Ulta Beauty, Inc.
Ulta said mass makeup was hurt by limited newness and tougher comparisons, but sees potential second-half recovery from stronger makeup trends and new launches.
Earnings Snapshot
Comparable sales rose 3.8%, driven by higher average ticket. Loyalty members grew 3%, and average spend per member increased in the quarter.
Gross margin stood at 39.1% versus 39.2% last year. Operating profit increased 10.1% year over year to $380 million, and operating margin rose to 12.5% from 12.4% a year ago.
Ulta ended the quarter with $213 million in cash and short-term investments and $340 million in short-term debt.
Inventory was flat at $2.4 billion, while inventory per store declined 4.1%.
Share Buyback Boost
The company repurchased shares worth $236 million in the quarter, bringing year-to-date buybacks to $791 million.
As of August 1, 2026, the company had $1.0 billion remaining under Ulta Beauty's $3 billion buyback program announced in October 2024. The company expects to use the remaining authorization by the end of fiscal 2026.
Ulta also increased its FY2026 share buyback plan to $1.8 billion from $1.5 billion.
Business Performance
Fragrance posted high-teens comparable sales growth, hair care grew high-single digits and makeup was roughly flat. Skincare and wellness declined modestly, though wellness grew double digits.
Services increased in mid-single digits, while K-Beauty sales rose in the double digits, with nearly half coming from exclusive brands or products. Ulta added five K-Beauty brands and 15 brands overall, including Bath & Body Works, Frenchie and Junoco.
Ulta opened 13 net new U.S. stores and delivered its sixth consecutive quarter of double-digit e-commerce growth, with Q2 online sales rising in the high-teens.
More than 50% of online orders were fulfilled through its 1,500-plus stores in the quarter. TikTok generated over 100 million impressions, while the company held more than 40,000 in-store events.
Outlook
The company raised fiscal 2026 EPS guidance to $28.70-$29.00 (versus consensus of $28.94) from $28.36-$28.80 and sales guidance to $13.223 billion-$13.285 billion (versus estimate of $13.209 billion) from $13.136 billion-$13.260 billion.
The company raised its net sales growth outlook to 6.7%-7.2% and comparable sales growth to 3.2%-3.7% for the fiscal year.
For the second half of fiscal 2026, Ulta expects sales growth of 4%-5%, including comparable sales growth of 2%-3%, with two-year stacked comps above 8%. Operating profit is expected to grow 6%-8% and diluted EPS 9%-12% in the second half.
The company projects third-quarter comparable sales to be lower than in the fourth quarter due to seasonality and planned investments ahead of the holiday period.
ULTA Stock Price Activity: Ulta Beauty shares were down 2.11% at $528.70 during premarket trading Friday, as per Benzinga Pro.
