Ulta Beauty, Inc.

Ulta Beauty, Inc. is an international specialty beauty retailer operating in the large and growing U.S. beauty products and salon services industry, which in 2025 represented approximately $126 billion ¹ in sales according to Euromonitor International and IBIS World Inc. The Company's target consumer is defined as a "beauty enthusiast," and management estimates there are approximately 140 million ² beauty enthusiasts in the U.S. The Company's U.S. operations make it the largest specialty beauty retailer in the U.S., and it has expanded internationally through its subsidiary Space NK Limited, a luxury beauty retailer operating in the U.K. and Ireland, a joint venture in Mexico, and a franchise in the Middle East.

The Company's major competitors for prestige and mass products include traditional department stores, specialty stores, grocery stores, drug stores, mass merchandisers, and the online capabilities of national retailers and brands, as well as pure-play e-commerce companies and online marketplaces. The market for salon services and products is highly fragmented, with competitors including chain and independent salons. Ulta U.S.'s top ten brand partners, such as L'Oréal and Estée Lauder Companies, among others, represented approximately 51% ³ and 54% ⁴ of its total net sales in fiscal 2025 and fiscal 2024, respectively. The Company's private label brand, Ulta Beauty Collection, and long-term Ulta Beauty exclusive products represented approximately 4% ⁵ of the Company's net sales in fiscal 2025, while these products combined with short-term exclusive products represented approximately 11% ⁶ of the Company's net sales in fiscal 2025.

The Company generates revenue through the sale of cosmetics, fragrance, skin care products, wellness products, hair care products, and salon services across its retail stores, digital platforms, and partnerships. Revenue is recognized when control of goods or services is transferred to the guest, with merchandise revenue recognized at the point of sale in retail stores and upon shipment or guest pickup for e-commerce. Salon service revenue is recognized at the time the service is provided. Other revenue includes private label and co-branded credit card programs, deferred revenue related to the loyalty program and gift card breakage, and royalties. The Ulta Beauty Rewards loyalty program, with more than 46 million ⁷ members as of the end of fiscal 2025 and approximately 95% ⁸ of total sales coming from members in fiscal 2025, is a key driver of customer retention and data insights.

The Company's product assortment spans cosmetics, fragrance, skincare, bath and body products, haircare, salon styling tools, and wellness products, with approximately 30,000 ⁹ products from approximately 600 ¹⁰ well-established and emerging beauty and wellness brands. In fiscal 2025, cosmetics represented 38% ¹¹ of net sales, skincare and wellness represented 24% ¹², haircare represented 19% ¹³, fragrance represented 13% ¹⁴, services represented 4% ¹⁵, and other represented 2% ¹⁶. The Company also offers salon services in its stores, with the typical U.S. store including approximately 950 ¹⁷ square feet dedicated to a full-service salon. The Company has expanded into the wellness category through Wellness by Ulta Beauty, which includes nutrition & supplements, intimate care, rest & reset, and essential routines.

In fiscal 2025, the Company launched UB Marketplace, an integrated online marketplace offering more than 200 ¹⁸ brands and 5,000 ¹⁹ stock keeping units through Ulta U.S.'s digital channels. On July 10, 2025 ²⁰, the Company announced the acquisition of Space NK, a leading British beauty retailer, which operates as a standalone subsidiary. As of January 31, 2026, the Company operates 84 ²¹ Space NK stores in the United Kingdom and two ²² in Ireland, nine ²³ stores through the joint venture in Mexico, and one ²⁴ location in Kuwait and one ²⁵ in the United Arab Emirates operated by its franchise partner. The Company repurchased 1,999,633 ²⁶ shares of common stock for $898.5 million ²⁷ during fiscal 2025. On August 14, 2025 ²⁸, Ulta Beauty and Target announced a mutual agreement to not renew the Ulta Beauty at Target shop-in-shop partnership when the current agreement concludes in August 2026 ²⁹.

Net sales increased $1.1 billion ³⁰, or 9.7% ³¹, to $12.4 billion ³² in fiscal 2025 compared to $11.3 billion ³³ in fiscal 2024. Gross profit increased $458.0 million ³⁴, or 10.4% ³⁵, to $4.8 billion ³⁶ in fiscal 2025 compared to $4.4 billion ³⁷ in fiscal 2024. Gross profit as a percentage of net sales increased to 39.1% ³⁸ in fiscal 2025 compared to 38.8% ³⁹ in fiscal 2024. Operating income was $1,532,992 ⁴⁰ in fiscal 2025 compared to $1,564,972 ⁴¹ in fiscal 2024. Net income decreased $47.6 million ⁴² to $1.15 billion ⁴³ in fiscal 2025 compared to $1.20 billion ⁴⁴ in fiscal 2024. Diluted EPS was $25.64 ⁴⁵ in fiscal 2025 compared to $25.34 ⁴⁶ in fiscal 2024.

The Company expects capital expenditures will not be greater than $450 million ⁴⁷ in fiscal 2026 and will primarily be used to fund new, remodeled, and relocated stores and strategic priorities, including investments in information technology systems and supply chain optimization.

