• by Sarah Mahoney  @mahoney_sarah, March 14, 2025

Ulta Beauty beat Wall Street expectations in the fourth quarter, but issued a downbeat outlook for 2025 and acknowledged losing market share in the beauty category for the first time -- a rare stumble for the high-performing specialty retailer.

In her first earnings call as CEO, Kecia Steelman directly addressed the company’s operational and strategic challenges.

“For the first time, we lost market share in the beauty category in 2024,” she told investors. “I am aware of the challenges that we face. Some of them are external, while others we own. Our business is bigger, and we've managed unprecedented category growth, and it is more complex as we've expanded our assortment… As a result, our in-store presentation and guest experience today are not as strong as we would like.”

Steelman called the year ahead a “transition” and outlined a broad transformation strategy aimed at restoring momentum. Dubbed Ulta Beauty Unleashed, the plan focuses on operational execution, store experience, digital acceleration, and brand curation.

“We will enhance our assortment through further investments in brand building with a particular focus on exclusive, emerging and established brands,” she said. “We’re getting back to the basics of running excellent stores that are easy to navigate, fully stocked, appropriately staffed, clean, and inviting.”

Ulta is also launching an invitation-only digital marketplace, expanding access to a curated mix of brands.

The Bolingbrook, Illinois-based company posted $3.49 billion in total sales for the 13-week quarter, compared with $3.55 billion a year ago, which had 14 weeks. On a comparable 13-week basis, sales rose 1.5%. Net income edged down to $393.3 million from $394.4 million.

For fiscal 2025, Ulta forecasts revenue growth of flat to 1%, falling short of analysts’ expectations of at least 1.2%. Steelman said the company is investing aggressively to improve results, despite the soft outlook and a more cautious consumer environment.

That strategy could pressure near-term margins, a surprise to some observers. Still, analysts expressed confidence in Ulta’s long-term positioning.

“We continue to look favorably on Ulta’s long-term prospects,” wrote Rupesh Parikh, who covers the company for Oppenheimer & Co. and rates it as likely to outperform peers. He cited Ulta’s “differentiated offering and unique value proposition, superior merchandising [and] the relative attractiveness of the beauty category and its ongoing market share potential.”

Krisztina Katai of Deutsche Bank also rates the stock a “buy."

“Notably, store performance is improving in locations previously impacted by cannibalization,” she wrote. “At the same time, Ulta continues investing in the in-store experience and product offerings. Looking forward, we see upside to initial fiscal year guidance,” aided by gains in UB Media, the company's retail media network, cost savings initiatives, lower shrink and its history of IT investments.

While the beauty category remains one of retail’s stronger sectors, Ulta’s softer outlook places it among a growing list of retailers managing through a more uncertain consumer backdrop -- and raises the stakes for its latest strategic reinvention.