Ulta Beauty (NASDAQ:ULTA) capped fiscal 2025 with what management described as “record-breaking holiday performance,” delivering fourth-quarter results that exceeded internal expectations while continuing to invest in guest-facing initiatives tied to its “Ulta Beauty Unleashed” strategy. Chief Executive Officer Kecia Steelman said the company ended the year “strong,” with continued market share gains in both mass and prestige beauty and high guest engagement across stores and digital channels.
Fourth-quarter results and holiday performance
For the fourth quarter, Chief Financial Officer Christopher DelOrefice said net sales rose 11.8% year-over-year to $3.9 billion. Comparable sales increased 5.8%, driven by a 4.2% increase in average ticket and a 1.6% increase in transactions. DelOrefice said comp performance was “fairly consistent” through the quarter, aided by a strong holiday season and the benefit of lapping softer results in January of the prior year, though he noted some weather impact late in January.
Steelman highlighted the impact of major promotional events including Black Friday, Cyber Monday, and post-holiday events such as Love Your Skin and Jumbo Love. She credited strong in-store and digital execution, marketing campaigns, and a gift-oriented assortment for the holiday strength. Steelman also pointed to recent distribution center upgrades that improved delivery speed and enabled faster store restocking.
Category performance and assortment changes
DelOrefice said category mix shifts in the quarter were influenced by Space NK, which carries a higher skincare mix than Ulta Beauty’s core business. Skincare and wellness increased to 24% of sales, while makeup decreased to 35% of sales.
- Fragrance: The strongest-performing category again, delivering double-digit comparable growth. Management cited newness from established brands such as YSL and Prada, exclusive brands including Noise, Snif, and “Summer Mink by Drake,” and strong holiday gift set demand. DelOrefice said co-branded TV campaigns, expanded store space, and improved in-stocks helped position Ulta Beauty as a fragrance destination.
- Haircare: Posted its best comparable performance of the year, with high single-digit comp growth. DelOrefice attributed results to brands including Amika and Moroccanoil and to the continued momentum of Céccred following its April launch.
- Skincare and wellness: Delivered mid-single-digit comparable growth, driven by prestige skincare and K-beauty brands including Medicube, Anua, and Peach & Lily, as well as brands such as Dermalogica and Personal Day. In wellness, DelOrefice pointed to giftable launches from Therabody, Nodpod, and Saje (exclusive to Ulta Beauty).
- Makeup: Grew low single digits, with management saying the company gained market share in the category. Mass makeup was supported by newness from L’Oréal, Morphe, and Ulta Beauty Collection, while prestige benefited from newness from Kylie Cosmetics and MAC.
- Services: Delivered mid-single-digit comp growth, driven by salon and specialty services including ear piercing and makeup services.
Steelman said the company added more than 100 new brands during fiscal 2025, including Moroccanoil, Amika, Medicube, Anua, Drake’s Better World fragrance, and TIRTIR, among others. She also cited collaborations with brand partners on innovation and a revised go-to-market approach aimed at tighter coordination between merchandising, marketing, and store teams.
Margins, expenses, and shrink initiatives
Fourth-quarter gross margin declined 10 basis points to 38.1% of sales. DelOrefice attributed the decline primarily to channel mix and deleverage of store fixed costs and other revenue, partially offset by lower inventory shrink and leverage of supply chain fixed costs tied to optimization efforts.
SG&A in the quarter increased 23% to $1.0 billion, with DelOrefice citing higher incentive compensation—“including rewarding our frontline and field associates”—as well as the impact of Space NK and strategic investments. As a percentage of sales, SG&A increased 230 basis points to 25.7%. Operating profit was $477 million, or 12.2% of sales, and diluted earnings per share were $8.01.
DelOrefice repeatedly emphasized progress in reducing shrink. He said efforts including fixtures and process improvements, targeted actions in high-risk markets, and associate training resulted in shrink reductions “across every category,” generating benefits throughout the year.
