Ulta Beauty reported fiscal second-quarter results that underscored a more cautious U.S. consumer, with net sales coming in below Wall Street projections while earnings per share matched consensus.
For the quarter, Ulta posted net sales of approximately $2.55 billion, missing the $2.61 billion analyst consensus. Comparable sales declined 1.6% year-over-year, a sharper drop than the 0.5% decline analysts had expected. Management attributed the softer top line to weaker demand in mass cosmetics and fragrances, a more promotional retail environment, and lower average ticket size as shoppers became increasingly price-conscious.
Diluted EPS came in at $6.65, in line with estimates. However, profitability metrics showed pressure: operating margin contracted to 13.6% from 15.2% a year earlier, and gross margin dipped amid inventory write-downs and a sales-mix shift toward lower-margin prestige products. Ulta reiterated full-year guidance, projecting EPS of $23.20 to $23.60 and net sales of $10.5 billion to $10.6 billion.
Heading into the report, analyst estimates had initially centered on EPS of $6.21 and revenue of $3 billion, according to a pre-earnings preview. The stock had been down double digits year to date and was coming off back-to-back post-earnings selloffs. FactSet data showed an average analyst price target of $623.54 versus a trading price around $533.95, implying nearly 20% upside, with about two-thirds of analysts bullish. Still, concerns over marketing spend and margin erosion remained in focus, especially after Ulta lost dedicated shelf space in Target.
Broader beauty and specialty retail signals were mixed. Estée Lauder posted a strong quarter, supporting prestige beauty sentiment, while Warby Parker and Sally Beauty delivered divergent post-earnings reactions. Ulta's results, however, reinforce that even resilient beauty retail is not immune to inflation, high interest rates, and a pullback in discretionary spending.
