How much of the SG&A increase was incremental marketing, what's the wraparound effect in FY27, and what's the promotional backdrop across the industry?

Chris DelOrefice attributed Q4 SG&A growth to higher incentive compensation, variable costs from increased sales, and targeted marketing investments for FY27. Kecia Steelman added that Ulta has no plans to accelerate promotions, relying on its strong loyalty base and personalization, despite a competitive environment. “we did make some investments to support the outperformance in growth, most notably marketing, some media investments that not only helped 2025, but positions us nicely as we look into 2026.”

Is the 2% to 4% industry growth forecast a deceleration from FY26, and how is the geopolitical backdrop factored into the FY27 sales outlook?

Kecia Steelman clarified that the 2% to 4% growth is very close to FY26, reflecting normalization and challenging comps. The guidance considers consumer demand, the competitive promotional environment, and beauty's resilience, with a focus on controlling internal factors. “There were really 4 areas that we looked at. The first was really on consumer demand. We're cautious about how the consumer demand could evolve given the macro pressures and rising conflicts. But beauty has been a resilient category.”

What is the early response to the Rare Beauty launch, and how should its impact be sized relative to other significant brand launches?

Kecia Steelman confirmed Rare Beauty launched very strong, contributing positively to makeup. She noted that while significant, it is one brand among 600, and its impact is already embedded in the FY27 guidance along with other newness. “Rare, while it came out of the gates very strong, and we're thrilled because makeup having this halo impact in makeup is fantastic for us. It's one brand, and we carry 600 brands in the assortment.”

ULTA

Ulta Beauty (ULTA) Q4 FY26 earnings call: guidance and Q&A

Q: Can you discuss the dynamics of the 4.2% average ticket increase versus decelerating transactions, and what you're seeing from brands regarding pricing for FY27?

Kecia Steelman stated that pricing increases typically impact 10% to 15% of the assortment annually, and the company is planning for a normalized pricing environment in FY27, with no unusual trends observed. “We see pricing increases every year. They typically impact about 10% to 15% of the overall assortment. And we're really planning for normalized pricing environment in fiscal 2026.”

Earnings call· Jan 2026 (Q4 FY26)· Consumer Discretionary· Mar 12, 2026

Source: earnings call transcript

Executive summary

Ulta Beauty Q4 FY26 — Strong Performance and Strategic Investments Drive Growth

Ulta Beauty concluded FY26 with strong Q4 results, exceeding financial targets through strategic investments in its Unleashed strategy. The company is focused on leveraging these investments to drive sustainable profitable growth and market share expansion in FY27, while navigating a competitive beauty landscape and potential macro uncertainties. Management expects a normalized pricing environment and continued consumer resilience in the beauty category.

Highlights

Full year FY26 net sales grew nearly 10% to $12.4 billion.
Full year FY26 diluted EPS of $25.64, exceeding previously provided guidance.
Q4 FY26 net sales increased 11.8% to $3.9 billion.
Q4 FY26 comparable sales increased 5.8%, driven by a 4.2% increase in average ticket and a 1.6% increase in transactions.
Loyalty program grew 5% to a record 46.7 million active members in FY26.

Concerns

Q4 FY26 gross margin decreased 10 basis points to 38.1% of sales, primarily due to channel mix and deleverage of store fixed costs.
Q4 FY26 SG&A increased 23% to $1 billion, driven by higher incentive compensation and the impact of Space NK.
Q4 FY26 SG&A as a percentage of sales increased 230 basis points to 25.7%.
Q4 FY26 operating profit was 12.2% of sales.

