Key Takeaways
- Ulta Beauty surpassed Q4 revenue projections with $3.90B versus the $3.80B forecast, though EPS of $8.01 fell shy of the $8.03 target.
- Fourth-quarter net sales jumped 11.8% compared to the previous year, propelled by a 5.8% increase in comparable sales.
- The company’s fiscal 2026 forecast disappointed — EPS guidance of $28.05–$28.55 trailed analyst projections of $28.40–$28.57.
- SG&A expenses surged 23% to reach $1 billion, fueled by increased corporate investments and marketing expenditures.
- Raymond James maintained its Strong Buy recommendation, suggesting that additional weakness presents an attractive entry point.
Ulta Beauty (ULTA) delivered a split fourth-quarter performance on Thursday, exceeding revenue expectations while falling short on earnings per share — but it was the lackluster fiscal 2026 forecast that triggered an approximately 8% after-hours selloff.
The beauty retailer announced revenue of $3.90 billion for the quarter that concluded on January 31, surpassing the Street’s $3.80 billion projection. However, earnings per share of $8.01 narrowly trailed the analyst consensus of $8.03.
Comparable store sales advanced 5.8% during the period, supported by a 4.2% uptick in average transaction value and a 1.6% boost in customer traffic.
Total net sales expanded 11.8% on a year-over-year basis. This performance reflected robust comparable sales, the Space NK acquisition, and revenue from newly opened locations.
For the complete fiscal 2025 period, the cosmetics giant recorded net sales of $12.4 billion, representing a 9.7% gain versus the prior year.
Forward Outlook Falls Short
The primary driver of investor disappointment stemmed from management’s forward-looking statements. For fiscal 2026, Ulta projected net sales expansion of 6% to 7%, with comparable sales anticipated to grow between 2.5% and 3.5%.
Regarding profitability, the company forecasted fiscal 2026 EPS in the range of $28.05 to $28.55. The guidance midpoint of $28.30 registered below the Street consensus, which ranged from approximately $28.40 to $28.57.
Olivia Tong, analyst at Raymond James, observed that while the guidance “captured consensus expectations,” buy-side projections were positioned higher. She also highlighted the quarter’s elevated spending levels as contributing to the after-hours pressure.
Despite the reaction, Tong reaffirmed her Strong Buy stance on the shares, characterizing any additional weakness as “a buying opportunity.”
Simeon Gutman from Morgan Stanley indicated that near-term upside potential for Ulta hinges on the retailer’s capability to “consistently sustain comp outperformance and provide clearer visibility on disciplined cost management.”
Expense Pressures Mount
Gross profit increased 11.2% to $1.5 billion, while gross margin contracted modestly to 38.1% from 38.2% in the year-ago period. Management attributed the margin compression to an adverse product mix and elevated store operating costs, partially mitigated by reduced shrinkage and supply chain optimization.
Selling, general and administrative expenses escalated 23% to $1 billion. This substantial increase reflected higher corporate overhead associated with strategic initiatives, expanded advertising investments, and greater incentive-based compensation.
CEO Kecia Steelman highlighted execution excellence and refreshed merchandising approaches as catalysts behind the quarter’s performance. She emphasized the organization’s commitment to enhancing customer engagement through “compelling newness” and “more seamless and convenient” shopping experiences.
This earnings release marked the first under the tenure of Christopher DelOrefice, who assumed the CFO role in early December.
Oppenheimer analysts had anticipated “solid” Q4 results heading into the print, and the revenue performance validated that view. The stock’s after-hours decline appears centered entirely on whether the 2026 guidance represents prudent conservatism or signals a legitimate deceleration in growth momentum.
