Ulta Beauty Inc Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Ulta Beauty's Q3 2025 earnings call highlighted strong financial performance, driven by comparable sales growth, loyalty member increases, and successful execution of the Ulta Beauty Unleashed strategy. The company is focused on strengthening its core US business, scaling new businesses internationally, and realigning its foundation for future growth. Ulta Beauty is optimistic about the upcoming holiday season, despite a cautious view of consumer spending.
Key Financial Results
Net sales increased by 12.9% to $2.9 billion.
Operating profit was 10.8% of sales.
Diluted EPS was $5.14 per share.
Comparable sales increased 6.3%, driven by a 3.8% increase in average ticket and a 2.4% increase in transactions.
Gross margin increased 70 basis points to 40.4% of sales.
Business Segment Results
Comparable sales growth was positive across all categories and channels, with double-digit strength in e-commerce.
Fragrance was the strongest growing category, with double-digit comp sales growth.
Skincare delivered solid, high single-digit comp growth, driven by prestige skincare and solid growth of mass skincare.
Makeup delivered mid-single digit comparable sales growth, supported by growth in both mass and prestige makeup.
Haircare delivered mid-single digits comps fueled primarily by strong performance in prestige hair.
Services delivered mid-single digit comp growth, driven by strength in cut and color services, expanded brow services, and ongoing improvement in stylist productivity.
Capital Allocation
Capital expenditures were $87 million for the quarter, mostly driven by investments in new and existing stores and IT systems.
In the quarter, 427,000 shares were repurchased, bringing the year-to-date total to 1.7 million shares, or $693 million.
At the end of the quarter, $2 billion remained under the current $3 billion repurchase authorization.
Industry Trends and Dynamics
Despite a softening in overall consumer confidence in Q3, beauty engagement remained healthy.
During the third quarter, both mass and prestige beauty markets delivered mid-single digit growth, according to Circana.
Insights suggest beauty consumers' budgets are tight and they are focused on value.
Beauty enthusiasts intend to spend on beauty for seasonal needs, affordable splurges, and gifts for loved ones.
Competitive Landscape
Continued market share gains in mass and prestige beauty, including prestige market share gains in both brick-and-mortar and digital channels.
Ulta Beauty is focused on leveraging its unique advantages to be the retail partner of choice to launch, build, scale and globalize brands.
Macroeconomic Environment
The company is mindful of the challenging macro backdrop.
Beauty consumers' budgets are tight and they are focused on value.
Growth Opportunities and Strategies
The company is focused on strengthening its core US business.
Scaling new businesses, including expanding internationally to capitalize on key growth opportunities.
Realigning the foundation for the future by streamlining the cost structure, optimizing ways of working and re-energizing the culture.
International expansion efforts are building momentum, with new stores opened in Mexico and the Middle East.
The company reached a key milestone with the successful launch of UB marketplace in the third quarter.
In wellness, the company is focused on leveraging its position as a trusted guide to expand more meaningfully into the vast and growing wellness category.
Financial Guidance and Outlook
For fiscal year 2025, net sales are expected to be approximately $12.3 billion, with comp sales growth between 4.4% and 4.7%.
Operating margin is expected to be between 12.3% and 12.4% of net sales.
Gross margin is expected to be roughly flat for the year.
Diluted EPS for the year is expected to be between $25.20 and $25.50.
For Q4, comp growth is expected to be between 2.5% and 3.5%.
For Q4, operating margin is expected to be between 12% and 12.3%, and EPS is expected to be between $7.61 and $7.90.
