Competitive Pressures and Restoring Positive Comps
Q: How long to restore positive comps amid competition?
A: Management acknowledges a dynamic and competitive environment, with 80% of stores impacted by at least one new competitor and over half by multiple new competitors [0]. They remain confident in their long-term outlook, citing positive signals such as new brand launches and loyalty growth [2]. While it may take time to return to positive comps, they are taking aggressive actions across assortment, marketing, and promotions to recover [2].

Promotions and Their Effectiveness
Q: Why didn't recent promotions work as intended?
A: Some incremental promotional offers added in the second quarter did not have the intended effect, particularly in stores [2]. While tentpole events like the "Big Summer Beauty Sale" and "21 Days of Beauty" are working, the additional promotions created complexity and didn't resonate with consumers [9]. Management plans to focus on the highest return promotions moving forward [2].

Prestige Share Losses
Q: Are prestige share losses worsening?
A: The company maintained share in mass but continues to face pressure in prestige, particularly in hair and makeup [7]. Management doesn't believe share losses are getting worse; the dynamics are consistent with earlier in the year, amid a moderating category after years of growth [7].

SG&A Cost Management
Q: How are you limiting SG&A deleverage amid pressure?
A: The company delivered better-than-planned SG&A through focused cost management [1]. They plan G&A expenses to increase in the mid-single-digit range for the year, reflecting moderated growth in the second half as transformational investments are completed [1].

ERP Transition Challenges
Q: What operational disruptions occurred with the ERP transition?
A: The rollout of the new ERP system to stores was complex and created challenges in purchasing, store allocation, and planning processes [5]. Managing dual systems added complexity, but the challenging phase is now completed [5]. Management is fine-tuning the system and is confident about the upcoming holiday season [5].

Unit Growth and Target Partnership
Q: How is unit growth and the Target rollout progressing?
A: New store openings are performing well, including small format stores [3]. The Target partnership is on track, with 541 locations opened and a goal of 800 stores [3]. Nearly 4 million guests have linked their Ulta Beauty and Target Circle loyalty programs, enhancing guest engagement [3].

Product Assortment Evolution
Q: Any changes to product assortment strategy?
A: Management continues to focus on a unique assortment across all price points [4]. They are partnering with legacy brands, offering exclusives like Clinique's "Black Honey" [4]. Simultaneously, they are introducing new and exclusive brands such as Orebella, Kylie, NOYZ, WYN, and Polite Society to drive growth [4].

Long-Term Growth Outlook
Q: Any update on long-term margin targets?
A: Management is not providing an update on long-term expectations during this call [6]. They plan to share insights on future growth opportunities and financial expectations at the Investor Day in October [6].

Attracting New Brands Amid Competition
Q: Has increased competition affected ability to get new brands?
A: No, brands continue to view Ulta Beauty as a leading destination to expand their business [8]. They are launching established brands like ILIA and exclusive partnerships, while also attracting brand-new to the world brands [8].

Mass Market Competition and Hair Care
Q: Are you seeing increased competition in mass market and hair care?
A: While the category is competitive, they haven't seen dramatic increases in mass market competition [10]. The primary driver of lower hair care results was a shift of a strategic event from the second quarter into the first quarter [10]. They remain confident in their mass business and overall hair category [10].