Ulta’s delay in opening a Jacksonville center won’t affect incentives

The city approved $1.425 million in January 2019 for the center to open by year-end 2021.

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Ulta Beauty Inc.’s delay in opening its Jacksonville e-commerce fast fulfillment center won’t affect its economic incentives agreement with the city.

Ulta Beauty notified the city Office of Economic Development in January about its intent to delay the opening from summer 2020 until 2021.

James Croft, assistant director of public affairs, said April 8 that Ulta Beauty remains within the terms of its economic development agreement.

The agreement says the company had to start construction by the end of 2019, which it did, and complete the project by the end of 2021.

Ulta has until the end of 2021 to have at least 30 jobs at the facility.

“In short, this delay does not affect the approved incentives,” Croft said.

Ulta Beauty announced Dec. 5 that it will delay opening its North Jacksonville fast fulfillment center until 2021, a decision made before the COVID-19 pandemic. 

The beauty supplies company announced the decision as it reprioritized its spending plans. 

The company distributes and sells cosmetics, fragrances, skin care products and hair care products through its stores, including seven in Northeast Florida, and its website.

The coronavirus is affecting its operations, though. Its retail locations are closed because of the pandemic.

Ulta Beauty is based in Bolingbrook, Illinois, near Chicago. As of Feb. 1, Ulta Beauty operated 1,254 retail stores across 50 states and also distributes its products through its website.

CEO Mary Dillon announced the Jacksonville delay during Ulta Beauty’s third-quarter earnings conference call Dec. 5.

Dillon said Ulta Beauty was working through its 2020 planning process and prioritizing its investment agenda “for a year that’s likely to remain challenged from a top-line perspective, given the headwinds facing the cosmetics category.”

She said that while Ulta Beauty had not finalized its decisions, “we have decided to delay the opening of our Jacksonville fast fulfillment center until 2021.”

The city issued a permit in July for Ulta Beauty to build-out a fulfillment center at 2619 Ignition Drive in the Park 295 Industrial Park at Interstate 295 and Duval Road. City permitting records show it approved at least $10 million in improvements for Ulta Beauty.

Ulta Beauty will lease 202,471 square feet of a 552,634-square-foot building.

Dillon announced in March 2019 that the retailer would open a fulfillment center in Jacksonville to serve its e-commerce business.

In May 2019, the city confirmed that Ulta Salon, Cosmetics & Fragrance Inc. was Project Flamingo, which City Council approved Jan. 8, 2019, for a city grant of $1.425 million.

Ulta Beauty intends to invest $37.5 million to lease and equip the center to distribute private-label skin and hair care products.

City legislation calls for the project to create 30 full-time jobs by year-end 2021 at an average annual salary of $46,346.

The positions include managerial, logistical, warehouse, receiving and shipping, forklift operators, truck drivers and support staff.

The company likely will hire more workers because only the 30 jobs are tied to the required annual salary to receive the incentives. Lower-wage warehouse jobs are not counted toward the salary threshold.

In addition, public documents say the company could hire 400 seasonal workers annually.

Fast fulfillment centers serve only e-commerce orders. Dillon said the facilities will be able to fill up to 30,000 orders per day during peak times, “increasing our network capacity and progressing toward our goal of two-day e-commerce shipping by 2021.” 

As COVID-19 spread, Ulta Beauty began adjusting its business operations.

On March 17, Dillon said on the company website that it was temporarily closing its Ulta Beauty stores across the U.S. as of 6 p.m. March 19. Customers still can shop online.

On April 2, Dillon said that in response to COVID-19, Ulta Beauty is reducing expense plans, suspending new hires, deferring merit pay increases for all corporate and store associates; reducing capital spending plans, particularly as it relates to new store openings, relocations and remodeling; and suspending its stock repurchase program.

On April 8, Dillon announced in a news release that Ulta Beauty will temporarily furlough many of its store and salon associates effective April 19, intending to bring them back when safe to do so.

Ulta Beauty said that in the interim, furloughed associates will be eligible to apply for unemployment benefits and affected employees participating in company benefit plans will remain enrolled in their respective coverages. 

The release said Dillon decided to forgo her base salary indefinitely and made a personal donation of $500,000 to the Ulta Beauty Associate Relief Program, which is part of the Ulta Beauty Charitable Foundation. The Ulta Beauty executive team and board will each make personal donations as well.

Associates at Ulta Beauty’s five distribution centers will continue on the job “to support the company’s essential e-commerce business.”

Ulta Beauty is providing associates actively working at the distribution centers a $2-per-hour wage premium for their continued commitment, it said.

Ulta Beauty also will donate 450,000 medical-grade gloves from its salons to hospitals across the country in collaboration with the Federal Emergency Management Agency.



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