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Ulta Beauty, Inc. (ULTA)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 financials and the Q3 earnings call have not yet been released; management said Q3 results would be reported “in early December.” This recap anchors on Q1–Q2 FY2025 results, updated FY2025 guidance, and strategic press releases from the September–November window .
  • FY2025 guidance was raised after Q2: net sales to $12.0–$12.1B (from $11.5–$11.7B), comps to 2.5–3.5% (from 0–1.5%), operating margin to 11.9–12.0% (from 11.7–11.8%), and EPS to $23.85–$24.30 (from $22.65–$23.20). This is the central stock narrative and a constructive backdrop heading into Q3 .
  • Q2 saw 6.7% comp growth (+3.7% transactions, +2.9% ticket), gross margin up 90 bps to 39.2% on lower shrink and better merchandise margin, while SG&A deleveraged on incentive comp and investments; EPS was $5.78 .
  • Strategic catalysts in Q3: UB Marketplace launched in October, expanding curated digital assortment; Mexico stores opened in August/September; Middle East (Kuwait) store opening in November—supporting brand reach and long-term growth optionality .
  • Wall Street consensus estimates via S&P Global were unavailable at time of this report, so beat/miss vs. estimates cannot be assessed; focus remains on trajectory vs. raised FY guide and execution of Q3 initiatives.*

What Went Well and What Went Wrong

What Went Well

  • Management raised FY2025 guide on stronger-than-expected first half and Space NK impact: net sales to $12.0–$12.1B, comps to 2.5–3.5%, operating margin to 11.9–12.0%, EPS to $23.85–$24.30 .
  • Expanded gross margin in Q2 to 39.2% (+90 bps YoY) on lower shrink and improved promotional effectiveness; comps +6.7% with balanced growth across categories/channels .
  • CEO on momentum: “Our Ulta Beauty Unleashed strategy continues to gain traction…comp sales growth of 6.7%, positive comp growth in both channels and all major categories, continued market share gains…loyalty member growth of 4% YoY to a record 45.8 million” .

What Went Wrong

  • SG&A deleveraged in Q2 to 26.6% of sales (+130 bps YoY) on higher incentive comp, store payroll/benefits, corporate overhead, plus ~$7M transaction costs for Space NK .
  • Supply chain fixed costs and store occupancy remain headwinds; CFO guided gross margin deleverage for the year driven by these costs (partially offset by lower shrink) and higher SG&A growth, especially in H2 .
  • Consumer/macro uncertainty persists (tariffs, inflation, wallet pressures) prompting cautious H2 planning despite strong first-half performance .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$2.848 $2.788 TBD (early Dec 2025)
Diluted EPS ($USD)$6.70 $5.78 TBD (early Dec 2025)
Gross Profit Margin (%)39.1% 39.2% TBD
Operating Margin (%)14.1% 12.4% TBD
Comparable Sales (%)+2.9% +6.7% TBD
Category Sales Mix (%)Q1 2025Q2 2025
Cosmetics40% 38%
Skincare & Wellness25% 25%
Haircare18% 19%
Fragrance11% 12%
Services4% 4%
Other2% 2%
KPIsQ1 2025Q2 2025
Transactions growth (%)+0.6% +3.7%
Average ticket growth (%)+2.3% +2.9%
E-commerce growthN/ALow double-digit
Rewards members (Millions)N/A45.8 (+4% YoY)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY2025$11.5–$11.7B $12.0–$12.1B Raised
Comparable SalesFY20250–1.5% 2.5–3.5% Raised
Operating MarginFY202511.7–11.8% 11.9–12.0% Raised
Diluted EPSFY2025$22.65–$23.20 $23.85–$24.30 Raised
New Stores, NetFY2025~60 ~63 Raised
Remodels/RelocationsFY202540–45 43–48 Raised
Interest, netFY2025~$6M income ~$4M expense Lowered
Effective Tax RateFY2025~24.5% ~24.5% (no change) Maintained
Capital ExpendituresFY2025$425–$500M $425–$500M (no change) Maintained
Depreciation & AmortizationFY2025$290–$300M ~$300M Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Promotional StrategyQ1 pressure from fixed costs; learning on promo effectiveness Lower promo impact vs 2024; optimized timing and eliminated overlapping offers Execution continues (results pending) Improving discipline
Shrink & Margin—Lower shrink across every category/region; +90 bps GM Expect moderation in H2 Tailwind moderating
UB Marketplace—Announced launch in Q3; curated, invitation-only Launched Oct 14 (Mirakl, Happy Returns integration) Scaling
International Expansion—Space NK acquired; Mexico soft opening; Middle East planned Mexico stores opened Aug/Sep; Kuwait open Nov 7 Expanding footprint
Macro/Tariffs—Cautious on H2; consumer watching pricing/tariffs Uncertainty persists Cautious
Loyalty & Personalization—45.8M members (+4%); personalization features (split cart, replenish & save) Ongoing engagement (results pending) Strengthening
Store Growth Strategy—24 openings Q2; plan 63 net new in FY2025 Targeting 50–56 per year in coming 2–3 years (quality focus) Quality over quantity