Guidance & targets

Category	Target	Timeline	Confidence
Net sales growth	6% to 7% increase high materiality	FY27	High
Net sales	$13.1 billion and $13.2 billion high materiality	FY27	High
Comparable sales growth	2.5% and 3.5% high materiality	FY27	High
Operating profit growth	6% and 9% high materiality	FY27	High
Diluted EPS	$28.05 and $28.55 per share high materiality	FY27	High
Net new company-operated stores	50 to 60 medium materiality	FY27	High
Gross margin	Approximately flat high materiality	FY27	Medium
SG&A growth	In line with to slightly below net sales growth high materiality	FY27	High
Capital expenditures	$400 million and $450 million medium materiality	FY27	High
Share repurchases	Approximately $1 billion high materiality	FY27	High
Beauty category growth	2% to 4% range medium materiality	FY27	Medium
Assumed tax rate	24.2% and 24.4% low materiality	FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Skin care and wellness Driven by prestige skincare and wellness. K-Beauty brands medicube, ANUA, and Peach & Lily, and new brands DRMTLGY and Personal Day drove strong guest engagement. Highly giftable launches from Therabody, Nodpod, and Saje delivered strong growth in wellness. Sales as % of total: 24%	—	mid-single-digit comp growth	—	—
Makeup Decreased to 35% of sales primarily reflecting the impact of Space NK, which has a higher mix of skin care sales. Market share was gained, supported by positive comps in both mass and prestige makeup. Mass makeup growth was driven by newness from L'Oreal, Morphe, and Ulta Beauty Collection, while Prestige Beauty benefited from newness from Kylie Cosmetics and MAC. Sales as % of total: 35%	—	low single-digit growth	—	—
Fragrance Strongest performing category again this quarter, fueled by newness from established brands (YSL, Prada) and exclusive brands (NOYZ, Snif, Summer Mink by Drake), coupled with strong performance of holiday gift sets. New co-branded TV campaigns, expanded in-store space, and better in-stocks positioned Ulta Beauty as the fragrance destination.	—	double-digit comp growth	—	—
Hair care Delivered its best comp performance this year, primarily driven by strong performance from new brands including amika and Moroccanoil, and exclusive Cecred, which continued to build sales momentum after its April launch.	—	high single-digit comp growth	—	—
Services Driven by increases in salon and specialty services, including ear piercing and makeup services.	—	mid-single-digit comp growth	—	—

ULTA operating KPIs by quarter

ULTA operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Jan 2026 Q4 FY26	Apr 2026 Q1 FY27	Jul 2026 Q2 FY27	Change vs prior quarter
Loyalty program members	46.7M We grew our loyalty program by 5% to a record 46.7 million active members, driven by strong growth in reactivated members and strong retention of existing members. Source: earnings call transcript	<47M During the quarter, we expanded our Ulta Beauty Rewards loyalty program to nearly 47 million members, up 4% year-over-year. Source: earnings call transcript	~47M Our robust loyalty program, which now encompasses about 47 million active members, remains central to inspiring members through personalized experiences meaningful rewards and exclusive benefits that deepen engagement and build lasting relationships with Ulta Beauty. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline
Ulta Beauty on TikTok Shop	launch	next week
Rare Beauty by Selena Gomez	launch	start of FY27
Destin De Balmain (new scent)	launch	—

Deals & partnerships

Space NK Acquisition of a luxury beauty retailer

Space NK operates more than 80 stores in the U.K. and Ireland. Its impact on Q4 FY26 sales mix was noted, having a higher mix of skin care sales.

Grupo Axo International expansion into Mexico

Opened nine stores in Mexico through this joint venture partner.

Alshaya International expansion into the Middle East

Opened two stores in the Middle East through this franchise partner.

TikTok Expanded strategic integration for social commerce

Launching Ulta Beauty on TikTok Shop next week, allowing guests to purchase directly from content. This leverages social and AI-enhanced commerce platforms.

Risks & headwinds

Rising global conflicts and economic conditions FY27

Could impact economic conditions

Mitigation:Staying focused on controlling internal factors; beauty category has shown resilience to macro pressures.

Competitive beauty landscape FY27

Competitive and dynamic environment

Mitigation:No plans to accelerate promotions; leveraging strong loyalty base, personalization, and omnichannel activation; focusing on brand-building capabilities and exclusivity.

