When high-profile beauty industry deals are announced (ahem, rhode), they are often met with a mixed bag of controversy, conspiracy theories, and naysayers. This was not the case when Ulta Beauty announced last week it had acquired British prestige beauty retailer SpaceNK from Manzanita Capital for an undisclosed amount. Although any acquisition is a gamble, beauty industry insiders and the investment community recognize that this acquisition instantly elevates Ulta Beauty’s international aspirations, bypassing the several years it would take to grow the UK market organically.
Commended for proving her “Ulta Unleashed” strategy is far more than just whiteboard jargon, Ulta Beauty President and CEO Kecia Steelman is aggressively catapulting the retailer into a significant position as an international powerhouse and a force Sephora will have no choice but to reckon with on a global scale.
Financial terms of the transaction were not disclosed, but past press reports indicated that Manzanita Capital was looking for a deal between £300 million and £400 million. Last year, SpaceNK reported its annual revenue for 2024 (year ending March 25) was £196.5 million ($264.4 million), a 34% increase from £146.6 million ($197.2 million) year over year.
The SpaceNK acquisition is another strategic layer of Ulta Beauty’s international growth plan, which already includes the retailer’s expansion into Mexico and the Middle East. When Steelman sat down with BeautyMatter’s co-founder and President, John Cafarelli, for a fireside chat at Future50 2025, she said, “We believe the Ulta Beauty experience can resonate globally, but we’re being very thoughtful in how we do it.”
During the fireside chat, Steelman shared that Ulta Beauty’s “secret weapon” is culture. “We always say, ‘Culture eats strategy for breakfast.’ It’s not just a phrase on the wall. It’s how we lead every day.”
Culture may eat strategy for breakfast at Ulta Beauty, but the retailer’s acquisition of SpaceNK signals a savvy strategy and a cultural priority. Known for its customer-centric environment, SpaceNK is a culturally home-grown success story, loved by its UK audience for creating a culture of high-touch, localized, and personalized service. This gives Ulta Beauty a significant upper hand in the highly coveted (and competitive) UK market and provides SpaceNK the financial and strategic horsepower it needs to keep the pressure up on Sephora.
The UK market is a golden goose for beauty retailers, with consumer spending on beauty and personal care products reaching £32.4 billion ($43.5 billion) in 2024, according to a recent report by the British Beauty Council and Oxford Economics. The UK also outpaces France, Germany, Spain, and Italy in prestige skincare sales, according to Circana.
SpaceNK opened its first store in London in 1993, quickly gaining popularity with upscale clientele for carrying hard-to-find emerging international brands like Diptyque, By Terry, and NARS. Now known for its experiential stores and prestige brands, SpaceNK has built a loyal customer base with 83 locations across the UK and Ireland.
Sephora attempted to dethrone SpaceNK in the UK in the early aughts but failed, citing higher costs. But the international beauty retailer reentered the UK in 2021 with its acquisition of online retailer Feelunique, followed by the installation of an impressive London flagship in 2023, with plans to open 20 additional stores by 2027.
Up until now, SpaceNK has more than held its own against Sephora in the UK, but with Ulta Beauty's deep pockets and SpaceNK’s loyal customer base, experts believe this deal gives SpaceNK the power to potentially outperform Sephora in the UK.
“They will certainly have it [the power to take on Sephora in the UK] if they want it,” said Richard Kestenbaum, a Partner at Triangle Capital. To achieve this, Kestenbaum explained, SpaceNK will need to grow in a way that allows it to remain the entity consumers identify with personally, while also being an aggressive business that captures market share and grows in the UK.
Recognizing the value of SpaceNK’s best-in-class executive suite and the emotional bond between SpaceNK and its devout customers, Ulta Beauty indicated that SpaceNK will operate independently of its parent company, with its existing CEO, Andy Lightfoot, at the helm.
But that’s not to say that the SpaceNK business will remain the same over time. Simeon Siegel, Senior Retail Analyst and Managing Director at BMO Capital Markets, noted that Ulta Beauty didn’t acquire this business to maintain the status quo. “I think we can feel very comfortable saying Ulta [Beauty] is not hoping ten years from now it [SpaceNK] will look exactly like it looks right now. They're buying this [SpaceNK] as a way to get their [Ulta Beauty] first step into the UK market. They're buying this as a way to collapse a learning curve and accelerate years of investment into one contract. But presumably, it feels safe to say they want this business to grow.”
Many prestige brands have been wooed by the allure of Sephora’s global dominance, submitting to the black and white cushioned handcuffs, locking in brands for years-long exclusivity agreements. This deal gives Ulta Beauty a clear negotiating chip.
