unique that our our guests and members really love and and engage with. But I think more most importantly is we have a team of more than 50,000 store and field associates who are passionate about beauty and really love helping our guests find their, you know, products to help them and really be their best selves.

Carmen: I like that. I didn't know that you guys do have, like, salon services within Ulta. I'll have to check that out. And I do like your point on it being kind of like a holistic center around beauty, you know, whether it be hair, face, body. I like that messaging.

Kiley Rawlins: Yeah. The salons and the services that we offer enable us to provide our guests with expertise. Right? So if you, even if you don't have a salon appointment, if you have questions about frizziness or color treated hair or dry hair or curly hair. You know, our salon stylist can help you find the best products for you because they're they're experts in it.

Carmen: Mhmm. I like that. I like that one stop shop with with the experts. It's great. And so you've been part of Ulta's investor relationships leadership team for a little bit now, and then some of your background, you know, you really focused in on consumer retail. So what initially drew you to this role at Ulta Beauty, and what's kept you excited about it?

Kiley Rawlins: Yeah. So I've been engaged in investor relations for a long time. More than twenty five years, I think, if I do the math. And to your point, I've I've always been in in retail. You know, retail is fun. It's dynamic. It's always changing because the consumer is always changing. And I think what drew me to the Ulta Beauty role specifically was just the the the market cap size of the company, you know, it changes every day, but call it 15 to 20,000,000,000. You know, the opportunity to work with a large group of sell side analysts. We have 30 firms that that publish research on us and a focus on investor relations. In my prior roles, both with Family Dollar and Michaels, I focused on investor relations, but also had employee communications and and PR. And so it was more of a communications focus. And so the role at Ulta Beauty gave me an opportunity to really focus on on an investor relation. I think the, you know, beauty is such a fun category. It's innovative. It's growing. There's an emotional connection with the consumer. And so it's a it's a great category to, to be in. But I think also what drew me to the role is the culture and and the leadership team. We have an amazing team all the way from, you know, our our frontline associates who represent the brand every day and help our guests to our leadership team who are driving the strategy. You know, I I think there there is a real commitment to transparency and collaboration and optimism and, you know, a focus on the guest that is pervasive throughout the organization. And that's, you know, really fun, you know, to to work with as a as a consumer retail company.

Carmen: Yeah. Holy mackerel. I didn't know you had 30 covering analysts. That's that really adds quite a dynamic there. And I like your comments around how dynamic the retail space is, and especially when you think about with beauty. Right? You always have you have your very standard idea of beauty. But to your point, it is evolving, and you have all these, like, seasonal pushes as well as I imagine, like, as you adjust and grow. Like, at times, we adjust and grow with each season as well.

Kiley Rawlins: Yeah. I think, you know, beauty is, as I said earlier, dynamic and innovative and personal. Right? I think, you know, what I used and needed and was interested when I was in my twenties and just starting my career is very different than what I need, what I'm interested in, you know, today in my fifties. And so I I think beauty, you know, changes with you as you move through your, you know, various life cycles. To your point, there's also seasonal change. Right? In spring, we like color. We like, you know, things tend to get a little lighter. In the winter, there's more, you know, a jewel palette. I think particularly, you know, in Chicago where I live, the weather is harsh. And so my skin care regimen changes, my hair care regimen changes. And so being able to support guests through all of those changes, whether they're environmental or part of the life cycle, is is really fun. But I think what's also really unique about this category is the entrepreneurship and innovation. I mean, there are we carry in our store today about 600 brands, almost 30,000 products. But every year, we're looking at, you know, two to 3,000 new brands that are coming to market. And, unfortunately, we can't carry all of those brands. But I do think it reflects the innovation and entrepreneurship in this category, which is pretty unique.

Carmen: Yeah. That is crazy unique. I didn't realize how many new makeup and beauty brands really, you know, start up within any given year. That that's really cool. It sounds like Ulta has a really distinctive spot in the retail and beauty space. So tying this back, when you're talking to investors, what do you see as Ulta's biggest competitive edge?

Kiley Rawlins: Yeah. I think, you know, I generally start with our assortment. We have, you know, an unmatched assortment. We carry products across makeup and skin care and fragrance and hair care at all types of price points. Right? Entry level price points to luxury and everything in between. And so that enables us to meet our guests where they are from an age, from a demographic, from a financial, standpoint to help them find really the best solutions for them. Our our associates aren't tied to a specific brand. We train them and educate them on all of our brands so they can they can help our guests find, what they need. So the breadth of assortment is unique within the category. And then I think because we bring together both a a significant footprint, you know, more than 1,400 stores across The US, plus a digital platform and app that includes virtual try on and skin analysis tools. You know, we're really focused on bringing the two together to create an omnichannel experience for our guests that is curated and personalized. We combine the, products and the experience with our loyalty program, which is, you know, loved by our our members because it's so easy to accumulate points and spend points. But I think beyond the, you know, the operational fundamental, I'd say, you know, we no one does what we do. We bring together beauty expertise and guidance and support with that human connection, and we really strive to create a welcoming, inclusive experience for our guests in our stores and across our digital platforms. We often say, you don't have to put on makeup to come shop for makeup at Ulta Beauty. And so that's, you know, a unique positioning for us.  I think from an investor standpoint, we have a really strong financial foundation. We lease all of our stores, but other than those obligations, we don't have any leverage on our balance sheet, and we have a strong, stable cash flow. And so that really gives us a lot of flexibility to invest in the business and to to expand our reach.

