Ulta Beauty is the largest specialty beauty retailer in the United States, offering a wide range of products and services through over 1,400 stores and digital platforms **[0001558370-24-012542_ulta-20240803x10q.htm:18]** **[0001558370-24-003941_ulta-20240203x10k.htm:4]** **[0001558370-24-005588_tmb-20240611xdef14a.htm:34]**. The company sells cosmetics, fragrance, skincare, haircare products, and provides salon services, featuring approximately 25,000 products from about 600 established and emerging beauty brands, covering mass to prestige price points **[0001558370-24-003941_ulta-20240203x10k.htm:4]** **[0001558370-24-005588_tmb-20240611xdef14a.htm:34]**. Ulta Beauty also operates full-service salons in nearly every store, offering hair, skin, and brow services **[0001558370-24-003941_ulta-20240203x10k.htm:4]** **[0001558370-24-003941_ulta-20240203x10k.htm:7]**.

1. **Cosmetics** - Offers a diverse range of makeup products from various brands, catering to different price points and consumer preferences.
2. **Skincare** - Provides a wide selection of skincare products, including cleansers, moisturizers, and treatments from both established and emerging brands.
3. **Haircare Products and Styling Tools** - Sells shampoos, conditioners, styling products, and tools designed for various hair types and styling needs.
4. **Fragrance and Bath** - Features a variety of perfumes, colognes, and bath products, appealing to a broad spectrum of scent preferences.
5. **Services** - Operates full-service salons offering hair, skin, and brow services to enhance customer beauty experiences.
6. **Accessories and Other** - Includes beauty accessories and miscellaneous products that complement the main product lines.

c587dc4f1ee6aa50c6b2a91ba501154e650b8519e39d59659fc6cb292afc62d0

761eac6c3eabbe5c4d613387e2cd00b267790139e693281846c1ba2bbba7c5eb

Adjustments for Non-Cash Items [USD, Thousands]

Stock-Based Compensation [USD, Thousands]

Changes in Working Capital [USD, Thousands]

Capital Expenditures (CapEx) [USD, Thousands]

Proceeds from / Repayments of Debt [USD, Thousands]

Share Repurchases [USD, Thousands]

Dividend Payments [USD, Thousands]

Net Change in Cash [USD, Thousands]

150278b5322f06f17192d470cacd3988bf9f74078127a7fa533a237aa0b50df6

fd6dcaf6d59494a3d65b8051a91e2754b5672ee91943f827d6e6850360959805

| Product Segment | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 |
|-----------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Cosmetics** (% of net sales) | **44%**  **[0001558370-22-018318_ulta-20221029x10q.htm:9]**  | **40%**  **[0001558370-23-003308_ulta-20230309xex99d1.htm:8]**  | **44%**  **[0001558370-23-010464_ulta-20230429x10q.htm:8]**  | **40%**  **[0001558370-23-015253_ulta-20230729x10q.htm:8]**  | **42%**  **[0001558370-23-019393_ulta-20231028x10q.htm:9]**  | **39%**  **[0001558370-24-003233_ulta-20240314xex99d1.htm:9]**  | N/A | N/A |
| **Haircare Products and Styling Tools** (% of net sales) | **21%**  **[0001558370-22-018318_ulta-20221029x10q.htm:9]**  | **20%**  **[0001558370-23-003308_ulta-20230309xex99d1.htm:8]**  | **18%**  **[0001558370-23-010464_ulta-20230429x10q.htm:8]**  | **21%**  **[0001558370-23-015253_ulta-20230729x10q.htm:8]**  | **19%**  **[0001558370-23-019393_ulta-20231028x10q.htm:9]**  | **18%**  **[0001558370-24-003233_ulta-20240314xex99d1.htm:9]**  | N/A | N/A |
| **Skincare** (% of net sales) | **16%**  **[0001558370-22-018318_ulta-20221029x10q.htm:9]**  | **16%**  **[0001558370-23-003308_ulta-20230309xex99d1.htm:8]**  | **19%**  **[0001558370-23-010464_ulta-20230429x10q.htm:8]**  | **20%**  **[0001558370-23-015253_ulta-20230729x10q.htm:8]**  | **19%**  **[0001558370-23-019393_ulta-20231028x10q.htm:9]**  | **18%**  **[0001558370-24-003233_ulta-20240314xex99d1.htm:9]**  | N/A | N/A |
| **Fragrance and Bath** (% of net sales) | **12%**  **[0001558370-22-018318_ulta-20221029x10q.htm:9]**  | **18%**  **[0001558370-23-003308_ulta-20230309xex99d1.htm:8]**  | **12%**  **[0001558370-23-010464_ulta-20230429x10q.htm:8]**  | **12%**  **[0001558370-23-015253_ulta-20230729x10q.htm:8]**  | **13%**  **[0001558370-23-019393_ulta-20231028x10q.htm:9]**  | **19%**  **[0001558370-24-003233_ulta-20240314xex99d1.htm:9]**  | N/A | N/A |
| **Services** (% of net sales) | **4%**  **[0001558370-22-018318_ulta-20221029x10q.htm:9]**  | **3%**  **[0001558370-23-003308_ulta-20230309xex99d1.htm:8]**  | **4%**  **[0001558370-23-010464_ulta-20230429x10q.htm:8]**  | **4%**  **[0001558370-23-015253_ulta-20230729x10q.htm:8]**  | **4%**  **[0001558370-23-019393_ulta-20231028x10q.htm:9]**  | **3%**  **[0001558370-24-003233_ulta-20240314xex99d1.htm:9]**  | N/A | N/A |
| **Accessories and Other** (% of net sales) | **3%**  **[0001558370-22-018318_ulta-20221029x10q.htm:9]**  | **3%**  **[0001558370-23-003308_ulta-20230309xex99d1.htm:8]**  | **3%**  **[0001558370-23-010464_ulta-20230429x10q.htm:8]**  | **3%**  **[0001558370-23-015253_ulta-20230729x10q.htm:8]**  | **3%**  **[0001558370-23-019393_ulta-20231028x10q.htm:9]**  | **3%**  **[0001558370-24-003233_ulta-20240314xex99d1.htm:9]**  | N/A | N/A |

