BOLINGBROOK, Illinois, August 28, 2026, 08:38 EDT
- Shares of Ulta Beauty dropped 1.5% to $531.86 ahead of Friday’s opening bell.
- Sales for the fiscal second quarter increased 8.9% to reach $3.04 billion.
- Comparable sales increased by 3.8%, and the operating margin rose slightly to 12.5%.
- Management increased its targets for 2026 sales, profit, and share buybacks.
Ulta Beauty stock fell on Friday, even after the company surpassed quarterly expectations and raised its full-year outlook. The 1.5% drop before the market opened wiped out roughly $350 million in implied market capitalization.
The response indicates that expectations had outpaced the projection. Ulta shares rose 5.3% in the month leading up to Thursday.
Ulta Beauty (NASDAQ: ULTA) reported earnings of $6.55 per diluted share, surpassing the $6.19 consensus estimate from LSEG referenced by Reuters Reuters.
Net sales totaled $3.036 billion, an increase of 8.9%. Comparable sales grew 3.8%, falling short of the 6.7% increase recorded the previous year company results.
| Metric | Fiscal Q2 2026 | Fiscal Q2 2025 / prior view | Change |
|---|---|---|---|
| Net sales | $3.036 billion | $2.789 billion | up 8.9% |
| Comparable sales | up 3.8% | up 6.7% | down 2.9 points |
| Gross margin | 39.1% | 39.2% | down 0.1 point |
| Operating margin | 12.5% | 12.4% | up 0.1 point |
| Diluted EPS | $6.55 | $5.78 | up 13.3% |
| 2026 EPS guidance | $28.70–$29.00 | $28.36–$28.80 | Guidance raised |
Operating income rose by 10.1% to $379.6 million. The margin was up just one-tenth of a percentage point.
Gross margin declined to 39.1% compared to 39.2%. Executives cited the Space NK business mix as the primary reason for this compression.
Revenue was supported by Space NK and newly launched stores. According to Reuters, Ulta added 13 net new U.S. locations over the quarter.
Management has updated its 2026 sales growth forecast to between 6.7% and 7.2%, compared to the previous range of 6% to 7%.
Guidance for comparable sales increased to a range of 3.2%-3.7%. The forecast for operating-income growth has been raised to 8.3%-9.3%.
The buyback program was raised to $1.8 billion from $1.5 billion. In the first half, Ulta invested $791.1 million to purchase 1.4 million shares.
The backing arrives alongside a more constrained balance sheet. Cash and short-term investments reached $213.5 million, compared with $339.6 million in short-term debt.
Inventory remained steady at about $2.4 billion. This is significant as slower comparable growth could increase the risk of markdowns if excess beauty stock accumulates.
Chief Executive Kecia Steelman stated the company observed no significant shift in consumer behavior. Higher-earning and younger customers kept purchasing prestige products.
Risks. The Space NK assortment may continue to weigh on gross margin. Increased competition from Amazon, TikTok, and specialty retailers could also drive higher marketing expenses.
Investor focus has shifted to execution. After a robust first half, the updated outlook offers minimal tolerance for slower momentum in the second half.
