Ulta Beauty Lifts Guidance as Net Sales Surge and Store Expansion Continues
Net Sales Up Nearly 13%, E-Commerce and In-Store Initiatives Fuel Growth
Ulta Beauty reported third quarter results showing net sales rose 12.9% year-over-year to $2.86 billion, building on comparable sales gains of 6.3%. The company credited an increase in both transaction volume (+2.4%) and average ticket size (+3.8%) for this performance, highlighting strength across physical locations and e-commerce.
CEO Kecia Steelman noted that a refreshed product assortment and improved shopping experience are resonating with guests. These results come despite continued consumer caution ahead of the holiday season, showing that Ulta’s efforts in digital innovation and marketing are delivering real market share gains.
Profit Margins Steady Despite Higher Costs
Gross profit margin increased to 40.4% (up from 39.7% a year ago), mainly due to lower inventory shrink and improved merchandise margins. Selling, general, and administrative (SG&A) expenses rose 23.3% to $840.9 million, reflecting higher store payroll, incentive compensation, and investments in cloud-based systems.
Operating income slipped slightly as a percentage of sales (10.8% vs. 12.6% prior year) due to the cost increases. Net income for the quarter stood at $230.9 million, with diluted EPS unchanged year-over-year at $5.14.
| Key Financials | Q3 2025 | Q3 2024 |
|---|---|---|
| Net Sales | $2.86B | $2.53B |
| Gross Profit (%) | 40.4% | 39.7% |
| Operating Income (%) | 10.8% | 12.6% |
| Diluted EPS | $5.14 | $5.14 |
Guidance Raised for Fiscal 2025—Sales, Margin, and EPS Targets Move Higher
Building on a robust year-to-date performance, Ulta raised its full-year guidance. The company now expects net sales of about $12.3 billion (vs. $12.0-$12.1 billion previously) and higher comparable sales growth (4.4-4.7% vs. 2.5-3.5% before). The operating margin outlook increased to 12.3-12.4% and diluted EPS is now projected between $25.20 and $25.50, up from a prior range of $23.85 to $24.30.
| Outlook Metric | Prior FY25 Outlook | Updated FY25 Outlook |
|---|---|---|
| Net Sales | $12.0B–$12.1B | ~$12.3B |
| Comparable Sales Growth | 2.5%–3.5% | 4.4%–4.7% |
| Operating Margin | 11.9%–12.0% | 12.3%–12.4% |
| Diluted EPS | $23.85–$24.30 | $25.20–$25.50 |
Store Openings, Inventory, and Share Repurchases Underline Confidence
Ulta’s expansion pace has been aggressive. In the first nine months of fiscal 2025, the company opened 58 new stores, remodeled 24, and relocated 4. Total store count now stands at 1,500 locations in the U.S. Inventory increased 16% year-over-year to $2.74 billion, supporting new brand launches and expansion efforts.
The company repurchased $693 million of its own shares so far this year, signaling ongoing confidence in long-term prospects, with $2.0 billion still authorized for buybacks.
Category Breakdown Shows Cosmetics Hold Strong, Fragrance Gains
Ulta’s revenue mix remained stable, with cosmetics accounting for 41% of net sales in the latest quarter, followed by skincare and wellness at 24%, haircare at 19%, and fragrance showing a slight increase to 11% (from 10% last year). Services and other sales were 5% combined.
| Category | Q3 2025 Share | Q3 2024 Share |
|---|---|---|
| Cosmetics | 41% | 41% |
| Skincare & Wellness | 24% | 23% |
| Haircare | 19% | 20% |
| Fragrance | 11% | 10% |
| Services | 3% | 4% |
| Other | 2% | 2% |
Key Takeaways for Investors
Ulta Beauty is showing both resilience and momentum as it enters the crucial holiday season. The combination of improved profit margins, upwardly revised guidance, and substantial reinvestment in stores and share buybacks point to ongoing management confidence. Investors will want to watch whether strong consumer demand and cost discipline continue through year-end—and how Ulta leverages digital and in-store strengths amid a shifting retail environment.
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