Ulta Beauty on Thursday revealed a full-year profit outlook that comes in largely beneath Wall Street expectations, a shortfall the company attributed in part to stepped-up marketing initiatives aimed at stimulating demand. The announcement coincided with an 8% drop in Ulta shares in after-hours trading.
The chain has been pursuing younger and more affluent customers by expanding its assortment of celebrity-owned and premium labels. Management highlighted partnerships and product lines including Beyonce’s Cecred haircare, Rihanna’s Fenty Skin Body, and holiday advertising that featured Khloe Kardashian and Paris Hilton.
While Ulta exceeded sales forecasts for the holiday quarter, its selling, general and administrative expenses rose sharply. For fiscal year 2025, SG&A climbed 17.4% to $3.30 billion, an increase company executives said was partly driven by higher advertising spending as the retailer reinforced its marketing efforts.
Executives noted on a post-earnings call that consumers - especially those in lower- and middle-income brackets - have been trimming discretionary purchases and reallocating constrained budgets toward everyday essentials such as groceries and pantry items. They also said the company is increasingly attuned to rising global conflicts that could affect economic conditions, adding that sticky inflation and heightened geopolitical unrest are weighing on consumer sentiment.
Looking ahead, Ulta projected comparable sales growth of 2.5% to 3.5% for fiscal 2026, down from the 5.4% comparable sales expansion it recorded in 2025. The company also faces mounting competition from mass retailers, with Target and Walmart expanding their beauty categories and capitalizing on growing demand for K-beauty products.
Last year, Ulta moved to broaden its international reach by acquiring British high-street chain Space NK, a step it described as part of a turnaround plan to accelerate expansion outside the U.S.
For the full fiscal year, Ulta expects earnings per share in a range of $28.05 to $28.55. The mid-point of that guidance sits below analysts' average estimate of $28.40, based on data compiled by LSEG. For the fourth quarter, the company reported EPS of $8.01, narrowly under the estimated $8.03.
On the top line, Ulta forecasts annual net sales growth of 6% to 7%, compared with analysts' expectation for a 5.94% increase.
In related commentary aimed at investors, an AI-based stock selection tool mentioned in the company’s coverage evaluates ULTA alongside many other firms using a broad set of financial metrics. The tool cited examples of prior successful picks, including Super Micro Computer (+185%) and AppLovin (+157%), while offering to identify whether ULTA is included in current strategies.