Research · Sep 3, 2026
[ULTA] Ulta Beauty Thesis 2026: Loyalty Moat Tested as Sephora Competition Intensifies
Ulta Beauty entered a normalization phase in FY2024 (ended Feb 2025) with +0.8% comparable sales and EPS of ~$26.03 as Sephora's mass-market expansion into Kohl's shop-in-shops created the first meaningful competitive pressure in Ulta's history. Operating margin compressed 100bp to ~14.7% as marketing and loyalty investment increased. FCF of ~$1.1B sustained buybacks. The FY2025 thesis test is whether Ulta's 42M-member loyalty database, salon traffic driver, and brand exclusivity portfolio can return comps to +2-3% despite permanent Sephora presence in the mass channel.