530ab1f66352aebcfe51ca8d95afeb59cc02d8e7dc4a03df95bb0ca58beb4663

1. Despite improved performance in Q3, your prestige skin care segment declined while mass skin care was flat; what specific strategies are you implementing to address the weakness in prestige skin care and stimulate growth in this critical category?  **[ULTA_3411064_17]** 

2. You mentioned elevated competition, particularly in prestige beauty, with competitor store openings impacting your business; how confident are you in regaining market share, and what's your timeline for returning to market share gains?  **[ULTA_3411064_1]** **[ULTA_3411064_12]** 

3. Given the decline in the makeup and hair care categories, both decreasing low single digits, what plans do you have to revitalize these segments and counteract the competitive pressures from mass and prestige retailers expanding their beauty offerings?  **[ULTA_3411064_17]** **[ULTA_3411064_12]** 

4. Inventory increased by 1.9% to $2.4 billion, partly due to new store openings; with sales growth slowing, how are you managing inventory levels to avoid overstocking and potential markdown risks?  **[ULTA_3411064_9]** **[ULTA_3411064_8]** 

5. With the fourth quarter expected to be impacted by a compressed holiday season and continued uncertainty around consumer demand, how are you adjusting your promotional strategies and operational plans to mitigate these risks and ensure a successful holiday performance?  **[ULTA_3411064_8]** **[ULTA_3411064_6]** 

8f59c9674bc3b52ab27c8d8dacb1abe718d99e8b2686cbe137e237c2fc1517b3

1. **Margin Outlook and New Product Contribution**  
   **Q:** What's driving the margin outlook to 14%-14.3%, and how will new products contribute this year?  
   **A:** Ulta expects operating margins between **14% and 14.3%** of sales, mainly due to SG&A deleverage from investments in growth enablers and wage pressures \[5\]. Merchandise margins will decrease modestly because of lower margin rates and supply chain costs, partially offset by growth in other revenue \[5\]. New product launches like **Charlotte Tilbury in 600 stores** and **Sol de Janeiro in 700 stores** are expected to contribute significantly, maintaining historical newness contribution levels of **20%-30% of sales** \[5\].

2. **Store Expansion Plans**  
   **Q:** How will the increased store expansion this year impact market share?  
   **A:** Ulta plans to open **60 to 65 net new stores** in fiscal 2024, including **10 small format stores**, aligning with previous growth targets \[3\]. This expansion aims to win back market share from competitors \[3\].

3. **International Expansion into Mexico**  
   **Q:** Why is Ulta entering Mexico instead of Canada, and what's the long-term opportunity?  
   **A:** Ulta chose Mexico after careful evaluation due to strong performance in border stores and a promising partnership with **Axo** \[1\]. They plan to begin operations in **2025**, with associated costs included in 2024 guidance \[1\].

4. **Investment Plans and Impact on Expenses**  
   **Q:** What are the 2024 investment plans compared to previous years?  
   **A:** Incremental investments will be limited in 2024 as foundational projects like **Project SOAR** and Digital Store wrap up \[6\]. Ulta invested **$62 million** in 2023 and **$55 million** in 2022 on transformational strategic investments \[6\].

5. **Promotional Environment and Sales Outlook**  
   **Q:** How will the promotional environment affect 2024 guidance and sales mix?  
   **A:** Ulta doesn't expect a significant increase in promotional intensity, planning for a competitive yet rational environment \[8\]. The company anticipates a normalized pricing environment and will manage shifts between mass and prestige products \[8\].

6. **Balance Between Prestige and Mass Products**  
   **Q:** How is the balance of prestige and mass products shaping future growth and margins?  
   **A:** Ulta sees strong engagement across both prestige and mass categories and is well-positioned to adapt to consumer shifts \[2\]. Merchandise margins remain higher than in 2019 due to a healthier business mix \[2\].

7. **Luxury Brands Performance and Expansion**  
   **Q:** How did luxury brands perform, and will there be more rollouts in 2024?  
   **A:** Luxury brands like **Chanel, Dior, Natasha Denona, and Pat McGrath** performed well, meeting guest needs \[7\]. Ulta will continue to grow existing luxury partnerships but hasn't shared specifics on new launches \[7\].

