Ulta Beauty Inc. (ULTA) Earnings & Analysis

Latest quarter

Ulta Beauty reported Q2 FY2027 revenue of $3.0 billion, up 8.87% from Q2 FY2026, and diluted EPS of $6.55, up 13.3%. The company exceeded the consensus on revenue by 2.10% and on adjusted EPS by 5.48%, according to the consensus measures.

The filing said that higher comparable sales, the acquisition of Space NK and sales from new stores drove the revenue increase. Comparable sales rose 3.8%, primarily reflecting a 3.9% increase in average ticket, the filing said. The filing attributed the 39.1% gross margin, down −0.1 percentage points, primarily to the Space NK business mix, while operating margin increased 0.1 percentage points to 12.5%.

The filing reported that net income rose 8.1% to $282.0 million, as higher gross profit was partly offset by higher SG&A expense, income taxes and net interest expense. Ulta Beauty generated $38.4 million of free cash flow in Q2 FY2027, compared with $19.6 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Chief Executive Officer Kecia Steelman said the company saw continued consumer interest and engagement in beauty and wellness, while perceived value influenced purchase decisions amid macro uncertainty and higher everyday expenses. She said Ulta Beauty used promotions strategically during the quarter to support traffic and sales, including around its summer sale, Mother’s Day, Father’s Day and Prime Days.

In response to analyst questions about promotional activity and the second half, Steelman said the company evaluates promotions beyond a single selling period, including their effects on average order value, member engagement and core business activity. She said the company had built flexibility into its forecast to respond to a dynamic environment. Steelman also said the company had not seen notable changes in consumer behavior or trade-down behavior during the quarter.

Steelman said competition for beauty-market share would remain intense, but that the company’s focus was on its assortment, exclusives and execution rather than chasing competitors. She said fragrance and K-Beauty were areas of emphasis, and that approximately half of quarterly K-Beauty sales came from exclusive brands or products.

Chief Financial Officer Chris DelOrefice said the company managed gross margin through shrink reductions, supply-chain productivity and merchandise-margin preservation while absorbing channel-mix effects and slower other-revenue growth. He said SG&A discipline and productivity supported targeted investments, including advertising, while the company continued to invest in stores, technology and omnichannel capabilities.

On the quarter ahead, DelOrefice said the company planned for gross-margin pressure in the second half because a prior-year third-quarter benefit from certain brand price actions was not expected to recur. He said Ulta Beauty expects normal seasonality between the third and fourth quarters, including third-quarter investment to prepare for the holiday season.

Guidance

Ulta Beauty raised its fiscal 2026 net sales-growth outlook to 6.7% to 7.2% from 6% to 7%, and raised comparable-sales growth guidance to 3.2% to 3.7% from 2.5% to 3.5%. The company raised expected operating income growth to 8.3% to 9.3% from 6.5% to 9% and raised diluted EPS guidance to $28.70 to $29.00 from $28.36 to $28.80.