Ulta Beauty, Inc. Q4 FY2025 earnings call

• 2025 was a year of strategic investment and transformative change. Delivered full-year financial performance ahead of plans. - Focused on executing Ulta Beauty Unleashed strategy with priorities: driving core business growth, scaling new businesses, aligning foundation for future. - Elevated omnichannel guest experience, strengthened assortment and merchandising strategy, built and expanded new growth channels, aligned foundation for future, reignited culture and brand.

Fourth quarter net sales increased 11.8% to $3.9 billion. Full-year net sales increased 9.7% to $12.4 billion. Comparable sales for the quarter increased 5.8% driven by a 4.2% increase in average ticket and a 1.6% increase in transactions. For the year, comparable sales increased 5.4% driven by a 3.3% increase in average ticket and a 2% increase in transactions. Skincare and wellness category increased to 24% of sales, makeup category decreased to 35% of sales. Fragrance was strongest performing category with double-digit comp growth. Haircare category had best comp performance this year with high single-digit growth. Skincare and wellness category had mid single-digit comp growth. Makeup category took market share with low single-digit growth. Services had mid single-digit comp growth.

For fiscal 2026, anticipate net sales will increase between 6% to 7%, with comp sales growth between 2.5% and 3.5%. Planning operating profit to grow in line or faster than net sales, and diluted EPS will increase more than operating profit. Expect net sales to be between $13.1 and $13.2 billion driven by comp sales growth and net new stores. Gross margin expected to be approximately flat. SG&A growth planned to be in line with to slightly below net sales growth. Operating profit expected to increase between six and 9%, resulting in operating margin flat to up 20 basis points. Anticipate diluted EPS will be between $28.05 and $28.55 per share.

Q: Christina Catay asked about comp composition, pricing, and SG&A.

A: Keisha and Chris responded on pricing, SG&A components like incentive comp and marketing investments, and promotionality.

Q: Chris Horvers asked about industry growth backdrop, Rare Beauty launch.

A: Keisha and Chris discussed industry growth outlook, Rare Beauty's early performance.

Q: Sydney Wagner asked about competitive environment.

A: Keisha talked about Ulta's competitive moat with low to lux, wellness, and omni-channel.

Q: Oliver Chen asked about makeup comp, K-beauty, wellness, comp store sales guidance, and promos.

A: Keisha and Chris responded on makeup categories, K-beauty and wellness integration, comp store sales guidance drivers, and promo plans.

Q: Susan Anderson asked about new DC timing, op margin, and comp growth.

A: Keisha and Chris answered on new DC timeline, op margin drivers.

Q: Kate McShane asked about SG&A and marketing spend.

A: Keisha responded on SG&A growth profile and marketing investment priorities.

Q: Mark Altrager asked about comp guide and space NK.

A: Keisha and Chris talked about comp guide drivers and space NK performance.

Q: Olivia Tong asked about investment spend leverage and consumer flexibility.

A: Chris and Keisha discussed investment spend leverage and consumer flexibility in the model.

Q: Kate McShane followed up on SG&A and marketing.

A: Keisha further discussed SG&A and marketing investment plans.