8. **UB Media Growth Potential**  
   **Q:** What's the update on UB Media's platform and scaling potential?  
   **A:** Ulta is pleased with UB Media's progress, leveraging **first-party data** to enhance partnerships with brands \[4\]. Although specific numbers aren't disclosed, the company expects continued growth in this area \[4\].

9. **Share Gains in Prestige Cosmetics**  
   **Q:** Will Ulta return to share gains in the prestige cosmetics category?  
   **A:** Ulta is focused on driving growth in all makeup segments, including prestige, through new brands like **Charlotte Tilbury**, exclusive offerings, and innovation from existing big brands \[0\]. They are confident in delivering expected growth over time \[0\].

a89dc4c3cfd93b6d4d001b0e98285d85e520d87390162bc951d2ba074ef4eae2

e89155df414d925845d84965ddc42c0b3718777705464b921e756928ec19590d

- Traditional department stores
- Specialty stores
- Grocery stores
- Drug stores
- Mass merchandisers
- Online capabilities of national retailers and brands
- Pure-play e-commerce companies
- Online marketplaces
- Chain salons
- Independent salons  **[0001558370-24-003941_ulta-20240203x10k.htm:7]** 

bc37ce4c124cd733030bc9402a7d9a429d209d18b30ef93420f7a1cec6fa01b0

### Q3 2025 Earnings Call
- **Issued Period**: Q3 2025
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Net Sales**: $11.1 billion to $11.2 billion
  2. **Comparable Sales Growth**: Negative 1% to flat
  3. **Operating Margin**: 12.9% to 13.1%
  4. **Diluted EPS**: $23.20 to $23.75
  5. **Capital Expenditures**: $400 million to $425 million
  6. **New Store Openings**: 60 to 65 net new stores; remodel or relocate 40 to 45 stores
  7. **Q4 Comparable Sales**: Decline in the low single-digit range
  8. **Q4 Operating Margin**: 11.6% to 12.4%  **[ULTA_3411064_9]** .

### Q2 2025 Earnings Call
- **Issued Period**: Q2 2025
- **Guided Period**: FY 2025
- **Guidance**:
  1. **Diluted EPS**: $22.60 to $23.50 per share
  2. **Net Sales**: $11 billion to $11.2 billion
  3. **Comparable Sales**: Down 2% to flat
  4. **Operating Margin**: 12.7% to 13%
  5. **Gross Margin**: Deleverage by 70 to 90 basis points
  6. **SG&A Expense**: Increase in the mid-single-digit range
  7. **Capital Expenditures**: $400 million to $450 million
  8. **Share Repurchases**: $1 billion  **[ULTA_3400318_9]** **[ULTA_3400318_8]** .

### Q1 2025 Earnings Call
- **Issued Period**: Q1 2025
- **Guided Period**: FY 2025
- **Guidance**:
  1. **Operating Margin**: 13.7% to 14%
  2. **SG&A Growth**: Mid- to high single-digit range for the full year
  3. **Gross Margin**: Down modestly for the year
  4. **Diluted EPS**: $25.20 to $26 per share
  5. **Stock Repurchase**: $1 billion
  6. **Net Sales**: $11.5 billion to $11.6 billion
  7. **Comp Sales Growth**: 2% to 3%
  8. **Capital Expenditures**: Not explicitly guided; Q1 CapEx was $91 million
  9. **Inventory**: Increased 8.8% to $1.9 billion  **[ULTA_3391326_7]** **[ULTA_3391326_6]** **[ULTA_3391326_5]** .

### Q4 2024 Earnings Call
- **Issued Period**: Q4 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Net Sales**: $11.7 billion to $11.8 billion
  2. **Comparable Sales Growth**: 4% to 5%
  3. **Operating Margin**: 14% to 14.3%
  4. **SG&A Growth**: High single-digit range
  5. **Gross Margin**: Down modestly
  6. **Diluted EPS**: $26.20 to $27 per share
  7. **Capital Expenditures**: $415 million to $490 million
  8. **Depreciation**: $275 million to $280 million  **[ULTA_3378271_8]** .

