ULTA Q3 Deep Dive: Digital Strength, Brand Innovation, and Market Share Gains Fuel Results

Beauty, cosmetics, and personal care retailer Ulta Beauty (NASDAQ:ULTA) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 12.9% year on year to $2.86 billion. The company’s full-year revenue guidance of $12.3 billion at the midpoint came in 2% above analysts’ estimates. Its GAAP profit of $5.14 per share was 11.7% above analysts’ consensus estimates.

Is now the time to buy ULTA? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Ulta’s third quarter was met with a positive market response, driven by robust sales growth and ongoing market share gains in both mass and prestige beauty categories. Management credited the quarter’s momentum to enhanced in-store experiences, an expanding loyalty program, and a strong slate of exclusive brand launches. CEO Kecia Steelman pointed to double-digit e-commerce growth and a record 46.3 million loyalty members as key contributors, emphasizing the company’s ability to “accelerate our top-line growth, increase our market share, and drive our results.”

Looking ahead, Ulta’s raised full-year guidance is underpinned by continued investment in digital capabilities, new store formats, and a deep pipeline of exclusive product launches. Management expects near-term operating margins to remain pressured by higher SG&A, but believes recent technology and supply chain upgrades will support long-term profitable growth. Steelman noted, “We are focused on building a plan that positions us to deliver against our long-term targets,” while the company’s new CFO Chris Delorphis will help refine cost discipline as Ulta balances innovation with operational efficiency.

Key Insights from Management’s Remarks

Ulta’s outperformance was shaped by strong guest engagement, successful merchandising innovation, and improved execution across digital and physical channels.

• Exclusive brand momentum: Ulta’s exclusive launches, including the Beyoncé-backed Sacred hair care line and Fenty Skin Body, drove guest traffic and were cited as some of the most successful product introductions in company history.
• Loyalty program expansion: The loyalty program reached a record 46.3 million members, reflecting meaningful year-over-year growth and driving higher repeat purchases and engagement across channels.
• E-commerce and app engagement: Digital sales grew in the mid-teens, with 65% of online member transactions now coming through the app, up from 63% last quarter. Management attributed this to new features such as “replenish and save” and a streamlined buy-online-pickup-in-store experience.
• Market share gains in all categories: Ulta gained share in both mass and prestige segments, with fragrance and prestige skincare showing particular strength. Notably, the company expanded shelf space for fragrance in over 60% of U.S. stores to support this growth.
• SG&A investments and margin pressure: Higher SG&A was driven by increased staffing, incentive compensation, and technology investments, with management acknowledging these costs will be a focus for improvement as Ulta transitions from a heavy investment year.

Drivers of Future Performance

Ulta’s outlook reflects expectations for sustained digital expansion, ongoing product innovation, and careful management of operating expenses as it balances growth and profitability.

• Digital acceleration: Continued investment in personalization, app features, and marketplace expansion are expected to drive further online penetration and customer engagement. Management highlighted recent digital initiatives as pivotal to maintaining sales momentum across both channels.
• Exclusive product pipeline: A strong slate of upcoming exclusive and new brand launches is seen as central to sustaining guest interest and market share gains. Management expects innovation and category diversification, particularly in wellness and professional products, to support revenue growth.
• Margin management focus: With 2025 a heavy investment year, management plans to moderate SG&A growth and seek cost efficiencies in 2026, aided by recent technology upgrades and leadership changes. While near-term margins remain pressured, the company is committed to stabilizing operating margins at or above current levels.

Catalysts in Upcoming Quarters

In the upcoming quarters, our team will be closely monitoring (1) the ramp-up of digital initiatives and app engagement for signs of sustained omni-channel growth, (2) the ability to manage SG&A and operating margin as recent technology and supply chain investments roll off, and (3) guest response to new exclusive brand launches and expanded wellness offerings. Expansion into international markets and execution of the new UB Marketplace will also be important indicators of Ulta’s evolving growth profile.

Ulta currently trades at $552.77, up from $536 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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