Ulta Beauty, Inc. (NASDAQ:ULTA) shares are trading lower premarket on Friday, following the company’s Wednesday after-market close report of second-quarter results.
The company reported EPS of $6.55, beating the $6.16 estimate. Also, sales rose 8.9% year over year to $3.036 billion, which beat the $2.955 billion consensus. Sales growth outpaced the U.S. beauty market, with prestige gaining share and mass remaining flat.
Ulta said mass makeup was hurt by limited newness and tougher comparisons, but sees potential second-half recovery from stronger makeup trends and new launches.
Earnings Snapshot
Comparable sales rose 3.8%, driven by higher average ticket. Loyalty members grew 3%, and average spend per member increased in the quarter.
Gross margin stood at 39.1% versus 39.2% last year. Operating profit increased 10.1% year over year to $380 million, and operating margin rose to 12.5% from 12.4% a year ago.
Ulta ended the quarter with $213 million in cash and short-term investments and $340 million in short-term debt.
Inventory was flat at $2.4 billion, while inventory per store declined 4.1%.
Share Buyback Boost
The company repurchased shares worth $236 million in the quarter, bringing year-to-date buybacks to $791 million.
As of August 1, 2026, the company had $1.0 billion remaining under Ulta Beauty’s $3 billion buyback program announced in October 2024. The company expects to use the remaining authorization by the end of fiscal 2026.
Ulta also increased its FY2026 share buyback plan to $1.8 billion from $1.5 billion.
Business Performance
Fragrance posted high-teens comparable sales growth, hair care grew high-single digits and makeup was roughly flat. Skincare and wellness declined modestly, though wellness grew double digits.
Services increased in mid-single digits, while K-Beauty sales rose in the double digits, with nearly half coming from exclusive brands or products. Ulta added five K-Beauty brands and 15 brands overall, including Bath & Body Works, Frenchie and Junoco.
Ulta opened 13 net new U.S. stores and delivered its sixth consecutive quarter of double-digit e-commerce growth, with Q2 online sales rising in the high-teens.
More than 50% of online orders were fulfilled through its 1,500-plus stores in the quarter. TikTok generated over 100 million impressions, while the company held more than 40,000 in-store events.
Outlook
The company raised fiscal 2026 EPS guidance to $28.70-$29.00 (versus consensus of $28.94) from $28.36-$28.80 and sales guidance to $13.223 billion-$13.285 billion (versus estimate of $13.209 billion) from $13.136 billion-$13.260 billion.
The company raised its net sales growth outlook to 6.7%-7.2% and comparable sales growth to 3.2%-3.7% for the fiscal year.
For the second half of fiscal 2026, Ulta expects sales growth of 4%-5%, including comparable sales growth of 2%-3%, with two-year stacked comps above 8%. Operating profit is expected to grow 6%-8% and diluted EPS 9%-12% in the second half.
The company projects third-quarter comparable sales to be lower than in the fourth quarter due to seasonality and planned investments ahead of the holiday period.
ULTA Stock Price Activity: Ulta Beauty shares were down 2.11% at $528.70 during premarket trading Friday, as per Benzinga Pro.
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