Ulta Shares Soar on Strong Q3 Earnings and Revenue

Ulta Beauty (NASDAQ: ULTA) reported third quarter fiscal 2026 results after market close on December 4, 2025, and investors liked what they saw. The company beat both earnings and revenue estimates by comfortable margins. EPS came in at $5.14, crushing the consensus estimate of $4.60 by 11.7%. Revenue hit $2.90 billion, topping expectations of $2.70 billion by 7.3%. The stock had been trading near 52-week highs heading into the print, up 40% over the past year.

Cosmetics and Comparable Sales Drive the Beat

Revenue growth of 12.9% year over year tells most of the story. Comparable sales rose 6.3%, driven by a 3.8% increase in average ticket and a 2.4% lift in transactions. That’s balanced growth. You’re seeing both higher spending per visit and more customers coming through the door.

Cosmetics accounted for 41% of net sales, while skincare and wellness made up 24%. The Space NK acquisition contributed to the top line, as did new store openings and ecommerce expansion. Gross profit climbed 19.3% to $1.20 billion, with margin expanding to 40.4% from 39.7% a year ago. I liked the margin improvement. It shows pricing power and better product mix, even as the company scales.

Operating Income Dips on Higher Expenses

Operating income fell 4.3% to $309.4 million despite the revenue beat. SG&A expenses rose faster than sales, eating into profitability at the operating level. Net income declined 4.7% to $230.9 million. The company is investing in growth, but you’ll want to watch whether expense discipline returns in Q4. If margins don’t stabilize, the strong top line performance won’t translate to bottom line gains.

Key Figures

Adjusted EPS: $5.14 (vs. $4.60 expected); beat by 11.7%
Revenue: $2.90B (vs. $2.70B expected); up 12.9% year over year
Comparable Sales: +6.3% (average ticket +3.8%, transactions +2.4%)
Gross Profit: $1.20B; up 19.3% (margin 40.4% vs. 39.7%)
Operating Income: $309.4M; down 4.3%
Net Income: $230.9M; down 4.7%

The earnings beat was the standout. An 11.7% surprise on EPS is material, especially for a retailer of this scale. The company is executing on its Ulta Beauty Unleashed Strategy, and the results show it’s working at the store level.

Leadership Sounds Confident About Momentum

CEO Kecia Steelman struck an optimistic tone in the release, noting that third quarter results “exceeded our expectations, reflecting the steady progress and momentum our team is building.” The emphasis on execution and strategy suggests management sees room for continued growth without signaling aggressive expansion plans. They updated full-year fiscal 2025 guidance to approximately $12.3 billion in net sales and EPS of $25.20 to $25.50.

The company also has $2 billion remaining on its $3 billion share buyback program announced in October 2024. That’s a meaningful capital return commitment and signals confidence in the business.

Can the Holiday Quarter Deliver?

All eyes now turn to Q4, which includes the critical holiday selling season. You’ll want to see whether comparable sales momentum holds and whether the company can manage expenses better than it did in Q3. The updated guidance implies solid performance ahead, but execution will matter. I’d also watch for any commentary on consumer spending trends. Macroeconomic conditions remain a risk, and beauty retail isn’t immune to broader pressures. If demand holds through year end, ULTA should be positioned to enter 2026 with momentum intact.