Carmen: Thank you. I really like how you kind of married those those two pieces together in terms of thinking about, you know, how Ulta Beauty and some of the programs that you're doing makes it stand out, but then tying that back to, well, how do I communicate that to investors and thinking about, you know, the fundamentals? I like how you paired those two together. You knocked out, like, two two of my questions in one. So thinking I'm maybe going honing in a little bit more around investor discussions. So things like sustainability, governance, diversity inclusion, which you mentioned are huge conversation points for investors today, and those conversations have spilled into policy and regulatory discussions as well. And then, also, another side of this, you pair this with inconsistent messaging from the administration on policies that directly impact corporations. I'm mainly thinking things like tariffs. Right? So that it we are coming off of a week where we saw wild swings based off the news that you heard from tariffs on, tariffs are off, tariffs are on, but they're lower. So the market's reacted appropriately, and it's quite messy in the markets right now. So how is Ulta given given all of these different things that are going on with the market, how is Ulta thinking about those priorities, and how do they come up in your investor discussions?

Kiley Rawlins: It's a great question, and you're you're right. The operating environment is really dynamic right now. I I think maybe we'll split the the conversation into two points. I think one, on the, you know, ESG and and diversity and and inclusion part of, the question. I think we have to always come back to the business and the strategy and what makes sense for our business and our objectives and and goals. Beauty is such a personal category. What works for me and what I like is gonna be very different than what you're looking for, what works for you, or what you like. You know, hair texture, and length, and color, and skin tone, and elasticity, and, you know, it's just it's very personal.  And we want to make sure that all of our consumers and guests feel welcomed and like they belong at Ulta Beauty. And so diversity and inclusion is part of our strategy. It's critical to enabling us to drive market share growth and revenue growth. And so we continue to lean into inclusion and belonging and diversity because it's an important part of this category and an important diversity because it's an important part of this category and an important part of our our strategy. I think we also have to, you know, be thoughtful about, you know, other parts at ESG that that don't make sense for our business. You know, I think we're very focused on energy and and risk management and, you know, in the beauty category and specifically, there's a lot of opportunity to reduce waste from a packaging standpoint. So, again, you know, we're leaning into those areas that make sense for our business. On the Terra side, it is, again, a very dynamic environment. And I think what we try to do is, you know, stay calm and focus and understand that it's continuing to evolve and make sure that we're not getting ahead of our skis, so to speak. We are a house of brands, and so our direct import exposure is pretty limited. But we have 600 brands who manufacture and have supply chains all over the world. And so we need to work with them to understand how are they thinking about the impact of tariffs, what choices are they making, and, ultimately, how do we make sure that we're limiting the impact on the guest? I think we really try to take a partnership approach with our brands. We actually call them brand partners and and really try to take a win win approach and work collaboratively with them in the service of our guests. And so we're gonna continue to work closely with them as they navigate, you know, some of these challenges. But I think from an investor standpoint, what we try to do is just, you know, stay focused on the long term, understand that it's dynamic, and that our brands will make choices and evolve as the evolve environment evolves and and just continue to provide clarity when we can.

Carmen: Yeah. Absolutely. I do like how you're leaning on the word dynamic as well. It definitely is a dynamic market right now, and I feel like folks are kind of to your point, I think folks are kinda getting tired of the whiplash as well because there's too there's almost, like, too much to pay attention to. But to your point, just really honing in on what is important to my company, you know, and how are we impacted by some of these major changes that are that are being released through the news is really a good place to to stay. Right? And stay and sit and just bring it back to, okay, what does this mean for my corporation? And since you sounds like you guys have a really in-depth, integrated, and strong strategy that it's really easy to just kinda lean back on that. Be like, hey. That's my North Star. There's a lot going in markets right now, but we gotta lean in, on our strategy because we we believe in it.

Kiley Rawlins: Yeah. No. I think that's that that's absolutely right. I think dynamic is a much better word than volatile. I think both are true. But I think the you know, when the short term is so unpredictable, you have to stay focused on the on the long term and what you're trying to achieve and deliver for your guests, your associates, and your shareholders.

