Executive Summary

Q4 (13 weeks ended Feb 1, 2025) delivered better-than-expected P&L: net sales $3.49B (vs $3.55B prior-year 14-week), comps +1.5% on +3.0% ticket and -1.4% transactions, gross margin +50 bps YoY to 38.2% on lower shrink, and EPS $8.46; management highlighted stronger holiday execution and expense discipline as drivers .
FY25 guidance set as a transition year: net sales $11.5–$11.6B, comps 0–1%, operating margin 11.7–11.8%, EPS $22.50–$22.90; investments in brand building, personalization, digital, wellness, and a new marketplace will pressure margins, partially offset by lower shrink and cost actions .
Mix and category trends: fragrance led with double-digit comp growth; skincare mid-single-digit; hair low single-digit; makeup mid-single-digit decline; services low single-digit growth, while e-commerce rose mid-single-digit and comp stores turned modestly positive vs Q3 .
Market share and competitive backdrop: company acknowledged first annual market share loss in 2024 and broad competitive openings; “Ulta Beauty Unleashed” plan aims to re-accelerate share with focused execution and guest-centric initiatives; cost optimization target $200–$250M over 3 years .
Note on estimates: S&P Global consensus data could not be retrieved at this time due to provider limits; we will update the “vs. estimates” comparisons when available (SPGI API limit) (Estimates unavailable).

What Went Well and What Went Wrong

What Went Well
- Gross margin expanded 50 bps YoY to 38.2% on materially lower shrink, favorable channel mix, and higher merchandise margin; management credited protective fixtures, training, and inventory processes; full-year shrink improved ~20 bps .
- Holiday execution: low single-digit comp for combined Nov/Dec, omnichannel traffic strength, curated assortment and kits, and operations recovery post-holiday supported results; e-commerce up mid-single-digit; comp stores modestly positive vs Q3 .
- Fragrance strength and selected skincare/body care brands (Sol de Janeiro, Naturium, TATCHA) offset pressure elsewhere; hair tools/newness and services added growth .
- Disciplined SG&A: $816M (23.4% of sales); lower corporate overhead (lapping ERP consulting) helped offset higher store labor/benefits .
What Went Wrong
- Traffic pressure: comps +1.5% driven entirely by ticket; transactions -1.4%, reflecting dynamic macro and competitive intensity .
- Makeup softness (mid-single-digit decline), notably in mass, on lapping strong newness/social engagement and increased distribution at certain brands .
- Ongoing competitive headwinds: >90% of stores impacted by competitive openings in recent years; management expects pressure to persist though improving on lapping and operational steps .
- FY25 margin reset: planned investments plus inflationary wages/benefits, transportation and higher depreciation will drive operating margin to 11.7–11.8% despite lower shrink and UB Media offsets .

Financial Results

Note: Ulta refers to the period as Q4 Fiscal 2024 (13 weeks ended Feb 1, 2025). Prior-year quarter was 14 weeks (included a 53rd week).

Metric	Q2 FY2024 (13 wks, Aug 3, 2024)	Q3 FY2024 (13 wks, Nov 2, 2024)	Q4 FY2024 (13 wks, Feb 1, 2025)
Net Sales ($USD Billions)	$2.55	$2.53	$3.49
Comparable Sales (%)	(1.2%)	0.6%	1.5%
Avg Ticket (%)	+0.6%	+0.1%	+3.0%
Transactions (%)	(1.8%)	+0.5%	(1.4%)
Gross Margin (%)	38.3%	39.7%	38.2%
SG&A (% of Sales)	25.3%	27.0%	23.4%
Operating Margin (%)	12.9%	12.6%	14.8%
Diluted EPS ($)	$5.30	$5.14	$8.46 (PY $8.08 incl. ~$0.46 from extra week)

Category mix (% of sales):