The Company's first strategic priority is to drive core business growth through operational excellence and an elevated go-to-market approach incorporating best-in-class store execution, digital acceleration, brand building and merchandising innovation, and enhanced marketing efforts and personalization. The Company believes that, over the long term, it has the potential to grow its store footprint to more than 1,800 ⁴⁸ freestanding Ulta U.S. stores. The average investment required to open a new Ulta U.S. store is approximately $2.4 million ⁴⁹, which includes capital investments, net of landlord contributions, pre-opening expenses, and initial inventory, net of payables. In fiscal 2025, 73% ⁵⁰ of Ulta U.S.'s loyalty members transacted solely within stores, while 19% ⁵¹ shopped both in stores and through digital platforms, with omnichannel guests historically spending over three times ⁵² as much as store-only guests.

The Company's second strategic priority is to scale new, accretive businesses by capitalizing on key growth opportunities, including accelerating its focus on wellness, expanding its e-commerce presence through UB Marketplace, expanding its international presence, and enhancing its retail media network, UB Media. The Company believes there is opportunity to drive profitable growth through strategic targeted international expansion, including through its joint venture in Mexico and franchise partnership in the Middle East. The Company earns royalties from sales generated by these operations. UB Media offers brands a suite of media and advertising capabilities that enable brands to reach unique audiences across various advertising channels.

The Company's third strategic priority is to align its foundation for future success by optimizing its ways of working, streamlining its cost structure, and cultivating an engaging, associate-centered culture. This work includes organizational and process changes to accelerate decision-making, remove friction, and align teams and resources around guest-centric goals. The Company invests in new supply chain and technology capabilities to drive productivity improvement, enhance inventory flow, and increase network capacity. The Company expects the impact of inflationary and macroeconomic pressures to continue in 2026 ⁵³.

The Company aims to develop and operate a dynamic and agile end-to-end supply chain that supports operational efficiency, performance, and guest experience. As of the end of fiscal 2025, Ulta U.S. operates four ⁵⁴ regional distribution centers, two ⁵⁵ market fulfillment centers, and one ⁵⁶ fast fulfillment center that supports e-commerce orders only. In addition, over 1,000 ⁵⁷ Ulta U.S. stores fulfill e-commerce orders as part of a ship-from-store program. The Company will continue to make investments in its information systems to facilitate growth and enhance its competitive position.

As of January 31, 2026, the Company had $1.8 billion ⁵⁸ remaining available under the October 2024 Share Repurchase Program, which authorizes the repurchase of up to $3.0 billion ⁵⁹ of the Company's common stock. The Company has a $1.0 billion ⁶⁰ secured revolving credit facility with a term expiring in March 2029 ⁶¹. Space NK maintains a £40.0 million ⁶² revolving credit facility maturing in April 2028 ⁶³. The Company does not pay dividends, and the timing, declaration, and payment of future dividends will depend upon many factors.

The Company faces structural headwinds from persistent inflationary and macroeconomic pressures that have impacted consumer spending habits broadly and could impact the Company's ability to grow sales and maintain historical profitability levels. Continuing dynamic global trade conditions and elevated tariff levels could contribute to increased input costs, supply chain disruption, pricing volatility, and heightened economic uncertainty. The Company also faces risks from the potential impact of geopolitical events, including the ongoing conflicts in Ukraine and the Middle East and cartel violence and related unrest in Mexico.

The Company identified several execution risks to its growth plan, including the need to successfully execute its real estate growth and optimization strategy, with no assurance that it will be able to locate and lease adequate desirable locations. The Company also faces risks related to its ability to successfully integrate acquisitions, such as Space NK, and realize anticipated benefits. Additionally, the Company's international expansion exposes it to risks including relatively little operating experience in international markets, challenges in replicating its business model, and the potential that international operations may not become profitable on a sustained basis.

The Company faces material risks from macroeconomic conditions, including inflation and elevated interest rates, which have had and may continue to have a negative impact on its business, financial condition, profitability, and cash flows. The Company's top ten brand partners accounted for approximately 51% ⁶⁴ of net sales in fiscal 2025, and the loss of or reduction in merchandise from any key vendor could have a material adverse effect. The Company's secured revolving credit facility of $1.0 billion ⁶⁵ contains restrictive covenants that could limit operational flexibility, including a requirement to maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 ⁶⁶ during certain periods. The Company's international expansion exposes it to additional risks, including relatively little operating experience in international markets and the potential that international operations may not become profitable on a sustained basis. The Company's business is subject to seasonal fluctuation, with significant portions of net sales and profits realized during the fourth quarter due to the holiday selling season.

Management's message emphasizes the unveiling of the Ulta Beauty Unleashed plan designed to accelerate the Company's performance and drive long-term profitable growth, with three strategic priorities: drive core business growth through operational excellence and an elevated go-to-market approach, scale new accretive businesses by capitalizing on key growth opportunities, and align its foundation for future success by optimizing ways of working, streamlining cost structure, and cultivating an engaging culture. Management expressed confidence that the Company's differentiated and diverse business model, commitment to strategic investments, and highly engaged associates will continue to drive market share gains in the U.S. beauty category over the long term. Management noted that despite a dynamic operating environment, proprietary consumer research confirms engagement with the beauty category remains healthy, and the Company expects capital expenditures will not be greater than $450 million ⁶⁷ in fiscal 2026.