 Carmen: Mhmm. Absolutely. Well, you mentioned earlier that you have 30 analysts covering you. That's an it's, like, a crazy amount. It's well, actually, let me say this. It's a healthy amount. So when you think about your conversations with TheStreet and kind of managing those relationships, what's the biggest thing investors care about in Ulta's story right now, and how has that changed over time?

Kiley Rawlins: Well, I I think the biggest area of focus, of course, is the short term impact on tariffs, the rising concerns about possible recession later this year and how all of that impacts our operations and also our consumer. I think beauty is a category. I often say beauty is not immune to economic challenges, but it is pretty resilient. And again, that comes back to the emotional connection with the category, the accessible price points. When everything around you is crazy, the focus on self care or the a great red lipstick or a great hair day can go a long way to, you know, building confidence and and and calm. And so I I think, you know, it's beauty is a is a a good category to be in in in the midst of of, uncertainty. I think for Ulta Beauty specifically, in addition to the broader questions, I think, you know, how do we maintain our competitiveness? How are we driving share? What makes us different than other beauty retailers? How are we thinking about, you know, expanded distribution? All of those operational questions are pretty consistent, I'd say, over time. And so today, the questions are a little bit different, but the topics are very similar. Competitive positioning, growth plans and objectives, and market share expectation.

Carmen: I gotcha. And then when dealing with investors so we opened up this podcast, and I was trying to give our listeners just a little bit more context into Ulta Beauty and then kinda dive into, you know, your your the investment story. And I I realized not all investors may may get that basic understanding. So it had me thinking about, you know, what you think that investors sometimes miss or might misunderstand about Ulta Beauty.

Kiley Rawlins: I think what is one of our challenges from an investor relations standpoint is that many of the investors that we talk to don't engage with the category very much. And so we often talk about our target customer being a beauty enthusiast, someone who is passionate about beauty. For them, it's not about need. It's about want. I can't tell you how many mascaras I have or serums I have or lipsticks I have in my stash because it's not about need. It's about what's the newest launch from E. L. F. Or Chanel or Drunk Elephant that I wanna try. And so helping investors understand the mindset of our guest can be challenging. I think the, you know, other elements that we talked about earlier, the innovation in the category, the number of brands that exist and are coming to market every day. Because beauty is so personal, I what we see often is an entrepreneur, you know, will make something because they can't find a solution in the market. And so we have brands that we launched that have five products, six products, 10 products because they found a niche that no one else is paying attention to. And so that that innovation is a a a really exciting part of the category, but again, it's unique to beauty, the number of brands that that come to market every day. And so I think helping investors understand those elements and how then they play into assortment decisions, consumer behavior, frequency, basket build, all of those things. Right? But understanding the, you know, key dynamics from a consumer standpoint and a category standpoint is usually where I start.

Carmen: Awesome. That's great. Thank you for explaining that. It's very helpful. So we're running up on on time today. So I always like to close these podcasts with just one last piece of advice. So for the IRO pros listening, what's one piece of advice that you would give our listeners today?

Kiley Rawlins: So I I'm gonna, I have three, actually. One is be a student of your business. I think I'm constantly learning about our business, about beauty, about our consumers, and I think that enables me to have credible detailed conversations with investors and and build build that trust. I think second, and we all know this, but I think it's it's helpful to be reminded. The folks that we talk to often or less frequently don't know our business. Right? They are following multiple companies. I think a stat that I've seen was the average buy side analyst or portfolio manager is covering more than a hundred company. That's a lot of detail to to keep up with, so be patient. And then I think third, never burn bridges. I've been in as I said earlier, I've been in the, IRC for more than twenty five years, and people move around. People, you know, come and go. And I think maintaining those relationships and that trust and credibility is really important in a, you know, an industry that that continues to, you know, evolve.

Carmen: Thank you for that. I'm definitely jotted your advice down. But in terms of your your last piece, never burn bridges, I just wanted to comment that, you know, I'm not an IRO, but I do go to a lot of, like, the near events and as well as a local chapter here, the Rocky Mountain events. And you're right. It is a it's a tight community. Right? And it's it's just even attending these events, I feel like I've created a really good network of of of folks and colleagues and and people that I I run into, like, all of the time at at these events and within this space. So I like that piece of advice there.

Kiley Rawlins: One of the things that I love about investor relations is the camaraderie, right, and the willingness to help and share experiences and, and network. I think it is a a unique element of of this role.

Carmen: Yeah. Absolutely. Well, thank you so much, Kiley, for joining us today. That is all the time that we have. Thank you for listening. If you guys have any topics you would like covered, you can reach out via carmen dot lilly at s p global dot com. I'm always on the lookout for new topics and ideas and feedback into the podcast, so happy to take those. Until next time, happy listening.