Category Mix (%)	Q2 FY2024	Q3 FY2024	Q4 FY2024	Q4 FY2023 (14 wks)
Cosmetics	39%	41%	36%	39%
Skincare	24%	23%	23%	22%
Haircare	20%	20%	19%	19%
Fragrance	11%	10%	17%	15%
Services	4%	4%	3%	3%
Other	2%	2%	2%	2%

KPIs and balance sheet:

KPI	Q2 FY2024	Q3 FY2024	Q4 FY2024
E-commerce Sales Trend	Low single-digit increase	Mid single-digit increase	Mid single-digit increase
Loyalty Members (Active)	43.9M	44.4M	44.6M (record; +3% YoY)
Stores (End of Period)	1,411	1,437	1,445
Inventory ($USD Billions, End)	$2.00	$2.37	$1.97
Cash & Equivalents (End)	$0.41B	$0.18B	$0.70B
Share Repurchase (Qtr)	$212.3M	$267.0M	$249.5M

Vs. estimates: S&P Global consensus data was unavailable due to provider limits at the time of this analysis; we will update “vs. estimates” once accessible (Estimates unavailable).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	FY2025	N/A (initial FY25 guidance)	$11.5B–$11.6B	New
Comparable Sales	FY2025	N/A	0%–1%	New
Operating Margin	FY2025	N/A	11.7%–11.8%	New
Diluted EPS	FY2025	N/A	$22.50–$22.90	New
New Stores (net)	FY2025	N/A	~60	New
Remodel/Relocations	FY2025	N/A	40–45	New
Share Repurchases	FY2025	N/A	~ $900M	New
Interest Income (OI&E)	FY2025	N/A	~ $6M	New
Effective Tax Rate	FY2025	N/A	~ 24.5%	New
Capital Expenditures	FY2025	N/A	$425M–$500M	New
D&A	FY2025	N/A	$290M–$300M	New

Management color on margin drivers: higher wages/healthcare/transport, SaaS utilization, depreciation, and strategic investments (brand building, personalization, digital, wellness, marketplace); partially offset by lower shrink, supply chain optimization, UB Media, and targeted cost savings .

Earnings Call Themes & Trends

Topic	Q2 FY2024 (Aug 2024)	Q3 FY2024 (Dec 2024)	Q4 FY2024 (Mar 2025)	Trend
Competitive intensity & market share	Prestige share under pressure; >80% stores impacted by new competitive openings; mass share maintained .	Prestige market share flat in Q3 per Circana; stores w/o direct competitive impact performed better; loyalty +5% .	First annual market share loss acknowledged; plan to re-accelerate via “Ulta Beauty Unleashed” .	Still pressured but improving paths identified.
Promotions & merch margin	Incremental promos in July helped e-comm but not stores; merch margin down; guidance assumed rational promo below 2019 levels .	Tentpoles (21 Days, Fall Haul) effective; improved promo effectiveness; gross margin still deleveraging on fixed costs .	38.2% GM; shrink tailwind; 2025 GM to deleverage on occupancy/supply chain; rational promo assumed .	More surgical promo; structural fixed-cost deleverage remains.
ERP / operations	ERP store rollout caused allocation frictions; shift to optimization underway .	Optimization progress; conversion improved; app features upgraded .	Execution “back to basics”; centralizing retail ops; leadership realignment .	Stabilizing systems, refocusing stores.
Shrink & security	New fragrance fixtures; shrink trend lower; full-year flat expected .	Lower shrink tailwind continues .	Shrink down; major GM driver in Q4; FY24 ~20 bps improvement .	Positive tailwind continues.
Loyalty & personalization	43.9M members; Member Love/tiered offers; app engagement +16% .	44.4M members; UB Community launched; app now ~2/3 of e-comm .	44.6M (record); focus on personalization acceleration .	Strong asset; deeper personalization planned.
Newness & assortment	Added ILIA, DIBS (announced), Naturium; Ulta Collection relaunch began .	Tatcha (Q4), XO KHLOÉ, collaborations (Wicked, Mini Brands) .	Cécred exclusive launches 4/6/25; MILK Makeup and ANUA additions .	Building exclusives/newness cadence.
Wellness & marketplace	Early wellness improvements; promotional/event tweaks .	Wellness expanded; UB Media capabilities growing (Rokt, Roblox) .	Dedicated wellness leader; 20+ new brands; closed marketplace invites live; launch 2H25; not material in 2025 .	Scaling wellness; new marketplace.
Macro & tariffs	Category normalizing; consumer value focus .	Holiday compressed; dynamic consumer .	Tariff exposure limited (~1% direct imports); monitoring .	Macro/tariffs monitored; limited direct risk.