0305044c60f56bb5bbee225875a291d566eae4c8a3963f4605e952c662e53cf8

fa38be84f9419aa4ea5765bd51e4bd4afef9a094d379835e046ecfddc6afca65

| Name               | Position                                                                 | Start Date     | Short Bio                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------------------|--------------------------------------------------------------------------|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| David C. Kimbell   | Chief Executive Officer and Member of the Board of Directors             | June 2021      | David C. Kimbell has been the **Chief Executive Officer** of Ulta Beauty since **June 2021**. Prior to this role, he served as the company's **President from December 2019 to June 2021**, and as **Chief Merchandising and Marketing Officer from March 2015 to December 2019**. He also held the position of **Chief Marketing Officer from February 2014 to March 2015**. Before joining Ulta Beauty, Mr. Kimbell was the Chief Marketing Officer and Executive Vice President at U.S. Cellular, and he has held various marketing roles at Seventh Generation, PepsiCo, and The Procter and Gamble Company  **[0001558370-24-003941_ulta-20240203x10k.htm:39]** **[0001558370-24-005588_tmb-20240611xdef14a.htm:17]** **[0001558370-23-006272_tmb-20230601xdef14a.htm:14]** . |
| Kecia L. Steelman  | President and Chief Operating Officer                                    | September 2023 | Kecia L. Steelman was named **President and Chief Operating Officer** of Ulta Beauty in **September 2023**. She has been serving as the Chief Operating Officer since **June 2021**. Prior to her current roles, she was the Chief Store Operations Officer from September 2015 and Senior Vice President of Store Operations since July 2014. Before joining Ulta Beauty, Steelman held various positions at Family Dollar Stores and The Home Depot Corporation, and she began her career at Target Corporation  **[0001558370-24-003941_ulta-20240203x10k.htm:39]** **[0001558370-24-005588_tmb-20240611xdef14a.htm:38]** **[0001558370-23-004581_ulta-20230128x10k.htm:39]** . |
| Scott M. Settersten | Chief Financial Officer, Treasurer, and Assistant Secretary              | March 2013     | Scott M. Settersten has been serving as the **Chief Financial Officer, Treasurer, and Assistant Secretary** at Ulta Beauty since **March 2013**. Before this role, he was the Acting Chief Financial Officer and Assistant Secretary starting in **October 2012**. He joined Ulta Beauty in **January 2005** as a Director of Financial Reporting and later became Vice President of Accounting in **2010**. Prior to his tenure at Ulta Beauty, Mr. Settersten spent 15 years with PricewaterhouseCoopers LLP, where he held various senior manager roles in the assurance and risk management practices  **[0001558370-24-003941_ulta-20240203x10k.htm:39]** **[0001558370-23-004581_ulta-20230128x10k.htm:38]** . |
| Jodi J. Caro       | General Counsel, Chief Risk & Compliance Officer, and Corporate Secretary | August 2015    | Jodi J. Caro was named **General Counsel, Chief Risk & Compliance Officer, and Corporate Secretary** at Ulta Beauty in **August 2015**. She oversees the company's Legal, Risk & Governance Services team, delivering legal, governance, compliance, risk management, and environmental, health, and safety services. Additionally, she leads Ulta Beauty's Environmental, Social, and Governance efforts, including responsibility for the Ulta Beauty Charitable Foundation. Before joining Ulta Beauty, Ms. Caro was Vice President, General Counsel, and Secretary for Integrys Energy Group and held the role of Integrys' Chief Compliance and Ethics Officer. Prior to Integrys, she owned and operated her own law practice and was co-founder and General Counsel of Looking Glass Networks. She also served as an in-house attorney with MCI/WORLDCOM  **[0001558370-24-003941_ulta-20240203x10k.htm:40]** **[0001558370-24-003941_ulta-20240203x10k.htm:39]** **[0001558370-23-004581_ulta-20230128x10k.htm:38]** . |
| Anita J. Ryan      | Chief Human Resources Officer                                            | April 2022     | Anita J. Ryan was named **Chief Human Resources Officer** at Ulta Beauty in **April 2022**. Before this role, she served as Senior Vice President of Human Resources since 2018 and Vice President of Human Resources since 2016. Ms. Ryan is responsible for Ulta Beauty's Human Resources strategy and innovation, overseeing the company's people success business partner team and centers of excellence in talent acquisition, associate care and support, leadership and organization development, diversity, equity, and inclusion, compliance, internal communications, and training for the enterprise. Prior to her career at Ulta Beauty, Ms. Ryan began her career in the grocery industry, where she held numerous operations leadership roles before transitioning to human resources  **[0001558370-24-003941_ulta-20240203x10k.htm:40]** **[0001558370-23-004581_ulta-20230128x10k.htm:39]** . |

6b49b5b09ef781bba4653a18a95552fbe91f69286ea68eea1a3b6e1738307f99

| Program Details          | Program 1               | Program 2               | Program 3               |
|--------------------------|-------------------------|-------------------------|-------------------------|
| Approval Date            | March 2022  **[0001558370-24-016048_ulta-20241102x10q.htm:26]** **[0001558370-24-016048_ulta-20241102x10q.htm:15]**        | March 2024  **[0001558370-24-016048_ulta-20241102x10q.htm:26]** **[0001558370-24-016048_ulta-20241102x10q.htm:15]**        | October 2024  **[0001558370-24-016048_ulta-20241102x10q.htm:33]** **[0001558370-24-016048_ulta-20241102x10q.htm:26]** **[0001558370-24-016048_ulta-20241102x10q.htm:15]**   |
| End Date/Duration        | No expiration  **[0001558370-24-016048_ulta-20241102x10q.htm:26]** **[0001558370-24-016048_ulta-20241102x10q.htm:15]**     | No expiration  **[0001558370-24-016048_ulta-20241102x10q.htm:26]** **[0001558370-24-016048_ulta-20241102x10q.htm:15]**     | No expiration  **[0001558370-24-016048_ulta-20241102x10q.htm:33]** **[0001558370-24-016048_ulta-20241102x10q.htm:26]** **[0001558370-24-016048_ulta-20241102x10q.htm:15]**  |
| Total additional amount  | $2.0 billion  **[0001558370-24-016048_ulta-20241102x10q.htm:26]** **[0001558370-24-016048_ulta-20241102x10q.htm:15]**      | $2.0 billion  **[0001558370-24-016048_ulta-20241102x10q.htm:26]** **[0001558370-24-016048_ulta-20241102x10q.htm:15]**      | $3.0 billion  **[0001558370-24-016048_ulta-20241102x10q.htm:33]** **[0001558370-24-016048_ulta-20241102x10q.htm:26]** **[0001558370-24-016048_ulta-20241102x10q.htm:15]**   |
| Remaining authorization  | Revoked  **[0001558370-24-016048_ulta-20241102x10q.htm:26]** **[0001558370-24-016048_ulta-20241102x10q.htm:15]**           | Revoked  **[0001558370-24-016048_ulta-20241102x10q.htm:26]** **[0001558370-24-016048_ulta-20241102x10q.htm:15]**           | $2.9 billion  **[0001558370-24-016048_ulta-20241102x10q.htm:33]**         |
| Details                  | Revoked by March 2024   | Revoked by October 2024 | Active as of Nov 2024   |