Consumer discernment in spending decisions FY27

Strong focus on value and affordability, increasing discernment in spending decisions

Mitigation:Strategic advantage of carrying low-to-lux price points; ability to flex as the consumer flexes; leveraging AI for strategic business decisions.

Challenging comparable sales comparisons H2 FY27

Increasingly challenging comps as we move through the year

Mitigation:Plan built to continue taking market share regardless of economic environment; focus on strong execution and innovation.

SG&A growth in first half of FY27 H1 FY27

Double-digit SG&A growth

Mitigation:Due to Space NK acquisition and annualization of investments; expected to normalize in H2 FY27 with productivity programs and disciplined investment prioritization.

What to watch in Q1 FY27

Comp Sales Growth

Q1 FY27

Current 5.8%

Target 2.5% to 3.5%

Why it matters

To assess if the company can achieve its FY27 guidance, especially with easier comparable sales comparisons in the first half of the year.

For the year, we anticipate net sales will increase between 6% to 7% with comp sales growth between 2.5% and 3.5%.

Find out whether ULTA delivers this. Inve re-checks your case every morning.

Q&A highlights

Can you discuss the dynamics of the 4.2% average ticket increase versus decelerating transactions, and what you're seeing from brands regarding pricing for FY27?

Kecia Steelman stated that pricing increases typically impact 10% to 15% of the assortment annually, and the company is planning for a normalized pricing environment in FY27, with no unusual trends observed.

“We see pricing increases every year. They typically impact about 10% to 15% of the overall assortment. And we're really planning for normalized pricing environment in fiscal 2026.”

asked by Krisztina Katai · answered by Kecia Steelman

2 min read 6 chapters

Detailed narrative

FY26 Strategic Progress and Achievements

Ulta Beauty's 'Unleashed' strategy in FY26 focused on driving core business growth, scaling new businesses, and realigning its foundation for the future. The company achieved significant progress, including enhancing the omnichannel guest experience, modernizing its assortment with over 100 new brands, and expanding internationally. These efforts led to stronger-than-expected financial performance and market share gains.

International Expansion and New Growth Channels

The company expanded its international footprint with nearly 100 stores across five countries, including the acquisition of Space NK in the UK and Ireland, nine new stores in Mexico via a joint venture with Grupo Axo, and two stores in the Middle East through a franchise partner, Alshaya.

Additionally, Ulta launched a curated online Marketplace with over 200 brands and 5,000 SKUs, and expanded its wellness initiative into over 400 stores.

Digital and AI-Enhanced Commerce Initiatives

Digital upgrades introduced guest-friendly features like 'replenish and save' and 'wish list,' alongside expanded convenience through 'split cart.' AI-powered personalization and an automated marketing engine delivered relevant content, while AI capabilities were also implemented for guest services and an order management system to optimize fulfillment and reduce out-of-stocks. An expanded strategic integration with TikTok will launch Ulta Beauty on TikTok Shop next week.

Supply Chain Transformation and Operational Productivity

Ulta Beauty plans to continue its supply chain transformation efforts in FY27 with increased automation in existing facilities and the construction of a new regional distribution center in the Northwest. These initiatives aim to expand network capacity, increase fulfillment speed, and drive further operational productivity. Investments in systems and processes will also target sales and inventory productivity.

Consumer and Beauty Category Outlook

Management observed continued consumer resilience, a strong focus on value, and increasing discernment in spending decisions throughout FY26, themes expected to persist into FY27. The beauty category is anticipated to grow in the 2% to 4% range, in line with historical averages, assuming no increased broader macro disruption. Ulta remains mindful of rising global conflicts and potential economic volatility.

Culture and Brand Reinvigoration

Ulta Beauty reignited its culture and reinvigorated its brand through decisive organizational changes, adopting a winning mindset, and launching a new marketing brand equity campaign, 'Beauty happens here.' This included engaging in cultural activations like Lollapalooza and Coachella, and leveraging new AI capabilities to deliver relevance and expertise across the guest beauty journey.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.