Management Commentary

  • “Our Ulta Beauty Unleashed strategy continues to gain traction…comp sales growth of 6.7%, positive comp growth in both channels and all major categories, continued market share gains…loyalty member growth of 4% YoY to a record 45.8 million” — Kecia Steelman, CEO .
  • “Gross margin impact from promotional activity was lower than last year…we optimized key events and offers…implemented replenish and save” — Chris Lialios, Interim CFO .
  • “Our marketplace…is a curated invitation-only online platform…members can earn points…returns via Happy Returns in-store” — CEO on UB Marketplace .
  • “We acquired Space NK…entering the UK market with an established player…Space NK will continue as a standalone subsidiary” — CEO .

Q&A Highlights

  • Margin outlook: H2 margins pressured by inflationary costs (healthcare), supply chain/occupancy, higher incentive comp; shrink benefit moderates; SG&A growth elevated in H2 due to rephasing of investments .
  • Real estate cadence: Targeting 50–56 new stores per year over next 2–3 years (vs. prior 200 plan) given rent/insurance pressures and focus on high-quality centers .
  • Target partnership exit: Royalty revenue “well below 1%” of FY2024 sales; ~60–65% flow-through; management expects Ulta Unleashed initiatives to offset in 2026 .
  • Category performance: Fragrance robust double-digit; makeup growth in both mass and prestige, haircare mid-single digit, services low-single digit .

Estimates Context

  • S&P Global consensus estimates for Q3 FY2025 EPS and revenue were unavailable at the time of writing due to a data access limit, so beat/miss vs. Street cannot be determined.*
  • Implication: Use raised FY2025 guidance and Q3 strategic execution (UB Marketplace launch, new geographies) as near-term anchors until the company reports Q3 in early December .

Key Takeaways for Investors

  • Raised FY2025 guidance is the core positive driver; execution into Q3 (marketplace launch, holiday cadence, newness) is the near-term focus .
  • Margin trajectory: structural supply chain/occupancy pressures and higher SG&A/incentive comp in H2 temper margin expansion despite improved shrink; watch how Q3 promos remain disciplined .
  • Strategic flywheel: UB Marketplace expands curated assortment and earns Rewards points, likely enhancing digital conversion and lifetime value without marketplace dilution risks .
  • International optionality: Mexico and Middle East openings plus Space NK add brand reach, synergies, and learnings while keeping the U.S. core as priority .
  • Category momentum: fragrance remains a leader; balanced growth across makeup, skincare, haircare suggests diversified demand drivers into holiday .
  • Real estate discipline: quality-focused new store pacing (50–56/year) should support returns and avoid over-build amid elevated rents/insurance .
  • Near-term setup: With Q3 results due early December, catalysts are execution quality, holiday performance, and any incremental color on FY guide durability and 2026 framework .

*Estimates disclaimer: S&P Global consensus estimates were unavailable at time of writing; comparisons to Street estimates are omitted.