4230d908f13cb55bc78cf25afd367710c73ae5f1625da671d4ecf446ab1d7158

**Quarterly guidance for Q4 (from the most recent issued period Q3 2025)  **
- **Comparable sales**: decline in the low single-digit range  **[ULTA_3411064_9]**  (no prior guidance)  
- **Operating margin**: 11.6% to 12.4%  **[ULTA_3411064_9]**  (no prior guidance)  

**Annual guidance for FY 2024 (from the most recent issued period Q3 2025)  **
- **Net sales**: $11.1B to $11.2B  **[ULTA_3411064_9]**  (raised from $11.0B to $11.2B  **[ULTA_3400318_9]** **[ULTA_3400318_8]** )  
- **Comparable sales growth**: negative 1% to flat  **[ULTA_3411064_9]**  (raised from down 2% to flat  **[ULTA_3400318_9]** **[ULTA_3400318_8]** )  
- **Operating margin**: 12.9% to 13.1%  **[ULTA_3411064_9]**  (raised from 12.7% to 13.0%  **[ULTA_3400318_9]** **[ULTA_3400318_8]** )  
- **Diluted EPS**: $23.20 to $23.75  **[ULTA_3411064_9]**  (raised from $22.60 to $23.50  **[ULTA_3400318_9]** **[ULTA_3400318_8]** )  
- **Capital expenditures**: $400M to $425M  **[ULTA_3411064_9]**  (lowered from $400M to $450M  **[ULTA_3400318_9]** **[ULTA_3400318_8]** )  
- **New store openings**: 60 to 65 net new stores; remodel or relocate 40 to 45 stores  **[ULTA_3411064_9]**  (no prior guidance)  

a57460165e3c965f913429beac40f4446094a31cd93dd3b3e4182837384b3ec0

- **Ulta Beauty is facing significant competitive pressures**, with over **1,000 new points of distribution** in prestige beauty opening over the last couple of years, affecting **80% of their stores**, and more than half experiencing multiple competitive openings, leading to **meaningful disruption** and uncertainty about when these pressures will abate. \[10\] \[12\]
- The company is experiencing **gross margin pressure** and expects **gross margin deleverage** to continue, driven by an intensely competitive environment, increased promotions, and unfavorable category mix, which could impact profitability. \[11\]
- Ulta Beauty **expects Q4 comp sales to decline** in the **low single-digit range**, and views **2024 and 2025 as transitional periods**, anticipating further investments that may pressure operating margins, potentially impacting near-term earnings growth. \[14\]

12294959e88ce67f11d7b4208cfce461ff753a4e126061fcaca2f19265151952

| Name               | Start Date | End Date | Reason for Change |
|--------------------|------------|----------|-------------------|
| Ernst & Young LLP  | 1997  **[0001558370-24-003941_ulta-20240203x10k.htm:59]**  | Present  | Current auditor   |

4d264790bcbfa94fc0078c601e9841d19286699db3d09d960aed42901be4b5d2

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $2,530.1 million (+2% YoY)  **[0001558370-24-016048_ulta-20241102x10q.htm:4]** **[0001558370-24-016048_ulta-20241102x10q.htm:7]** **[0001558370-24-016048_ulta-20241102x10q.htm:6]** **[0001558370-24-016048_ulta-20241102x10q.htm:5]** **[0001558370-24-016048_ulta-20241102x10q.htm:3]**   
- Operating Income (EBIT): $318.5 million (-3% YoY)  **[0001558370-24-016048_ulta-20241102x10q.htm:4]** **[0001558370-24-016048_ulta-20241102x10q.htm:7]** **[0001558370-24-016048_ulta-20241102x10q.htm:6]** **[0001558370-24-016048_ulta-20241102x10q.htm:5]** **[0001558370-24-016048_ulta-20241102x10q.htm:3]**   
- Net Income: $242.2 million (-3% YoY)  **[0001558370-24-016048_ulta-20241102x10q.htm:4]** **[0001558370-24-016048_ulta-20241102x10q.htm:7]** **[0001558370-24-016048_ulta-20241102x10q.htm:6]** **[0001558370-24-016048_ulta-20241102x10q.htm:5]** **[0001558370-24-016048_ulta-20241102x10q.htm:3]**   
- Cash & Equivalents: $177.8 million (+46% YoY)  **[0001558370-23-019393_ulta-20231028x10q.htm:3]** **[0001558370-24-016048_ulta-20241102x10q.htm:3]**   
- PP&E: $1,264.4 million (+13% YoY)  **[0001558370-23-019393_ulta-20231028x10q.htm:3]** **[0001558370-24-016048_ulta-20241102x10q.htm:3]**   
- Share Repurchases: $263.6 million (up from $2.0 million YoY)  **[0001558370-23-019393_ulta-20231028x10q.htm:5]** **[0001558370-24-016048_ulta-20241102x10q.htm:5]**   

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993f7040689a027796b047d6b3cd67a6a92d65e9bfc814620b9fc76ab28c17f7

1. **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 \[2\].