Full-year performance and strategic highlights
For fiscal 2025, Steelman said Ulta Beauty grew net sales nearly 10% to $12.4 billion, generated operating income of $1.5 billion (12.4% of sales), and delivered EPS of $25.64. DelOrefice reported net sales increased 9.7%, with comparable sales up 5.4% driven by a 3.3% average ticket increase and a 2% transactions increase. Full-year gross margin increased 30 basis points to 39.1% of sales, supported by lower shrink and higher merchandise margin, partially offset by channel mix and deleverage of other revenue.
Ulta Beauty ended the year with 1,505 Ulta Beauty stores and 86 Space NK stores. During the year, the company opened 63 net new stores, relocated six, and remodeled 42. The fourth quarter included five new stores and 18 remodels, plus two new and one relocated Space NK store.
Steelman said the company’s loyalty program grew 5% to a record 46.7 million active members. She also said approximately 60% of online sales were made through the app, with active app users up 15% year-over-year. Management cited improving net promoter scores, increased transactions, and market share gains in mass and prestige.
On capital allocation, DelOrefice said the company finished the year with $494 million in cash and short-term investments and $62 million in short-term debt related primarily to Space NK. Inventory rose 10.8% to $2.2 billion due to new brands, Space NK, and store growth, along with deliberate investments to improve in-stocks. Operating cash flow exceeded $1.5 billion, funding $435 million in capital expenditures and $890 million in share repurchases.
Fiscal 2026 outlook: growth, profit, and new initiatives
Looking ahead, management said it expects the beauty category to grow in line with historical averages, with Steelman citing an expected 2% to 4% growth range, while noting consumer resilience alongside a focus on value and affordability. She said the company is “increasingly mindful” of rising global conflicts that could affect economic conditions.
For fiscal 2026, DelOrefice guided to net sales growth of 6% to 7%, with comparable sales growth of 2.5% to 3.5%. For modeling purposes, he said net sales are expected to be $13.1 billion to $13.2 billion, driven primarily by comps and the addition of 50 to 60 net new company-operated stores. He said the company anticipates stronger sales growth in the first half due to Space NK and easier comparisons in the first quarter.
DelOrefice said gross margin is expected to be approximately flat, as higher merchandise margin from improved inventory productivity is likely to be offset by deleverage in store fixed costs and other revenue. SG&A growth is expected to be in line with to slightly below net sales growth and “significantly lower” than fiscal 2025, supported by productivity programs and investment prioritization. He added that SG&A growth is expected to be double-digit in the first half, as the company cycles the Space NK acquisition and annualizes investments later in the year.
Operating profit is expected to increase 6% to 9%, with operating margin flat to up 20 basis points. DelOrefice guided diluted EPS to $28.05 to $28.55, representing growth of 9.4% to 11.4%, including share repurchases and an assumed tax rate of 24.2% to 24.4%.
Management also outlined several operational and strategic initiatives for 2026. Steelman said Ulta Beauty will launch on TikTok Shop with a curated assortment of “Only at Ulta” brands. The company plans to continue international expansion through existing partners, expand wellness and marketplace assortments, and add UB Media capabilities. On the supply chain, Steelman said Ulta Beauty plans to begin construction of a new regional distribution center in the Northwest later in 2026, though she noted it will not be operational until 2027. DelOrefice guided capital expenditures of $400 million to $450 million for 2026.
In Q&A, management said it is planning for a “normalized” pricing environment, with typical annual pricing increases affecting about 10% to 15% of the assortment, and said it is not building elevated promotionality into plans. Steelman also said early response to the Rare Beauty launch has been “very strong,” while emphasizing it is one brand within a much broader portfolio.
About Ulta Beauty (NASDAQ:ULTA)
Ulta Beauty, Inc (NASDAQ: ULTA) is a U.S.-based specialty retailer and beauty services provider focused on cosmetics, fragrance, skin care, hair care, bath and body, and beauty tools. The company operates a dual-format business that combines brick-and-mortar retail stores with an e-commerce platform, offering a broad assortment of national, prestige and mass-market brands alongside its own private-label products. In many locations Ulta also provides full-service salon treatments, positioning the company as a one-stop destination for product discovery and in-store services.
The retailer’s product mix spans color cosmetics, haircare and styling products, skin and body care, fragrance, and accessories, catering to a wide range of consumer preferences and price points.
