Ulta Beauty Inc (NASDAQ:ULTA) shares fell about 8% after the beauty retailer issued softer-than-expected guidance for fiscal 2026, overshadowing fourth quarter results that came in ahead of Wall Street estimates.
The company reported strong holiday-driven performance for the quarter, with revenue rising 11.8% year over year to $3.9 billion, topping analyst expectations of roughly $3.82 billion.
Diluted earnings per share came in at $8.01, slightly above the consensus estimate of $7.98.
Comparable sales increased 5.8%, supported by a 4.2% rise in average ticket size and a 1.6% increase in transactions, reflecting steady demand during the holiday shopping season.
Despite the top-line strength, profitability metrics showed pressure. Operating margin declined to 12.2%, down from 14.8% a year earlier, as the company faced higher operating costs and increased investment in strategic initiatives. Operating income totaled $476.9 million in the quarter.
Selling, general and administrative expenses rose 23% year over year to about $1 billion, representing 25.7% of net sales, as the company spent more on advertising, corporate initiatives, and incentive compensation.
For the full fiscal year, Ulta reported net sales growth of 9.7% and diluted EPS of $25.64.
Looking to fiscal 2026, Ulta projected net sales growth of 6% to 7% and diluted EPS of $28.05 to $28.55, slightly below the roughly $28.57 expected by analysts. The company also anticipates comparable sales growth of 2.5% to 3.5%, signaling a slowdown from the prior year.
Management attributed the cautious outlook to several factors, including competitive pressures, inflationary costs, and signs of more selective consumer spending, particularly in discretionary beauty categories as shoppers seek value.
“The Ulta Beauty team closed the year with momentum, delivering strong fourth quarter and full-year sales and continued market share gains,” Ulta Beauty CEO Kecia Steelman said in a statement.
“Looking ahead, we are well-positioned for sustainable, profitable growth in 2026 and beyond and are excited to build on our successes to extend our position as the unmatched beauty and wellness destination for all guests across all ages and life stages.”