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 \[2\].

3. **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 \[7\].

4. **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 \[1\].

5. **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 \[5\].

6. **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 \[3\].

7. **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 \[4\].

8. **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 \[6\].

9. **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 \[8\].

10. **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 \[10\].

4ab9fc0fe4e06d9e4af3f012eb7e4bb3b8bc621851425f4c795f1782e44eb2cc

| Year       | Amount Due (Millions) | Debt Type       | Interest Rate (%) | % of Total Debt                     |
|------------|------------------------|-----------------|-------------------|-------------------------------------|
| 2024       | 199.7                 | Short-Term Debt | 7.15             | 100% = (199.7 / 199.7) * 100 **[0001558370-24-016048_ulta-20241102x10q.htm:24]** **[0001558370-24-016048_ulta-20241102x10q.htm:27]** |

b636a9d21fc05ee2d3b63fc033443b3fa08d1ae960747692016d42ea50181ac1

Number of products (products)

Number of brands (brands)

Number of stores end of period (stores)

Comparable sales (percent)

Number of new stores opened (stores)

Number of stores closed (stores)

Number of stores relocated (stores)

Number of stores remodeled (stores)

Percentage change in transactions (percent)

Percentage change in average ticket (percent)

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- **Ulta Beauty plans to open between 60 and 65 net new stores in fiscal 2024**, bringing the two-year total to **90 to 95 new stores**, and sees potential for additional growth through its **small format store prototype**.  **[ULTA_3378271_12]**
- **Ulta Beauty is executing strategies to drive growth in the prestige cosmetics category**, including launching sought-after brands like **Charlotte Tilbury** in **600 stores and online**, aiming to regain market share in this segment.  **[ULTA_3378271_9]**
- **Ulta Beauty is expanding internationally into Mexico** in partnership with **Axo**, with plans to be operational in **2025**, opening new growth opportunities beyond the U.S. market.  **[ULTA_3378271_10]**

135e425ca62600feef91aee77befbbf575827bdc950a59bc2168dbd9f2a5ba84

- **Ulta Beauty's loyalty program continues to grow, reaching over **44 million active members** with a **5% year-over-year increase**, and strong engagement from platinum and diamond members, indicating high customer retention and spending**  **[ULTA_3400318_12]** **[ULTA_3400318_5]** **[ULTA_3400318_14]**
- **Exclusive brand partnerships and new product launches, such as the launch of **ILIA** and exclusive products like **Black Honey with Clinique**, are driving sales growth and attracting guests, reinforcing Ulta Beauty as a leading beauty destination**  **[ULTA_3400318_12]** **[ULTA_3400318_18]** **[ULTA_3400318_14]**
- **Ulta Beauty's differentiated business model and unique omnichannel experiences are resonating with guests, evidenced by positive signals like high levels of brand love and awareness, digital sales meeting expectations, and successful promotional events attracting new guests and driving strong sales**  **[ULTA_3400318_12]** **[ULTA_3400318_20]** **[ULTA_3400318_14]**

7ace20f9b2519a4d3d0538b88d6c35c61c7db4501bce98f376d995e03bca6f66

- **Increased competitive pressures** are negatively impacting Ulta Beauty's performance, with **over 80% of stores affected by at least one competitor opening** and **more than half impacted by multiple competitive openings**, leading to underperformance in these locations.  **[ULTA_3400318_12]** ,  **[ULTA_3400318_10]**
- **Promotional activities** have not been as effective as expected, with **incremental offers not having the intended impact**, especially in physical stores, indicating challenges in driving traffic and sales through promotions.  **[ULTA_3400318_12]**
- **Sales trends decelerated as the quarter progressed**, with **July being the most challenging period**, and the company experiencing a **1.2% decline in comparable sales** and a **1.8% decline in transactions**, suggesting that the headwinds may persist.  **[ULTA_3400318_7]**

d15696a07efdcbedcd07b138baaccb10817497f44cec00bc03a654f561c73a01

- **Operating margin is expected to decline to between 14% and 14.3% of sales in fiscal 2024**, down from 15% in fiscal 2023, primarily due to **SG&A deleverage**, **ongoing wage pressures**, and **supply chain cost deleverage**.  **[ULTA_3378271_14]**
- **Gross margin is anticipated to decrease modestly in fiscal 2024** because of **lower merchandise margin** and **deleveraging of supply chain costs**, partially offset by growth in other revenue.  **[ULTA_3378271_14]**
- The company **faced challenges in the prestige cosmetics category** in 2023, especially in the second half, with **more growth on the mass side and challenges on the prestige side**, potentially indicating a shift in consumer preferences that could impact margins.  **[ULTA_3378271_9]**

