Key Takeaways:
Ulta Beauty closed the second quarter of fiscal 2025 on a confident note, reporting robust topline growth, margin expansion, and stronger-than-expected profitability, while signaling caution on shifting consumer demand in the second half of the year. The company also raised its full-year guidance, which showed the momentum behind its “Ulta Beauty Unleashed” strategy.
For the thirteen weeks ended August 2, 2025, Ulta Beauty’s net sales rose 9.3% year over year to $2.79 billion, compared to $2.55 billion in the prior-year quarter. Comparable sales, a key retail metric that combines e-commerce and stores open at least 14 months, increased 6.7% versus a 1.2% decline a year earlier. Growth was fueled by both higher transaction volumes (+3.7%) and larger average ticket sizes (+2.9%), reflecting consumer resilience across categories.
Gross profit climbed 11.6% to $1.1 billion, with gross margin expanding to 39.2% from 38.3%, primarily driven by reduced inventory shrinkage and improved merchandise margins. On the other hand, selling, general, and administrative expenses (SG&A) increased 15% to $741.7 million, representing 26.6% of net sales (up from 25.3%) as the company absorbed higher incentive compensation, store payroll, and corporate overhead. Operating income was $344.9 million, equivalent to 12.4% of sales, slightly down from 12.9% in Q2 2024.
Bottom-line performance remained healthy. Net income rose 3.3% to $260.9 million, with diluted earnings per share (EPS) advancing 9.1% to $5.78 versus $5.30 last year, including a $0.03 tax benefit from stock-based compensation.
“The Ulta Beauty team delivered strong results in the second quarter, including 6.7% comparable sales growth. Outstanding top-line performance, fueled by growth across all major categories, drove market share growth and better-than-expected profitability,” said CEO Kecia Steelman in a press release.
First-Half 2025 Performance
For the first six months of fiscal 2025, Ulta Beauty reported net sales of $5.6 billion, up 6.8% from $5.3 billion in the prior-year period. Comparable sales increased 4.7% compared with a modest 0.2% rise a year earlier, driven by higher average tickets (+2.6%) and transactions (+2.1%).
Gross profit expanded 7.7% to $2.2 billion, with margin improving to 39.1% from 38.8%. Operating income reached $746.6 million, representing 13.2% of sales, down slightly from 13.8% last year. Net income was $565.9 million, versus the prior year’s $565.7 million—while diluted EPS climbed 6.0% to $12.49 (versus $11.78), aided by favorable tax accounting adjustments.
Category Performance
Ulta Beauty’s diversified portfolio remains a key growth engine. In Q2 2025, sales by category broke down as follows:
The shift highlights a growing consumer demand for skincare and wellness, alongside momentum in fragrance, which is partially offset by slight share declines in cosmetics and haircare.
Balance Sheet & Shareholder Returns
At quarter-end, Ulta Beauty held $242.7 million in cash, reflecting significant outlays for inventory, store expansion, and its acquisition of SpaceNK, completed in July 2025. Merchandise inventories rose 20.5% to $2.4 billion, reflecting preparation for new brand launches, 62 net new Ulta Beauty stores, and the addition of 83 SpaceNK stores in the UK and Ireland.
The company reported $289.1 million in short-term debt, drawn on its revolving credit facility to support the SpaceNK acquisition. Shareholder returns were robust. During Q2, Ulta Beauty repurchased 244,559 shares for $109.5 million. Year-to-date, repurchases totaled 1.2 million shares at $468.3 million, leaving $2.2 billion authorized under its $3.0 billion program.
Store Network
Ulta continued expanding its brick-and-mortar presence, opening 24 new stores in Q2, while closing two, remodeling five, and relocating two. Year-to-date, the company opened 30 stores, remodeled nine, and closed two, bringing its US footprint to 1,473 stores totaling 15.4 million square feet. SpaceNK adds another 83 stores across the UK and Ireland, marking Ulta Beauty’s clearest international expansion play to date.
Outlook for Fiscal 2025
Reflecting a strong first-half performance and the integration of Space NK, Ulta Beauty raised its full-year guidance:
Steelman highlighted both opportunity and caution, noting that while Q2 reflected strong execution and guest engagement, the company remains mindful of near-term macro uncertainty. “Our outlook for the remainder of the year reflects both the strength of our year-to-date performance and our caution around how consumer demand may evolve in the second half of the year. While near-term uncertainty persists, we’re staying focused on what we can control and on executing with excellence to deliver our uniquely Ulta Beauty experience,” she said.
Ulta Beauty’s second quarter of fiscal 2025 highlights a company that is not only weathering a dynamic retail landscape but also using acquisitions, omnichannel capabilities, and disciplined financial management to sharpen its edge. While SG&A inflation and macroeconomic pressures remain key watchpoints, Ulta Beauty’s ability to expand margins, lift EPS, and raise guidance is a testament to its resilience and continued relevance as the largest US specialty beauty retailer. Its acquisition of SpaceNK also signals a bolder international strategy, while growing demand for skincare and fragrance suggests Ulta Beauty is aligned with shifting consumer preferences.
