Ulta Beauty Q2 Earnings Call Highlights

Key Points

• Ulta delivered strong second-quarter results, with net sales up 8.9% to $3 billion, operating profit up 10.1%, and diluted EPS rising 13.3% to $6.55. Comparable sales increased 3.8%, supported by higher average spending and a loyalty program that reached roughly 47 million active members.
• Growth was led by fragrance and haircare, while makeup was approximately flat and skincare and wellness declined modestly. E-commerce sales grew in the high teens for the sixth consecutive quarter, and Space NK continued to expand internationally.
• Ulta raised its fiscal 2026 outlook to 6.7%-7.2% net sales growth and diluted EPS of $28.70-$29.00, while increasing its annual stock-repurchase target to $1.8 billion. Management remains cautious about consumer value sensitivity and broader macroeconomic pressures in the second half.

Ulta Beauty NASDAQ: ULTA reported second-quarter fiscal 2026 results that included 8.9% net sales growth, 10.1% operating profit growth and a 13.3% increase in diluted earnings per share, prompting the beauty retailer to raise its full-year sales and earnings outlook.

Chief Executive Officer Kecia Steelman said the company generated 3.8% comparable sales growth during the quarter, increased active loyalty-program members by 3% and saw higher average spending per member. Ulta’s loyalty program reached about 47 million active members.

“Our sales outpaced the U.S. beauty market in a dynamic environment,” Steelman said, adding that the company gained share in prestige beauty while maintaining flat share in mass beauty, according to Circana.

Quarterly Financial Results

Net sales rose to $3 billion from $2.8 billion a year earlier. Excluding the impact of Space NK, the U.K. and Ireland beauty retailer Ulta acquired, total sales increased in the mid-single-digit range, Chief Financial Officer Chris DelOrefice said.

Comparable sales growth was driven by average ticket, largely reflecting category-mix shifts, while transactions were roughly flat from the prior year. E-commerce posted high-teens sales growth, marking Ulta’s sixth consecutive quarter of double-digit digital growth, while comparable-store sales increased modestly.

Ulta opened 13 net new U.S. stores and one new Space NK location during the quarter. More than half of e-commerce orders were fulfilled through its network of more than 1,500 store locations.

• Gross margin was 39.1% of sales, compared with 39.2% a year earlier, primarily due to the Space NK business mix.
• SG&A expense increased 8.2% to $803 million, though it declined to 26.4% of sales from 26.6% a year earlier.
• Operating profit rose to $380 million, with operating margin improving to 12.5% from 12.4%.
• Net income increased 8.1% to $282 million.
• Diluted earnings per share rose to $6.55.

DelOrefice said gross-margin management benefited from lower shrink, supply-chain productivity and preserved merchandise margin, partly offsetting channel-mix effects, higher fuel costs and slower growth in other revenue.

Category Performance and Merchandise

Fragrance was Ulta’s strongest category, producing high-teens comparable sales growth. Management cited Mother’s Day and Father’s Day campaigns, new launches and continued strength in luxury brands including Prada, Carolina Herrera and YSL. The company also launched fragrances from Drake’s Better World Fragrance House, Khloé Kardashian, Megan Thee Stallion and Viktor&Rolf.

Haircare generated high-single-digit comparable sales growth, supported by prestige haircare, treatments and hair tools. Newer brands Amika and Moroccanoil, as well as Cécred, contributed to prestige haircare performance, while Shark and T3 supported growth in hair tools.

Makeup comparable sales were approximately flat. Prestige makeup grew at a low-double-digit rate, aided by launches from Charlotte Tilbury and Half Magic and continued momentum from Rare Beauty. However, mass makeup declined in the low-single-digit range as certain brands lapped major new-product introductions from the prior year.

Steelman said the company sees potential “green shoots” in makeup for the second half, citing consumer interest in more expressive eye looks and a fuller-face makeup routine, as well as planned new launches in both mass and prestige products.

Total skincare and wellness sales declined modestly, as growth in prestige and mass skincare and double-digit wellness growth was more than offset by lower body-care sales. Ulta said K-beauty sales increased at a robust double-digit rate, with nearly half of the category’s sales coming from exclusive brands or products. The company added five K-beauty brands during the quarter and said it also sees opportunity in broader global beauty trends, including Chinese beauty.

Digital, Marketplace and International Expansion

Ulta said its TikTok Shop initiative generated more than 100 million impressions since launch. The retailer used its Chelsea, New York, store as a live-shopping studio and added brands to the social-commerce platform, including a live celebrity fragrance launch with rapper Ice Spice.

The company’s marketplace assortment ended the quarter with more than 450 brands and over 12,000 SKUs. Management said the marketplace has helped attract new and reactivate lapsed loyalty members while supporting growth at Ulta’s UB Media advertising business. UB Media posted double-digit growth from the second quarter of 2025, supported by connected-TV offerings and spending by core and marketplace brands.

Internationally, Space NK continued to report robust sales growth and market-share expansion, according to Steelman. Ulta also opened a store in Chiapas, Mexico, bringing its total store count there to 12. Its Middle East franchise partner, Alshaya Group, is progressing on additional stores planned for later this year, though Ulta said it is navigating geopolitical conditions in the region alongside the partner.

Outlook and Capital Returns

Ulta raised its fiscal 2026 outlook and now expects net sales growth of 6.7% to 7.2%, with comparable sales growth of 3.2% to 3.7%. The company expects operating profit growth of 8.3% to 9.3% and diluted EPS of $28.70 to $29, representing annual growth of 11.9% to 13.1%.

For the second half, Ulta expects net sales growth of 4% to 5% and comparable sales growth of 2% to 3%, while maintaining an expectation of market-share gains. Management said the outlook reflects both the company’s first-half results and caution about an evolving macroeconomic environment, including consumers’ focus on value and higher everyday costs.

Ulta ended the quarter with $213 million in cash and short-term investments, $340 million in short-term debt and $2.4 billion in inventory. It repurchased $236 million of stock during the quarter, bringing year-to-date repurchases to $791 million. The company raised its fiscal-year buyback target to $1.8 billion and said it expects to complete its current board authorization during fiscal 2026.

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.

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