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BOLINGBROOK, Ill.– Ulta Beauty surpassed expectations in its fourth-quarter earnings report, showcasing strong holiday sales driven by consumer demand for cosmetics and perfumes. However, despite the robust performance, the beauty retailer issued a cautious outlook for 2025, citing consumer uncertainty, rising competition, and internal challenges.
The company reported net sales of $3.49 billion for the quarter ended February 1, a 1.9% decline from the previous year but still exceeding analysts' expectations of $3.46 billion. Earnings per share came in at $8.46, well above the anticipated $7.12 per share, leading to a 7% jump in Ulta’s stock during extended trading.
“The Ulta Beauty team delivered stronger-than-expected revenue, profitability, and diluted EPS in the fourth quarter. I am incredibly proud of our team’s collective impact on the business and the care they showed our guests throughout the holiday season, positioning us to finish fiscal 2024 ahead of our expectations,” said Kecia Steelman, president and chief executive officer. She took over as CEO in January following the retirement of Dave Kimbell.
She continued, “I am incredibly optimistic about the future of Ulta Beauty, as I believe we have the right elements to drive our success – a strong business model, an ambitious long-term plan, and passionate associates who bring our brand to life for our guests every day. Fiscal 2025 will be a pivotal year as we make purposeful investments to fuel our future growth and move quickly to optimize our business. While it will take time to see the impact of these efforts, we are confident these investments will help reignite our momentum and unlock sustained growth and long-term value for our shareholders."
Ulta benefited from strong holiday sales and promotional strategies, similar to larger retailers such as Walmart and Amazon.com, which attracted customers through Thanksgiving discounts. In contrast, competitors like Coty, Elf Beauty, and L'Oreal faced softer growth in the U.S. mass beauty market.
Despite the positive Q4 performance, Ulta warned of a challenging year ahead, forecasting full-year sales between $11.5 billion and $11.6 billion, below analysts’ estimates of $11.67 billion. Profit per share is expected to range between $22.50 and $22.90, compared to Wall Street’s expectations of $23.47.
Ulta has encountered operational difficulties, particularly with new fulfillment options such as buy online, pickup in store, same-day delivery, and ship from store.
Steelman outlined plans to invest in consumer-focused improvements to enhance competitiveness and long-term growth. However, these investments will weigh on profitability in the near term, making 2025 a transition year for the retailer.
While Ulta contends with a shifting market, beauty remains a strong retail category. Ulta’s comparable sales rose 1.5% in Q4, exceeding the expected 0.8% growth. However, a 1.4% decline in transactions suggests fewer shoppers visited stores, even as average spending per customer increased by 3%.
Mass retailers like Macy’s, Walmart, and Amazon have ramped up their beauty offerings, intensifying competition. While Ulta previously warned of a cooling beauty market, brands like E.l.f. Beauty and Oddity continued to thrive, and retailers like Macy’s and Target saw steady beauty sales.
As Ulta recalibrates its strategy under new leadership, the focus will be on regaining lost market share and improving operational efficiency. Steelman’s background in operations positions her well to tackle execution challenges, but the company acknowledges that overcoming these hurdles will take time and financial investment.