214056bb206bef89e77b04a8aae6914160412f58c53c9bd5299ca45e9ae2ea54

1. **Gross Margin Outlook**  
   **Q:** Can you quantify gross margin pressures and outlook?  
   **A:** Paula explained that they continue to expect gross margin deleverage for the full year and into Q4, reflecting top-line expectations in a competitive environment. Headwinds include deleverage from fixed costs and merchandise margin pressure due to promotions and category mix, while lower transportation costs provide some offsets.  **[ULTA_3411064_10]** 

2. **2025 Operating Margin Guidance**  
   **Q:** Has this quarter changed your 2025 margin outlook?  
   **A:** Paula stated that they maintain the same directional guidance provided at the Investor Day. They expect 2024 and 2025 to be transitional periods with investments to reaccelerate growth, aiming to deliver operating margins at least above **11%**.  **[ULTA_3411064_14]** 

3. **Competitive Pressures and Headwinds**  
   **Q:** Can you quantify the drag from new competition and when it will ease?  
   **A:** David acknowledged over **1,000** new points of distribution in prestige beauty, impacting **80%** of their stores, with more than half experiencing multiple openings. While improvements were seen in Q3, they're still navigating these dynamics and have more work ahead.  **[ULTA_3411064_11]** 

4. **Drivers of Q3 Improvement**  
   **Q:** What drove the sequential performance improvement?  
   **A:** David attributed the improvement to a combination of factors: introducing newness like brands such as **ILIA**, successful collaborations, more effective promotions including tentpole events like **21 Days of Beauty**, and operational enhancements that improved conversion both in-store and online.  **[ULTA_3411064_13]** 

5. **Prestige Makeup Performance**  
   **Q:** How did prestige makeup perform and what's the innovation pipeline?  
   **A:** Prestige makeup was flat for the quarter, showing improvement from prior trends. The overall category grew in low single digits, so they faced some share pressure but saw improvement from Q2. Innovation includes launching brands like **ILIA** and focusing on core brands like **Clinique** and **MAC**.  **[ULTA_3411064_11]** 

6. **Mass Beauty Competitiveness**  
   **Q:** How is competition affecting your mass beauty business?  
   **A:** David noted that mass beauty continues to perform in the mid-single-digit range. The mass makeup category is decelerating, but there's continued strength in mass skin care. Ulta remains focused on delivering a compelling assortment across price points and engaging guests in the mass segment.  **[ULTA_3411064_12]** 

7. **Holiday Season Outlook**  
   **Q:** Are you positive quarter-to-date, and how is the holiday shaping up?  
   **A:** Paula mentioned that the holiday season is off to a solid start, with teams executing well. They're expecting Q4 comp sales to decline in the low single-digit range, considering the dynamic environment and factors like fewer shopping days.  **[ULTA_3411064_14]** 

34aa13ec4345cd4b38a943d99440df6f643efdbc0ddc3bedc521110fde25b3d6

- **Strong Brand Partnerships and Unique Value Proposition:** Ulta Beauty has built **very strong relationships with brand partners**, both large and emerging, across all beauty segments. Their **unique proposition**—offering a special and differentiated in-store and online experience—allows brands to connect with **nearly 44 million loyalty members**, strengthening Ulta's position as a premier distribution point.  **[ULTA_3391326_14]**
- **Confidence in Makeup Category and Growth Opportunities:** Despite recent challenges, Ulta remains confident in its **largest category, makeup (44% of business)**, driven by opportunities with **exclusive partnerships** (e.g., Morphe), expansion of prestige brands like **Charlotte Tilbury in 600 stores**, and introduction of exciting exclusive emerging brands. Additionally, **online shoppers spend 2.5 times more**, and Ulta gained share in the **prestige e-commerce business in Q1**.  **[ULTA_3391326_16]**
- **Robust Loyalty Program and Strong Customer Engagement:** Ulta continues to see growth in **brand love, brand awareness, loyalty members (up 6%)**, and **high retention rates**, even in an elevated competitive environment. **Traffic is up** in stores and online, and the company is confident in its model and ability to adjust strategies, ensuring a bright future in the beauty industry.  **[ULTA_3391326_10]**

f0e72c7862c5c7d8dfaa04e3a91a0254b470c78c23d10802979f4ca7cb1e1ced

- **Strong Loyalty Program Growth and Member Engagement**: Ulta Beauty's loyalty program grew by **5% in active members** during the quarter, driven by attracting new members, reactivating lapsed members, and improving existing member retention.  **[ULTA_3411064_17]**  High engagement and spending from their **platinum and diamond members**, who are their top customers, demonstrate robust customer loyalty.  **[ULTA_3411064_17]**
- **Improved Performance Through Strategic Adjustments and Exciting Collaborations**: The company achieved **sequential improvement in Q3 performance**, attributed to effective promotional strategies, new brand launches like **ILIA**, and exciting collaborations such as **Wicked** and **Mini Brands**, which drove guest engagement and sales.  **[ULTA_3411064_11]** **[ULTA_3411064_13]**  Adjustments in promotional strategies made their efforts more effective, contributing to better-than-expected sales and profitability.  **[ULTA_3411064_10]**
- **Confidence in Long-Term Growth Drivers and Strategic Investments**: Ulta Beauty is focusing on four key pillars—**assortment, experience, access, and loyalty**—to drive long-term growth.  **[ULTA_3411064_16]**  The company remains confident in reinforcing its market position and delivering stronger performance, planning strategic investments to reaccelerate growth, while ensuring an operating margin of at least **above 11%**.  **[ULTA_3411064_14]**

