Ulta Beauty on Thursday raised its full-year forecast, after reporting growth in all major categories and topping Wall Street’s quarterly sales expectations.
The beauty retailer said it expects net sales of between $12 billion and $12.1 billion, up from its previous range of $11.5 billion and $11.7 billion, representing an increase from last fiscal year’s net sales of $11.3 billion. It expects earnings per share of $23.85 to $24.30, up from its previous range of $22.65 to $23.20.
It expects comparable sales, a metric that takes out one-time factors like store openings and closures, to grow between 2.5% to 3.5%, up from projections of as much as 1.5%. The company had raised its annual profit forecast and the upper end of its full year sales range in May.
In the company’s news release, CEO Kecia Steelman said its outlook for the year “reflects both the strength of our year-to-date performance and our caution around how consumer demand may evolve in the second half of the year.”
Shares of Ulta gained about 3% in extended trading, after earlier hitting a 52-week during the regular session.
Here’s what the company reported for the fiscal second quarter compared with what Wall Street expected, according to LSEG:
- Earnings per share: $5.78. It was not immediately clear if that was comparable to the $5.08 expected by analysts.
- Revenue: $2.79 billion vs. $2.67 billion expected
In the three-month period that ended August 2, Ulta’s net income rose to $260.88 million, or $5.78 per share, from $252.6 million, or $5.30 per share, in the year-ago period. Revenue increased from $2.55 billion in the year-ago quarter.
Beauty has remained a hot category for consumers, even as they pull back or watch their spending in other discretionary categories. Yet that’s fueled tougher competition for Ulta Beauty as specialty players like LVMH-owned Sephora, big-box retailers like Walmart and department stores like Kohl’s have all bulked up their beauty businesses.
For investors, tariffs have been a closely watched challenge for retailers, too. Compared to other retailers, Ulta is not as directly exposed. Only about 1% of the company’s merchandise last fiscal year was direct imports, then-CFO Paula Oyibo said in May on the company’s earnings call. She said at the time most of Ulta’s exposure to the higher duties was minor, such as store fixtures and supplies.
Even in tumultous economic times, Steelman said beauty and wellness tend to fare better because they “offer a unique sense of comfort and escape.”
“Our insight suggests consumers continue to prudently manage their day-to-day spending and are watchful of pricing trends in response to tariffs,” she said on the earnings call. “At the same time, beauty enthusiasts tell us that they’re prioritizing their beauty regimens and remain strongly engaged within the category.”
In the second quarter, Ulta’s comparable sales grew 6.7% year over year, more than double analysts’ expectations, according to StreetAccount.
Customers visited more and spent more when they shopped on Ulta’s website and in its stores compared to the year-ago quarter. Transactions rose by 3.7% and average ticket increased by 2.9%.
Ulta added new brands and products that drove purchases in the quarter, including more products from Sol de Janeiro, exclusive Korean beauty brand Peach & Lily and Shakira’s hair care brand, Isima, Steelman said on the company’s earnings call.
Plus, she said, it’s trying to reach more of its existing and prospective customers in new ways. It had an activation at the Coachella and Lollapalooza music festivals and was the official beauty retail partner of Beyonce’s Cowboy Carter Tour.
In a growing number of Ulta stores, it is dedicating space to wellness-related products, such as supplements. It has opened a wellness shop in about 370 stores and plans to expand them to more stores this quarter, Steelman said.
Along with attracting more customers in the U.S., Ulta has looked internationally for growth. It announced in July that had acquired Space NK, a British beauty retailer, from Manzanita Capital. The deal allows Ulta to enter a new international market, since Space NK has 83 stores in the United Kingdom and Ireland.
Ulta did not disclose the price of the acquisition, saying it funded the transaction with cash on hand and Ulta’s existing credit facility and that it would not be material to financial results for the fiscal year.
For Ulta, Space NK offered a less expensive way to enter a new market, Steelman said. Its business, which will continue to operate independently, could offer learnings that could shape Ulta’s strategy, she said. Compared to Ulta, its shops tend to be smaller, located on main streets in cities and sell primarily prestige beauty merchandise.
The company is expanding in other international markets, too. Ulta recently marked the soft opening of its first Ulta store in Mexico and it plans to open its first store in the Middle East later this year, Steelman said Thursday on the company’s earnings call.
Ulta is also introducing a third-party marketplace, which Steelman said will launch in the third quarter. A growing number of retailers, including Best Buy, are launching the marketplaces a way to expand the mix of merchandise they carry without needing more store shelf space or buying more of their own inventory.
At the same time, Ulta recently announced the end of one of its efforts to expand reach. It cut ties with Target, which had opened mini Ulta shops in more than 600 big-box stores. The licensing deal, which will end in August 2026, allowed Target to sell a smaller and rotating assortment of makeup, skincare, hair care products and more that are carried by the full Ulta stores. Target carried those items on its website, and it staffed the shops.
For Ulta, however, the Target deal contributed little to its finances, Steelman said. Royalty revenue from the deal last fiscal year “was well below 1% of net sales,” she said on the company’s earnings call.
Ulta is looking for a new CFO as well. The company’s former CFO, Oyibo, left Ulta in late June after about a year in the role. Ulta has not yet announced her permanent successor.
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