Management Commentary

“For the first time, we lost market share in the beauty category in 2024… It’s clear… how we’ve operated must change… We intend to move faster, invest strategically and optimize our business.” — Kecia Steelman, CEO .
“These investments will pressure profitability in 2025… We are targeting cost optimization of $200 million to $250 million over the next 3 years.” — Kecia Steelman .
“Net sales… decreased 1.9% to $3.5 billion… Comparable sales… increased 1.5%… Gross margin increased 50 basis points to 38.2% primarily due to lower inventory shrink.” — Paula Oyibo, CFO .
“We expect operating margin [FY25] will be between 11.7% and 11.8%… pressures from inflation, SaaS, depreciation and strategic investments… partially mitigated by lower shrink, supply chain optimization, UB Media and cost savings.” — Paula Oyibo .

Q&A Highlights

Cadence and comps: FY25 comps planned flat to +1% with no wide quarterly variation; Q2/Q3 seen as opportunity given strong Q1/Q4 comps in 2024 .
Fleet strategy: ~60 net new stores in FY25; 40–45 remodels; strong new store performance; flexibility via universal fixtures to adapt brand space .
Wellness & marketplace: Build out dedicated wellness team, ~20+ new brands, expanded in-store presentations; closed marketplace invites live now, launch 2H25, loyalty points and store returns enabled; 2025 impact not material .
Promotional stance: Planning a rational environment; will optimize timing/targeting; merchandise margin specifics not disclosed .
Tariffs: Direct import exposure ~1% of shipments; limited merchandise exposure beyond Ulta Beauty Collection and some fixtures/lighting .

Estimates Context

Wall Street consensus (S&P Global) for Q4 FY2024 revenue, EPS, and EBITDA was not retrievable due to provider request limits at the time of analysis. As a result, we cannot present “vs. consensus” deltas in this report. We will refresh and append estimate comparisons once SPGI data access is restored (Estimates unavailable).
Management indicated Q4 was “better-than-expected” across the P&L, supported by holiday execution, lower shrink, and expense discipline, but formal Street consensus comparisons are omitted here pending data access .

Key Takeaways for Investors

FY25 is a reset year: expect flattish comps and lower operating margins (11.7–11.8%) as Ulta invests in brand building, personalization, digital, wellness, and marketplace to re-accelerate share; cost savings ($200–$250M over 3 years) and lower shrink are important offsets .
Execution focus in stores should be a near-term driver: leadership realignment and “back to basics” could lift conversion and in-stock, addressing a controllable drag called out by management .
Category/mix: fragrance strength and body care momentum continue; makeup softness (especially mass) remains a watch item; exclusive launches (e.g., Cécred) and prestige additions aim to re-invigorate demand .
Loyalty moat remains intact: 44.6M active members, expanding app engagement, and deeper personalization are durable levers to improve traffic and basket over time .
Competitive openings still a headwind but moderating: lapping effects and operational efforts are improving trends; investors should monitor comp differentials between impacted vs. non-impacted stores .
Capital allocation remains shareholder-friendly even in a transition year: ~$900M FY25 buybacks, capex $425–$500M prioritizing stores, supply chain, and IT, supporting long-term growth .
Tactical trading implications: absent estimate benchmarks, the Street may key on FY25 margin trajectory, early wins from marketplace/wellness, and evidence of traffic stabilization (transactions) as near-term stock catalysts .

Ulta Beauty, Inc. (ULTA)·Q4 2025 Earnings Summary