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Ulta Salon Cosmetics & Fragrance Inc. has been on a tear opening new stores and plans to keep it going, a rare brick-and-mortar expansion as beauty retailers buck retrenchment elsewhere in retail.

On Thursday, the Bolingbrook, Ill.-based company said it plans to increase its store locations to between 1,400 to 1,700, from about 900 now. That is beyond Ulta's previous target of having 1,200 storefronts in the U.S. by 2019. Ulta Chief Executive Mary Dillon said she aims to double the company's market share over the next several years and increase online sales to $1 billion. The company also raised its financial forecasts for the year.

Shares in the beauty-products seller, which were up 29% so far this year before its announcement, gained 11% by midday Thursday to $265.98.

"Our focus is not just all women but the beauty enthusiast. When I say enthusiast, I mean really enthusiastic," she said at a meeting with investors, citing that 77% of Ulta customers own more than 11 lip products.

Ulta, which offers hair-care services and sells beauty products ranging from cheaper drugstore brands to more high-end labels, has been expanding its chain that is largely based in strip malls as other retailers have been closing locations. Wal-Mart Stores Inc. said last week that it would slow new store openings. Macy's Inc. is in the process of shutting 100 stores.

Specialty beauty retailers like Ulta and Sephora have stood out in a sector hurt by dwindling foot traffic. On Monday, French luxury giant LVMH Moë t Hennessy Louis Vuitton SE, which owns Sephora, said its nine-month revenue rose 4% from a year earlier. Cosmetics and perfumes were the strongest division in the period.

Ulta has been adding about 100 new stores a year for the last five years, while revenue jumped to $3.9 billion last fiscal year from $1.8 billion in the fiscal year ending January 2012.

Founded 26 years ago, Ulta has been working to increase its brand awareness. It launched a national TV ad for the first time in September 2015. As YouTube and Instagram celebrities exert more influence in the beauty space, Ulta has moved a larger share of marketing dollars away from print and toward television, radio and digital channels.

The retailer has also been shifting away from broad discounting and toward more loyalty-focused promotions. Its Ultamate Rewards loyalty program, which gives members perks for shopping at the retailer, represents more than 90% of sales.

Stifel analysts estimate that Ulta will double its current 3% share of beauty retail by fiscal 2023, in part due to its expanded assortment of high-end products, growth of its hair salon business and its loyalty program.

In addition to boosting its earnings forecasts for the third quarter and the full year, Ulta also said comparable-store sales, including e-commerce, will come in higher than anticipated, up 14% to 15% in the third quarter compared with a 12.8% increase in the same quarter a year ago.

Write to Khadeeja Safdar at khadeeja.safdar@wsj.com

(END) Dow Jones Newswires

October 13, 2016 15:05 ET (19:05 GMT)

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