Ulta Beauty Raised Profit Outlook as Sales Accelerated
Diluted earnings rose to $7.74 a share as gross margin improved and comparable sales kept growing.
Ulta Beauty (ULTA), the beauty retailer, posted faster sales growth in its fiscal first quarter and lifted its profit outlook, as gross margin gains offset higher operating costs.
The quarter extended Ulta's recovery in comparable sales while showing a slower pace than recent periods. Net sales rose 11.1% to $3.16 billion, accelerating from 4.5% growth a year earlier, though growth eased from 11.8% in the fourth quarter of fiscal 2025.
Comparable sales increased 5.3%, up from 2.9% in the year-earlier quarter. The measure continued to cool from 6.7% in the second quarter of fiscal 2025, 6.3% in the third and 5.8% in the fourth, leaving the first-quarter gain supported more by ticket than traffic.
Average ticket rose 3.7% and transactions increased 1.6%, compared with 2.3% ticket growth and 0.6% transaction growth a year earlier. Against the fourth quarter, ticket growth slowed from 4.2% while transaction growth held steady.
Gross margin widened to 40.1% from 39.1% a year earlier, helped by lower inventory shrink and higher merchandise margin. That rebound from 38.1% in the fourth quarter helped operating income rise 11.6% to $448.3 million, with operating margin edging up to 14.2% from 14.1%.
Selling, general and administrative expenses rose faster than sales, climbing 14.6% to $814.7 million and reaching 25.8% of sales, up from 24.9% a year earlier. Ulta cited Space NK, strategic enterprise investments and store expenses as contributors to the increase.
Merchandise categories shifted away from cosmetics and toward skincare, wellness and fragrance from the year-earlier quarter. Cosmetics fell to 38% of sales from 40%, while skincare and wellness rose to 26% from 25% and fragrance increased to 12% from 11%.
Space NK remained a broader factor in the business after its July 2025 acquisition. The company listed 1,521 U.S. stores and 87 international company-operated stores in the first quarter, while fiscal 2025 year-end listed 1,505 U.S. stores and 86 international stores.
Ulta now expects fiscal 2026 operating-income growth of 6.5% to 9.0%, up from 6.0% to 9.0%, and earnings of $28.36 to $28.80 a share, above its prior view of $28.05 to $28.55. Sales-growth and comparable-sales-growth guidance remain unchanged at 6% to 7% and 2.5% to 3.5%, respectively, while first-quarter buybacks reached $555.0 million.
Source: company public filings.