Ulta Beauty shares climbed after the retailer delivered stronger-than-expected third-quarter results and raised its profit outlook, supported by double-digit sales growth and continued market-share gains. The company highlighted broad strength across both prestige and mass categories, as well as momentum in online and in-store channels.
BNN Bloomberg spoke with Susan Anderson, managing director at Canaccord Genuity, who said Ulta’s Beauty Unleashed strategy is driving meaningful improvements. She added the company’s conservative fourth-quarter guide leaves room for upside if holiday demand remains firm.
Key Takeaways
- Ulta Beauty reported a stronger-than-expected third quarter, with comparable sales up 6.3 per cent and total revenue rising nearly 13 per cent.
- The retailer posted market-share gains across both mass and prestige categories, supported by mid-teens e-commerce growth and steady in-store demand.
- Earnings and margins exceeded expectations, with adjusted EPS of US$5.14 and a strong gross margin helping offset SG&A deleverage.
- Ulta’s Beauty Unleashed strategy — focused on innovation, merchandising and customer experience — is contributing to sustained sales momentum.
- International expansion, including Space NK integration and new markets in Mexico and the Middle East, remains a long-term growth driver.
Read the full transcript below:
ROGER: Shares of Ulta Beauty are trading higher after the Illinois-based cosmetics and fragrance company boosted its full-year profit forecast and logged a convincing beat for the third quarter. Let’s get more from Susan Anderson, managing director at Canaccord Genuity. Susan, thanks for joining us, as always. Let’s talk about the numbers you liked most, because there are quite a few. Looking through them, there were a lot of numbers to like.
SUSAN: Yeah, the numbers were really strong across the board. They reported comps up 6.3 per cent; the Street was at 3.5 per cent, so a very nice beat there. Even in stores, comps were up mid-single digits, which we haven’t seen in a while. E-commerce sales were in the mid-teens, so they were gaining share across both of those channels. And then they beat on the bottom line as well, driven by a very strong gross margin and sales. Earnings came in at US$5.14, beating the Street at US$4.61. So really strong numbers across the board.
ROGER: And what did they do? I mean, there has been a lot of concern in retail about numbers, but Ulta is kind of smashing things. What are they doing right?
SUSAN: Beauty, once again, continues to be very strong, so that’s helping them. But I also think the initiatives they’re working on through their Beauty Unleashed strategy are starting to work. They’re bringing in newness and innovation, they’re improving merchandising and marketing, and they’re improving customer service. All of that is finally coming together.
They also started expanding internationally. They bought Space NK a while back — that business is based in the U.K. — and they’re also opening stores in Mexico and operating franchise stores in the Middle East. I think all of these things are coming together and contributing to the strong numbers. I would note, too, they talked about some price increases, more so in the third quarter versus the second. Typically that’s normal course, but I think they’re seeing a bit more because of the tariff situation, and that did help the top line as well.
ROGER: And who is their customer? Where are they on the curve?
SUSAN: Really, it’s across all demographics. The good thing with Ulta is they cater to prestige and value products. About half of their business is prestige and half is mass cosmetics and beauty products. They cater across all price points, and I think that really benefits them. They did talk about consumers still looking for value, and it sounds like they saw that even more in recent quarters. The fact that consumers can trade across price points throughout the store really helps them.
All ages are still shopping in their stores — mainly women, but men are shopping there as well.
ROGER: And were there any weak points in the sector that you saw?
SUSAN: They did see deleverage on SG&A, due mostly to higher incentive compensation because results have been so strong, and some deleverage from other expenses and investments. That was the one area that wasn’t as strong, but I think the top line and strong gross margin really made up for that.
ROGER: And with their international expansion, how is that performing?
SUSAN: It’s doing well. They don’t break it out, but they talked about learnings they’re getting from Space NK, which they’re thinking about rolling out across the broader Ulta store fleet. Longer term, it’s another growth vehicle for them, which is partly why the stock has done so well.
ROGER: And is this their big season, or does beauty sell consistently throughout the year? Are we looking for a lift from Black Friday into Christmas?
SUSAN: Holiday is a seasonal category for beauty, maybe not as much as others because sales stay pretty strong throughout the year. But you do see a bump over the holiday season. They said Black Friday was very good and strong so far, which is positive. That said, they noted there is still a lot of shopping ahead. Typically we see a December lull, so we’ll see how much that offsets the strong Black Friday performance.
In general, our checks show the beauty category continues to be very strong, and promotions were very rational over Black Friday, which is encouraging heading into the rest of the holiday season.
ROGER: And they raised their outlook. Where do you see the growth coming from?
SUSAN: They raised their outlook, which we still think could be considered conservative, because it implies a step down in comps to low single digits for the fourth quarter. They may be being conservative. If the strength continues through the rest of the holiday season, they could do another mid-single-digit comp. But we’ll watch to see what happens.
They also raised the bottom line. They saw positive growth in all four of their categories last quarter, and I think that will continue into the fourth quarter as well.
ROGER: And just out of curiosity — with all this expansion — any talk of coming to Canada?
SUSAN: Before COVID, they were planning to expand into Canada, but when COVID hit, they decided not to. I would think that’s definitely still on the radar for future expansion.
ROGER: Okay, we’ll leave it there. Susan, thanks as always for joining us.
SUSAN: Thank you.
ROGER: Susan Anderson, managing director at Canaccord Genuity.
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This BNN Bloomberg summary and transcript of the Dec. 5, 2025 interview with Susan Anderson are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
