Ulta Beauty (ULTA) Q2 2025 earnings summary

Executive summary

• Net sales for Q2 2024 rose 0.9% to $2.6B, but comparable sales declined 1.2% year-over-year, driven by a 1.8% drop in transactions and a 0.6% increase in average ticket, with operating margin at 12.9% and diluted EPS at $5.30, down from $6.02 last year.

• Net income for Q2 2024 was $252.6M, down from $300.1M in Q2 2023, primarily due to higher SG&A expenses and lower gross profit.

• Loyalty program membership increased 5% to 43.9M, with strong growth in Platinum and Diamond tiers.

• New store openings and exclusive brand launches contributed positively, but market share in prestige beauty declined.

• Ulta operated 1,411 stores as of August 3, 2024, up from 1,362 a year earlier.

Financial highlights

• Gross margin for Q2 2024 decreased to 38.3% from 39.3% year-over-year, mainly due to higher promotions, lower merchandise margins, and deleverage of store costs.

• SG&A expenses rose 7.3% to $644.8M (25.3% of sales), driven by higher payroll, benefits, and strategic investments.

• Operating income for Q2 2024 was $329.2M (12.9% margin), down from $391.6M (15.5%).

• Inventory increased 10.1% to $2B, reflecting new stores and brand launches.

• Cash and cash equivalents stood at $414M at quarter end.

Outlook and guidance

• FY net sales expected between $11B–$11.2B; comp sales projected down 2% to flat; prior guidance was $11.5B–$11.6B and 2%–3% comp growth.

• Operating margin forecasted at 12.7%–13%; gross margin to deleverage 70–90 bps.

• Diluted EPS guidance set at $22.60–$23.50, down from prior $25.20–$26.00.

• CapEx planned at $400M–$450M; $1B in share repurchases targeted for the year.

• Management expects continued long-term market share gains, but persistent inflation and macroeconomic pressures may impact future sales and profitability.