TLDR
- Ulta Beauty exceeded Q4 revenue forecasts with $3.90B versus expectations of $3.80B, though earnings per share fell short at $8.01 against the anticipated $8.03.
- Year-over-year net sales surged 11.8% during Q4, propelled by a 5.8% increase in comparable sales.
- The company’s fiscal 2026 EPS outlook disappointed — projecting $28.05–$28.55 compared to analyst consensus of $28.40–$28.57.
- Operating expenses in the selling, general and administrative category soared 23% to reach $1 billion, fueled by increased corporate overhead and marketing investments.
- A Strong Buy rating from Raymond James remains in place, with analysts viewing potential declines as attractive entry points.
Ulta Beauty (ULTA) delivered a fourth-quarter earnings performance that left investors with mixed feelings on Thursday—exceeding revenue targets while falling short on per-share earnings. The real catalyst for the approximate 8% after-hours sell-off, however, was the company’s underwhelming fiscal 2026 projections.
The beauty retailer announced quarterly revenue of $3.90 billion for the period concluding January 31, surpassing the $3.80 billion Wall Street consensus. However, earnings per share landed at $8.01, marginally below the analyst expectation of $8.03.
Comparable sales performance showed solid momentum with 5.8% growth during the quarter. This uptick reflected a 4.2% improvement in average transaction value combined with a 1.6% boost in customer transaction volume.
Total net sales expanded 11.8% compared to the same period last year. Multiple factors contributed to this growth trajectory, including robust comparable sales performance, the strategic Space NK acquisition, and revenue from newly opened retail locations.
Across the complete fiscal 2025 period, Ulta delivered net sales totaling $12.4 billion, representing a 9.7% year-over-year expansion.
Guidance Disappoints
The primary source of investor concern stemmed from forward-looking projections. Management outlined fiscal 2026 expectations calling for net sales expansion between 6% and 7%, alongside comparable sales growth ranging from 2.5% to 3.5%.
Regarding earnings, Ulta forecast fiscal 2026 EPS between $28.05 and $28.55. The guidance midpoint of $28.30 landed modestly below the Street’s consensus estimates hovering around $28.40 to $28.57.
Olivia Tong from Raymond James observed that while the guidance “captured consensus expectations,” buy-side anticipations were positioned higher. She also highlighted the quarter’s elevated spending levels as contributing to the after-hours pressure.
Despite the pullback, Tong maintained her Strong Buy recommendation, characterizing additional weakness as “a buying opportunity.”
Simeon Gutman at Morgan Stanley suggested that Ulta’s near-term upside potential hinges on the retailer’s capacity to “consistently sustain comp outperformance and provide clearer visibility on disciplined cost management.”
Costs Rise
Gross profit increased 11.2% to reach $1.5 billion, while gross margin experienced a modest contraction to 38.1% from the prior year’s 38.2%. Management attributed the margin compression to less favorable product mix dynamics and elevated store-level expenses, partially counterbalanced by reduced shrinkage and improved supply chain operations.
Selling, general and administrative costs escalated 23% to $1 billion. This substantial increase reflected higher corporate infrastructure investments aligned with strategic priorities, expanded advertising expenditures, and elevated incentive-based compensation.
CEO Kecia Steelman emphasized execution capabilities and refreshed merchandising approaches as key performance drivers for the quarter. She highlighted the organization’s commitment to enhancing customer engagement through “compelling newness” and “more seamless and convenient” shopping experiences.
This marks the inaugural earnings release since Christopher DelOrefice assumed the CFO position in early December.
Oppenheimer’s analyst team had anticipated “solid” fourth-quarter results heading into the announcement, and from a revenue perspective, Ulta certainly delivered. The post-announcement share price decline appears fundamentally tied to investor interpretation of whether the 2026 guidance represents conservative positioning or signals authentic growth deceleration.
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