A month has gone by since the last earnings report for Ulta Beauty (ULTA). Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ulta due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Ulta Beauty Lifts FY26 View as Q1 Earnings Beat, Comps Rise 5.3%
Ulta Beauty reported first-quarter fiscal 2026 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. The company delivered double-digit sales and earnings growth, driven by broad-based strength across channels and product categories, along with contributions from the Space NK acquisition.
The beauty retailer reported first-quarter fiscal 2026 earnings per share of $7.74, beating the Zacks Consensus Estimate of $6.90. The bottom line increased 15.5% from the year-ago quarter’s reported figure of $6.70.
Net sales rose 11.1% year over year to $3,163.9 million and surpassed the Zacks Consensus Estimate of $3,113 million. Growth was primarily driven by higher comparable sales, contributions from the Space NK acquisition and sales from new stores. Comparable sales increased 5.3%, supported by a 3.7% rise in average ticket and a 1.6% jump in transactions.
ULTA’s Quarterly Results: Key Metrics & Insights
Ulta Beauty’s gross profit increased 13.8% year over year to $1,267.6 million. Gross margin expanded 100 basis points to 40.1% from 39.1%, primarily due to lower inventory shrink and higher merchandise margin. Improvements in inventory productivity and favorable category mix also aided profitability.
Selling, general and administrative (SG&A) expenses increased 14.6% to $814.7 million from $710.6 million reported in the prior-year quarter. As a percentage of net sales, SG&A expenses rose to 25.8% from 24.9%. The increase was primarily due to the acquisition of Space NK, strategic enterprise investments and higher store-related expenses, partially offset by leverage in advertising expenses.
Operating income surged 11.6% to $448.3 million from $401.8 million in the year-ago quarter. As a percentage of net sales, operating income improved slightly to 14.2% from 14.1% in the prior-year period.
ULTA’s Category Performance Remains Broad-Based
Performance was broad-based across all major categories in the quarter. Fragrance remained the strongest category, delivering high-teens comparable sales growth, driven by newness from luxury brands such as YSL, Carolina Herrera, Valentino and Balmain, as well as innovation from exclusive fragrance brand NOYZ.
Haircare generated high-single-digit comparable growth, supported by strength in prestige haircare, new and exclusive brands, and healthy demand for hair-treatment products.
Makeup posted low-single-digit comparable sales growth, aided by prestige makeup performance and the successful launch of Rare Beauty. Skincare and wellness delivered low-single-digit comparable growth, benefiting from prestige skincare, mass skincare and continued momentum in supplements and self-care products. Services revenues increased in the mid-single-digit range, supported by strong member engagement.
Ulta Beauty’s Strategic Initiatives Gain Traction
Ulta Beauty continued to advance its “Ulta Beauty Unleashed” strategy during the quarter. The company launched TikTok Shop, positioning itself as a key beauty discovery platform and strengthening engagement with younger consumers. Ulta Beauty also added more than 20 new brands during the quarter, expanded its marketplace assortment to more than 325 brands and 8,000 SKUs and grew its loyalty program to approximately 46.9 million members, up 4% year over year.
The company continued expanding its international presence through Space NK, Mexico and the Middle East. Management also announced plans for a highly experiential flagship location in Times Square, NY, which is expected to open in late 2027.
ULTA’s Financial Health Snapshot & Store Update
The company ended the quarter with cash and cash equivalents of $166.3 million and short-term investments of $55 million. Merchandise inventories increased 12.5% year over year to $2.4 billion. Short-term debt totaled $144.9 million, while stockholders’ equity stood at $2.58 billion at quarter-end.
Net cash provided by operating activities was $261.9 million in the first quarter. Capital expenditures totaled $58.3 million, primarily related to investments in new and existing stores.
During the quarter, Ulta Beauty repurchased 958,323 shares of its common stock for $555 million. As of May 2, 2026, approximately $1.3 billion was available under the company’s $3 billion share buyback authorization announced in October 2024.
Ulta Beauty opened 16 net new stores in the United States and one net new Space NK store during the quarter. The company ended the period with 1,521 Ulta Beauty stores and 87 Space NK stores.
What to Expect From ULTA in FY26?
Following its better-than-expected first-quarter performance, Ulta Beauty updated its fiscal 2026 outlook.
The company continues to expect net sales growth of 6% to 7% and comparable sales growth of 2.5% to 3.5%. Management now anticipates operating income growth of 6.5% to 9% compared with its previous expectation of 6% to 9%.
Ulta Beauty raised its fiscal 2026 earnings per share guidance to the range of $28.36-$28.80 from the prior range of $28.05-$28.55.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Ulta has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a score of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Ulta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Ulta is part of the Zacks Retail - Miscellaneous industry. Over the past month, Bath & Body Works (BBWI), a stock from the same industry, has gained 24.1%. The company reported its results for the quarter ended April 2026 more than a month ago.
Bath & Body Works reported revenues of $1.38 billion in the last reported quarter, representing a year-over-year change of -3.2%. EPS of $0.32 for the same period compares with $0.49 a year ago.
For the current quarter, Bath & Body Works is expected to post earnings of $0.23 per share, indicating a change of -37.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.7% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Bath & Body Works. Also, the stock has a VGM Score of A.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
