Ulta Beauty (ULTA) expects sales growth to decelerate to 6-7% this fiscal year from 9.7% previously, despite beating Q3 expectations with 12.9% net sales growth. The cosmetics retailer’s cautious outlook reflects broader beauty industry headwinds and consumer spending pressures, even as it raised full-year guidance following strong third-quarter results.
Key Takeaways
- Sales growth expected to slow to 6-7% from 9.7%
- Q3 net sales jumped 12.9% to $2.9 billion
- Comparable sales increased 6.3% in third quarter
Market Reaction & Context
The beauty retail giant’s revised growth expectations come amid a broader slowdown in the beauty industry, where even major players like L’Oréal and LVMH have reported disappointing sales 1. Ulta’s projected 6-7% growth rate, while slower than recent years, still outpaces many traditional retailers struggling with consumer spending pressures.
The company’s third-quarter performance exceeded expectations, with net sales rising 12.9% to $2.9 billion compared to $2.5 billion in the prior year quarter 2. Comparable sales, a key retail metric, increased 6.3% versus 0.6% in the same period last year.
Financial Performance Details
Ulta’s Q3 results showed strong momentum across multiple metrics. The company reported net income of $230.9 million, or $5.14 per diluted share, matching the prior year’s earnings per share despite revenue growth 2.
Gross profit margin improved to 40.4% from 39.7% in the prior year, primarily driven by lower inventory shrink and higher merchandise margins. However, selling, general and administrative expenses increased to 29.4% of sales from 27.0%, reflecting higher incentive compensation and store-related costs.
Strategic Initiatives and Outlook
“Our third quarter results exceeded our expectations, reflecting the steady progress and momentum our team is building as we execute our Ulta Beauty Unleashed Strategy,” said Kecia Steelman, president and CEO 2. The company has been focusing on improving in-store and digital experiences while expanding its product assortment.
The retailer raised its fiscal 2025 guidance, now expecting net sales of approximately $12.3 billion and diluted earnings per share between $25.20 and $25.50 2. This represents an increase from previous projections and reflects confidence in its operational execution despite macro headwinds.
Industry Challenges and Consumer Trends
Ulta’s more conservative long-term growth outlook aligns with industry trends showing beauty sector deceleration. The company noted that consumer wallets remain pressured, with shoppers increasingly seeking value during the important holiday season 2.
The beauty retailer has been investing in digital capabilities and expanding its omnichannel presence, including the recent acquisition of luxury beauty retailer Space NK. These investments are intended to maintain market share as competition intensifies from both traditional retailers and online platforms.
Store Expansion and Operations
Ulta continues its physical expansion, operating 1,500 stores totaling 15.6 million square feet across the U.S. as of the third quarter 2. During Q3, the company opened 28 new stores while remodeling 15 existing locations, demonstrating continued confidence in its brick-and-mortar strategy.
The retailer’s share repurchase program remains active, with $2.0 billion remaining available under its $3.0 billion authorization announced in October 2024 2. This reflects management’s confidence in the company’s cash generation capabilities despite the expected growth deceleration.
Not investment advice. For informational purposes only.
References
1Liz Flora (March 14, 2025). “Ulta Beauty Braces for a Challenging 2025”. The Business of Fashion. Retrieved March 12, 2026.
2(December 4, 2025). “Ulta Beauty Announces Third Quarter Fiscal 2025 Results”. Ulta Beauty, Inc. Retrieved March 12, 2026.