During its first-quarter earnings call in April of this year, LVMH, Sephora’s parent company, blamed Sephora for the luxury conglomerate’s less-than-stellar performance in the US. Ilya Seglin, Managing Director at Cascadia Capital, noted that Ulta Beauty’s acquisition of SpaceNK occurs at a vulnerable time for Sephora and may give Ulta Beauty the leverage to sway U.S. beauty brands that would otherwise sign exclusive deals with Sephora. “With Sephora struggling, they are putting even more pressure on brands [to sign exclusives] and it's harder for them [Ulta Beauty] to have a conversation with brands when Sephora can offer an eventual global solution for distribution.”
But now, Ulta Beauty can have those conversations. “I think what Kesia [Steelman] is saying [with this acquisition], particularly to premium skincare and color brands, is ‘I can offer you a real alternative. I’ll soon be able to cover Mexico and the Middle East, and now I have a solution in the UK,” Seglin said. “Historically, if you had global ambitions, you kind of had to go to Sephora. Now, she [Steelman] can approach these brands and say, ‘Now I can cover you for more than just the US, and markets that actually matter for you.’ That’s the opportunity.”
SpaceNK has longstanding relationships with niche and emerging prestige and luxury brands. And Ulta Beauty, though a powerhouse retailer in the US and one of the “Big 5” retail scale-up opportunities, hasn’t always been the partner of choice for global, prestige brands. Ulta Beauty is considered mass-prestige, and Sephora (and to some extent Bluemercury) has had more success in attracting true global prestige brands. This transaction will give Ulta Beauty unprecedented access to those brands, which will help to differentiate their store assortment in the US.
SpaceNK is also plugged into the UK/European trend ecosystem. This gives Ulta Beauty a new pipeline of product and concept discovery to reverse-import trends spotted at SpaceNK and use them to refresh US assortment strategy or own-brand innovation.
Although Ulta Beauty stated that SpaceNK will remain independently operated, experts assume that over time, there will be some sort of integration between the two retailers. Whether SpaceNK becomes a digital-only property selling premium brands in the US, the British retailer opens a shop-in-shop in Ulta stores, or opens a walled garden to merchandise luxury products within the orange and pink walls, or SpaceNK opens its own stores in key US markets—the integration will need to be handled delicately to prevent SpaceNK from losing its valued consumers.
Kestenbaum said that Ulta Beauty will have to ensure SpaceNK keeps its loyal customers during this integration. “Beauty is such a personal thing, and you have consumers choosing retailers based on personal identity,” Kestenbaum explained. “For example, Neiman Marcus is very vulnerable right now because it's not clear what its future will be now that it's been taken over by Saks. Neither SpaceNK nor Ulta [Beauty] can afford for that to happen, to leave SpaceNK customers vulnerable.” Kestenbaum said Ulta Beauty will have to retain consumers’ identity and how they feel about SpaceNK, as Ulta Beauty builds the business in a way that can be most effective.
No one can predict how an acquisition will play out weeks or even months after a deal is signed, but experts are optimistic that this deal will show its value for both parties. Siegel pointed out that previously, Ulta Beauty was known for its organic expansion, and with this acquisition, the retailer has chosen to buy rather than to build. “This [the deal] will be a fantastic triumph if we look back [after five years] and recognize that by buying an existing business, Ulta [Beauty] skipped many years of growing pains, learning curves, and upfront investments to simply acquire an existing business and help the business scale.”
Does this deal mean prestige brands with longstanding relationships with SpaceNK will continue those relationships? “At the end of the day, the brands decide where they want to sell,” Siegel told BeautyMatter. “A brand doesn't suddenly choose to sell in a box that they did not agree to sell in, because that box now has a different corporate parent. It's not how it works. At the end of the day, the brands will decide. They will need to weigh the delicate balance of exclusivity versus distribution and buying.”
Siegel thinks it’s an important distinction that buying the business doesn’t automatically grant Ulta Beauty SpaceNK’s distribution. “Now, does it open up relationships? Sure, but frankly, who’s not taking that call from Ulta [Beauty]?”
This deal allows Ulta Beauty to appeal to multiple psychographics and wallets simultaneously, without confusing the consumer or diluting its core positioning: Ulta Beauty for mass/prestige, SpaceNK for luxury/aspiration. Given the massive gap in the US market for luxury beauty retail, could this mean a return of the SpaceNK nameplate at some point? Could it mean rolling out the SpaceNK brand as a luxury player in other markets? Although there has been no indication of this, at a minimum, Ulta Beauty now has insights, data, and learnings into the luxury/aspirational customer through SpaceNK.
SpaceNK has a small but highly engaged, affluent customer base. If Ulta Beauty overlays its tech stack or loyalty intelligence on this base (for which Ulta Beauty is top-notch), it creates an opportunity to cultivate high-margin, high-repeat-purchase cohorts within the SpaceNK customer base. This creates defensibility at a time when loyalty programs are becoming key brand differentiators, especially in the beauty sector.
