Key Takeaways
- Fourth-quarter revenue reached $3.90B, exceeding the $3.80B consensus, while EPS of $8.01 fell short of the $8.03 forecast.
- Year-over-year net sales increased 11.8% in Q4, supported by a comparable sales rise of 5.8%.
- The company’s fiscal 2026 EPS outlook of $28.05–$28.55 disappointed, falling below analyst projections of $28.40–$28.57.
- SG&A expenses surged 23% to reach $1 billion, fueled by increased corporate overhead and marketing investments.
- Raymond James maintained its Strong Buy stance, viewing potential further declines as attractive entry points.
Ulta Beauty (ULTA) delivered a split fourth-quarter performance on Thursday, surpassing revenue expectations while falling short on earnings — but it was the underwhelming forward guidance that triggered an approximate 8% after-hours stock decline.
The cosmetics retailer reported quarterly revenue of $3.90 billion for the period ending January 31, exceeding the Street’s $3.80 billion projection. However, earnings per share landed at $8.01, marginally below the anticipated $8.03.
Comparable store sales advanced 5.8% during the period, benefiting from a 4.2% uptick in average transaction value and a 1.6% gain in transaction volume.
Net revenue jumped 11.8% compared to the year-ago quarter. The expansion stemmed from improved comparable sales performance, the Space NK acquisition, and revenue from newly launched locations.
For the complete fiscal 2025 period, the beauty retailer recorded net sales of $12.4 billion, representing a 9.7% year-over-year improvement.
Forward Outlook Falls Short
The stock’s after-hours weakness stemmed primarily from the company’s future projections. For fiscal 2026, management forecast net sales growth between 6% and 7%, with comparable sales expected to rise 2.5% to 3.5%.
Regarding profitability, Ulta projected fiscal 2026 EPS in the range of $28.05 to $28.55. The midpoint of $28.30 trailed the Street’s consensus estimate of approximately $28.40 to $28.57.
Olivia Tong from Raymond James observed that the guidance “captured consensus expectations,” though she acknowledged that buy-side forecasts were positioned higher. She also highlighted elevated quarterly spending as a contributing factor to the post-market selloff.
Tong maintained her Strong Buy recommendation, characterizing any additional weakness as “a buying opportunity.”
Simeon Gutman of Morgan Stanley suggested that Ulta’s near-term upside potential hinges on the company’s capacity to “consistently sustain comp outperformance and provide clearer visibility on disciplined cost management.”
Expense Pressures Mount
Gross profit climbed 11.2% to $1.5 billion, although gross margin contracted modestly to 38.1% from the prior year’s 38.2%. Management attributed the margin compression to an unfavorable product mix and elevated store-level costs, partially balanced by reduced shrinkage and supply chain improvements.
Selling, general and administrative costs escalated 23% to $1 billion. The spike resulted from increased corporate overhead linked to strategic initiatives, expanded advertising budgets, and higher performance-based compensation.
Chief Executive Kecia Steelman credited execution excellence and innovative merchandising approaches for the quarter’s performance. She emphasized the organization’s commitment to enhancing customer experiences through “compelling newness” and “more seamless and convenient” shopping options.
This marks the inaugural earnings release since Christopher DelOrefice assumed the CFO position in early December.
Oppenheimer analysts had anticipated “solid” fourth-quarter metrics heading into the report, and Ulta indeed delivered on the revenue front. The stock’s after-hours retreat appears centered on investor interpretation of whether the 2026 guidance represents conservative positioning or signals authentic growth deceleration.
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