Ulta Beauty Raises 2025 Sales Outlook

Ulta Beauty (NASDAQ:ULTA) reported its Q2 FY2025 earnings on August 14, 2025, with net sales up 9.3% to $2.8 billion, comparable sales increased 6.7% year-over-year, and diluted EPS at $5.78. Management raised full-year sales and EPS guidance for FY2025, announced milestones in international expansion, provided segment-level performance detail, and addressed the future impact of its Target partnership wind-down. The following analysis distills three key insights shaping the long-term investment thesis.

Ulta Beauty lifts 2025 outlook amid double-digit e-commerce growth

Management raised annual GAAP net sales expectations to a range of $12 billion to $12.1 billion, citing momentum from both stores and digital channels, with e-commerce comp sales up in the low double digits. Gross margin rose 90 basis points to 39.2%, attributed to lower inventory shrink and better promotional efficiency, while operating margin (GAAP) faced pressure from higher SG&A spending, including increased incentive compensation and investments supporting strategic priorities.

"We now expect consolidated net sales for the year will be between $12 billion and $12.1 billion with comp sales growth in the range of 2.5% to 3.5%. This outlook reflects our expectation that comp sales will be in the range of flat to up low single digits in the second half. We now expect operating profit for the year will decrease in the high single-digit range and operating margin will be between 11.9% and 12% of sales."
-- Chris Lialios, Interim Chief Financial Officer

This revised guidance signals management’s discipline amid ongoing inflationary and competitive pressures, but also highlights e-commerce as an increasingly critical engine of future growth for Ulta Beauty, reinforcing the value of its omnichannel strategy.

International expansion and marketplace launch mark pivotal growth initiatives

In July 2025, Ulta Beauty completed its acquisition of Space NK, a retailer with 83 stores in the U.K. and Ireland, and initiated a soft launch in Mexico, with a Middle East debut slated for later this year. Additionally, management outlined the upcoming “invitation-only” Ulta Beauty Marketplace, set for Q3 launch, designed to broaden category reach and product assortment with a curated, margin-accretive offering directly through ulta.com.

"Our acquisition of UK specialty beauty retailer Space NK was a unique and strategically compelling opportunity to enter the growing UK market with an established and successful player. A top destination for beauty lovers, SpaceNK operates 83 UK and Ireland stores and a vibrant online platform. SpaceNK will continue to operate as a standalone subsidiary with CEO Andy Lightfoot and his talented team staying at the helm leading operations from the UK. We see opportunities to leverage each other's strengths, talents, and expertise and over the long term we will focus on sharing best practices in transferring learnings between markets, particularly around assortment, guest experience, and scaling growth. Chris will share more about the financial details of the acquisition shortly. In addition to our expansion in the UK, we just celebrated the soft opening of our first Ulta Beauty store in Mexico, with the grand opening to come in a few weeks. And we remain on track to open our first store in the Middle East later this year."
-- Kecia Steelman, Chief Executive Officer

These initiatives diversify Ulta Beauty’s geographic exposure and digital footprint, positioning the company for incremental international revenue streams and leveraging its loyalty ecosystem while preserving capital via asset-light market entry tactics.

Ulta Beauty Unleashed strategy drives comp growth and operational recovery

The Ulta Beauty Unleashed framework has yielded tangible results: loyalty membership reached a record 45.8 million (up 4% YoY), comp sales grew across all categories, and shrink improvements contributed to gross margin gains in every region. Management cited balanced performance between newness and core assortments, as well as broad executional improvements in stores and digital channels, overcoming prior-year operational and promotional headwinds.

"Highlights from our quarterly results include comp sales growth of 6.7%, positive comp growth in both channels and all major categories, continued market share gains during a highly competitive quarter, loyalty member growth of 4% year over year to a record 45.8 million members, and ongoing improvement across several key performance indicators including brand engagement, earned media value, in-store conversion, and app engagement."
-- Kecia Steelman, Chief Executive Officer

The successful execution of the Unleashed strategy demonstrates robust management adaptability, quantifiable customer engagement, and ongoing operational improvements that should support sustainable long-term earnings power, even as external conditions evolve.

Looking Ahead

Management forecasts full-year net sales of $12 billion to $12.1 billion, comp sales growth of 2.5% to 3.5%, operating margin between 11.9% and 12%, and diluted EPS (GAAP) in the $23.85 to $24.30 range. Ulta Beauty plans to open 50 to 56 new stores per year over the next two to three years and expects SG&A to increase 13% to 14%, with growth elevated in the second half due to higher incentive compensation, strategic investments, and the addition of Space NK. No changes were made to long-term financial targets, and leadership will update 2026 expectations at the next annual planning cycle.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Ulta Beauty. The Motley Fool has a disclosure policy.