4482071a8e5cb70088072d708538756b085158985db15f9915143476ef1a7652

- **Ulta Beauty is facing increased competition leading to market share loss, especially in prestige beauty, due to over 1,000 new points of distribution in the last 2 years.**  **[ULTA_3391326_2]**
- **Gross margin decreased by 80 basis points to 39.2%, primarily due to increased promotions, unfavorable brand mix, and higher inventory shrink, pressuring profitability.**  **[ULTA_3391326_4]**
- **Makeup comp sales decreased in the mid-single-digit range, raising concerns about remaining competitive against innovative online competitors like Amazon.**  **[ULTA_3391326_5]** **[ULTA_3391326_16]**

bfbc025637caccb0de8afce97122a915bbb23611f5ee6c872d54015eccafb495

1. **Guidance Change and Margins**  
   **Q:** Are you comfortable lowering guidance deep enough to reach long-term margins?  
   **A:** Management is confident in the revised outlook for the year, feeling clear about the updated comp guidance of **2% to 3%** and operating margin guidance of **13.7% to 14%**, despite pressures. They believe actions like introducing more newness, strong marketing, enhanced digital capabilities, and leveraging the loyalty program will drive the business forward.  **[ULTA_3391326_9]** 

2. **Competitive Environment Impact**  
   **Q:** How is increased competition affecting sales and margins?  
   **A:** The competitive environment is unprecedented with over **1,000 new locations** opening nearby, impacting short-term sales. However, Ulta is holding share in total beauty, with gains in mass and prestige e-commerce. Brand love, loyalty members, retention, and traffic are all up, demonstrating strong consumer connection despite increased competition.  **[ULTA_3391326_10]** 

3. **Makeup Trends and Competition**  
   **Q:** How will you remain competitive in the makeup category amidst online competition?  
   **A:** Makeup accounts for **44%** of Ulta's business. Despite pressures, Ulta is confident in strengthening performance through opportunities with brands like **Charlotte Tilbury** in **600 stores and online**, and exclusive brands like **Live Tinted** and **Polite Society**. Ulta continues to drive both in-store and online sales, gaining share in prestige e-commerce in Q1.  **[ULTA_3391326_16]** 

4. **Marketing Spend Increase**  
   **Q:** What increase in marketing spend are you planning, and its impact?  
   **A:** Ulta is protecting investments in marketing and in-store labor, reflected in the operating margin outlook. Efforts focus on strengthening guest connections, with unaided awareness and brand love increasing in Q1. Strategies include driving greater connection through social media and partnering with brands to connect with nearly **44 million loyalty members**.  **[ULTA_3391326_11]** 

5. **Comp Guidance and Trends**  
   **Q:** Why lower back half guidance despite expected improvement?  
   **A:** While Q1 comp of **1.6%** was within internal plans, it was at the low end of expectations. Anticipating continued pressures into Q2, and despite potential upside in the second half, Ulta updated full-year comp guidance to **2% to 3%**, reflecting first-half performance and ongoing challenges.  **[ULTA_3391326_12]** 

6. **Operating Margin Recovery**  
   **Q:** How will you rebuild to long-term **14%-15%** margins if comps stay at **2%-4%**?  
   **A:** Achieving margins above **14%-15%** is challenging with comps below the long-term algorithm of **3%-5%** due to difficulties in leveraging fixed costs. Ulta plans to share more on future growth opportunities and financial impacts at the Investor Day in October.  **[ULTA_3391326_17]** 

7. **Inventory Levels and Margins**  
   **Q:** Are aging inventories a concern for margins?  
   **A:** No significant concerns with inventory. Approximately **75%** of inventory growth is due to new brands and stores, especially from opening a new distribution center. Most inventory is current core product with minimal seasonal risk.  **[ULTA_3391326_15]** 

8. **Brand Value Proposition**  
   **Q:** How is Ulta's value proposition evolving for brand partners?  
   **A:** Ulta's unique proposition and strong relationships with brands, both established and emerging, provide confidence in remaining a premier distribution point. Brands value access to **44 million loyalty members** and Ulta's ability to activate strategies with the largest pool of beauty enthusiasts.  **[ULTA_3391326_14]** 

9. **Member Retention & Promotions**  
   **Q:** How are promotional efforts aiding member retention amid competition?  
   **A:** Ulta is amplifying key events like the semiannual beauty event and leveraging targeted promotions through the loyalty program. Programs like **"member love"**, a three-week event highlighting different categories, offer differentiated connections, adding value for guests through personalization and strengthening retention.  **[ULTA_3391326_18]** 

10. **Merchandise Margin Dynamics**  
    **Q:** What drives merchandise margin changes between halves?  
    **A:** Merchandise margin faces more pressure in the first half due to increased promotions, brand mix, and lapping prior price increases. In the second half, pressures ease as these effects subside, expecting margins to be flat.  **[ULTA_3391326_13]** 

57339dcbca1ccde2dfbe4fa1393ea076d2dc89f3ced24b11f8d34fee61fdb97a

Ulta Beauty Inc (ULTA)

Financials