Dive Brief:
- Ulta Beauty plans to launch on TikTok Shop next week, CEO Kecia Steelman told analysts on a call Thursday. The retailer's fourth quarter net sales grew 11.8% year over year to $3.9 billion, per a press release. The jump was partly due to a 5.8% increase in comparable sales and the acquisition of Space NK.
- Comp growth stemmed from a 4.2% increase in average ticket and a 1.6% jump in transactions. The beauty retailer’s gross profit grew 11.2% to $1.5 billion and operating income during the quarter was $476.9 million, or 12.2% of net sales.
- Ulta’s full fiscal year 2025 net sales grew 9.7% to $12.4 billion compared to 2024. For fiscal year 2026, the retailer expects net sales to grow in a range of 6% to 7% and projects comp growth of 2.5% to 3.5%.
Dive Insight:
Ulta may have beat on the street’s comp expectations for Q4, but experts remarked on the retailer’s softer comp guidance for 2026.
“Near term, the stock may be held back as investors digest a softer FY26 comp outlook of +2.5–3.5% vs. +5.4% in FY25, reflecting tougher compares, more normalized category growth, and pressure from the full annualization of 2H25 investments,” TD Cowen analysts led by Olvier Chen said in an emailed note Friday. “That said, we believe the comp guide could be conservative, with solid QTD trends (February momentum into March) and continued resilience in beauty.”
Company leadership explained the comp outlook during a call with analysts Thursday.
“The comp guidance really reflects a normalization and the fact that we're going to be increasingly having some challenging comps as we move through the year,” Steelman said on the call. “We've adjusted for dynamic operating environments. We're staying really focused on controlling what we can control.”
Steelman noted that the company's TikTok Shop launch will include a curated assortment of brands that are only available at Ulta.
Reflecting on the fourth quarter, Steelman touted the success of AI usage across the company. The retailer tested new conversational AI capabilities for its guest services team, improving resolution efficiency. Additionally, Ulta implemented an AI-backed order management system, which expanded its ship-from-store fulfillment and reduced out of stocks.
Ulta’s e-commerce efforts may be reflective of broader category trends, according to industry experts.
“Ulta delivered the quarter we expected: sales upside led by online comp and another underwhelming margin performance led in part by retail-channel deleverage,” William Blair analysts led by Dylan Carden said in an emailed note Friday. “To Ulta’s credit, it is capturing share in what we believe is a larger beauty category migration online, where we are encouraged to see it embracing TikTok in particular through exclusive product.”
