Ulta Beats Earnings, Cautions Consumer Uncertainty As Back-To-School Season Begins

Ulta Beauty delivered solid second-quarter results and raised its full-year financial outlook, while cautioning that a potential consumer slowdown could materialize in the second half and impact sales of beauty products. 

Second-quarter comparable sales increased 6.7%, exceeding Bloomberg Consensus estimates. This outperformance, combined with a solid first half, led Ulta to raise its full-year revenue outlook to $12 to $12.1 billion, up from a previous forecast of $11.7 billion. Comparable sales are expected to be around 3.5% this year, up from the prior guidance of 1.5%. 

In the beauty products industry, Ulta commands about 9% of the total U.S. market, underscoring its substantial retailer presence across all aspects of cosmetics. So its earnings are certaintly a proxy to consumer behavior trends across the industry. 

Moreover, when management speaks, analysts tend to listen. Ulta’s interim chief financial officer, Chris Lialios, stated on the earnings call that comparable sales are now expected to be flat or up by a low single-digit percentage in the second half of the fiscal year.

“We continue to believe it is prudent to take a cautious approach given continued uncertainty around consumer spending,” Lialios said.

The earnings results highlight accelerating consumer demand in the first half, but a mix of elevated inflation, high interest rates, and tariffs may be sidelining some consumers from splurging on premium cosmetics as the back-to-school season kicks off.

Other key developments mentioned during the earnings report:

Target Partnership Ending: Ulta and Target will not renew their 600-store shop-in-shop partnership (expiring next year).
Leadership Change: Former CFO Paula Oyibo departed in June after just a year in the role. Lialios, previously SVP & Controller, is serving as interim CFO.
Consumers: Cosmetics demand remains resilient despite budget pressures, with shoppers balancing discretionary beauty spending against higher prices.

“Ulta Beauty’s raised 2025 revenue outlook appears conservative, likely due to economic uncertainty, leaving room for more surprises,” Bloomberg Intelligence’s Lindsay Dutch wrote in a note. 

Ulta shares soared as much as 9.1% after hours on Thursday following the earnings release. Much of those gains have been erased in premarket trading on Friday, with shares up about 4%. The stock is now up 22% year-to-date (as of Thursday’s close), far outpacing the S&P 500’s +11%.

Goldman analyst Kate McShane told clients earlier that management “still sounds conservative”. She added: “While the company increased its sales expectations for 2H, management continues to take a cautious approach given ongoing uncertainty around consumer spending.”