ULTA 10-Q
Ulta Beauty, Inc. (ULTA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For the Quarterly Period Ended
or
For the transition period from _____________ to _____________
Commission File Number:
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction of | (I.R.S. Employer |
(Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding as of August 24, 2026 was
ULTA BEAUTY, INC.
TABLE OF CONTENTS
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Part I - Financial Information
Item 1.Financial Statements
Ulta Beauty, Inc.
Consolidated Balance Sheets
August 1, | January 31, | August 2, | |||||||
(In thousands, except per share data) | | 2026 | | 2026 | | 2025 | |||
Assets | (Unaudited) | (Unaudited) | |||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | | $ | | $ | | |||
Short-term investments | | | — | ||||||
Receivables, net | | | | ||||||
Merchandise inventories, net | | | | ||||||
Prepaid expenses and other current assets | | | | ||||||
Prepaid income taxes | | | | ||||||
Total current assets | | | | ||||||
Property and equipment, net | | | | ||||||
Operating lease assets | | | | ||||||
Goodwill | | | | ||||||
Other intangible assets, net | | | | ||||||
Deferred compensation plan assets | | | | ||||||
Other long-term assets | | | | ||||||
Total assets | $ | | $ | | $ | | |||
Liabilities and stockholders’ equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | | $ | | $ | | |||
Accrued liabilities | | | | ||||||
Deferred revenue | | | | ||||||
Current operating lease liabilities | | | | ||||||
Accrued income taxes | — | | — | ||||||
Short-term debt | | | | ||||||
Total current liabilities | | | | ||||||
Non-current operating lease liabilities | | | | ||||||
Deferred income taxes | | | | ||||||
Other long-term liabilities | | | | ||||||
Total liabilities | | | | ||||||
Commitments and contingencies (Note 6) | |||||||||
Stockholders' equity: | |||||||||
Common stock, $ | | | | ||||||
Treasury stock-common, at cost | ( | ( | ( | ||||||
Additional paid-in capital | | | | ||||||
Retained earnings | | | | ||||||
Accumulated other comprehensive (loss) income | ( | | — | ||||||
Total stockholders’ equity | | | | ||||||
Total liabilities and stockholders’ equity | $ | | $ | | $ | | |||
See accompanying notes to consolidated financial statements.
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Ulta Beauty, Inc.
Consolidated Statements of Income
(Unaudited)
13 Weeks Ended | 26 Weeks Ended | |||||||||||
August 1, | August 2, | August 1, | August 2, | |||||||||
(In thousands, except per share data) | | 2026 | 2025 | 2026 | 2025 | |||||||
Net sales | $ | | $ | | $ | | $ | | ||||
Cost of sales | | | | | ||||||||
Gross profit | | | | | ||||||||
Selling, general and administrative expenses | | | | | ||||||||
Pre-opening expenses | | | | | ||||||||
Operating income | | | | | ||||||||
Interest expense (income), net | | ( | | ( | ||||||||
Income before income taxes and equity net loss of affiliate | | | | | ||||||||
Income tax expense | | | | | ||||||||
Income before equity net loss of affiliate | | | | | ||||||||
Equity net loss of affiliate | | | | | ||||||||
Net income | $ | | $ | | $ | | $ | | ||||
Net income per common share: | ||||||||||||
Basic | $ | $ | $ | $ | ||||||||
Diluted | $ | $ | $ | $ | ||||||||
Weighted average common shares outstanding: | ||||||||||||
Basic | | | | | ||||||||
Diluted | | | | | ||||||||
See accompanying notes to consolidated financial statements.
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Ulta Beauty, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)
13 Weeks Ended | 26 Weeks Ended | |||||||||||
August 1, | August 2, | August 1, | August 2, | |||||||||
(In thousands) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Net income | | $ | | $ | | $ | | $ | | |||
Other comprehensive income: | ||||||||||||
Foreign currency translation adjustments | ( | — | ( | — | ||||||||
Comprehensive income | $ | | $ | | $ | | $ | | ||||
See accompanying notes to consolidated financial statements.
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Ulta Beauty, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
26 Weeks Ended | ||||||
August 1, | August 2, | |||||
(In thousands) | | 2026 | | 2025 | ||
Operating activities | ||||||
Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash provided by operating activities: | | |||||
Depreciation and amortization | | | ||||
Non-cash lease expense | | | ||||
Deferred income taxes | | | ||||
Stock-based compensation expense | | | ||||
Loss on disposal of property and equipment | | | ||||
Equity net loss of affiliate | | | ||||
Change in operating assets and liabilities: | ||||||
Receivables | | ( | ||||
Merchandise inventories | ( | ( | ||||
Prepaid expenses and other current assets | | ( | ||||
Income taxes | ( | ( | ||||
Accounts payable | ( | | ||||
Accrued liabilities | ( | ( | ||||
Deferred revenue | ( | ( | ||||
Operating lease liabilities | ( | ( | ||||
Other assets and liabilities | | ( | ||||
Net cash provided by operating activities | | | ||||
Investing activities | ||||||
Proceeds from short-term investments | | — | ||||
Capital expenditures | ( | ( | ||||
Acquisitions, net of cash acquired | — | ( | ||||
Other investments | ( | ( | ||||
Net cash used in investing activities | ( | ( | ||||
Financing activities | ||||||
Borrowings from short-term debt | | | ||||
Payments on short-term debt | ( | ( | ||||
Repurchase of common shares | ( | ( | ||||
Stock options exercised | | | ||||
Purchase of treasury shares | ( | ( | ||||
Net cash used in financing activities | ( | ( | ||||
Effect of exchange rate changes on cash and cash equivalents | ( | — | ||||
Net decrease in cash and cash equivalents | ( | ( | ||||
Cash and cash equivalents at beginning of period | | | ||||
Cash and cash equivalents at end of period | $ | | $ | | ||
Supplemental information | ||||||
Income taxes paid, net of refunds | | $ | | $ | | |
Non-cash investing and financing activities: | ||||||
Non-cash capital expenditures | | | ||||
Repurchase of common shares in accrued liabilities | | | ||||
See accompanying notes to consolidated financial statements.
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Ulta Beauty, Inc.
Consolidated Statements of Stockholders’ Equity
(Unaudited)
Treasury - | Accumulated | |||||||||||||||||||||
Common Stock | Common Stock | Additional | Other | Total | ||||||||||||||||||
Issued | Treasury | Paid-In | Retained | Comprehensive | Stockholders' | |||||||||||||||||
(In thousands) | | Shares | | Amount | | Shares | | Amount | | Capital | | Earnings | | (Loss) Income | | Equity | ||||||
Balance – January 31, 2026 | | $ | | ( | $ | ( | $ | | $ | | $ | | $ | | ||||||||
Net income | — | — | — | — | — | | — | | ||||||||||||||
Stock-based compensation | — | — | — | — | | — | — | | ||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | ( | ( | ||||||||||||||
Stock options exercised and other awards | | | — | — | | — | — | | ||||||||||||||
Purchase of treasury shares | — | — | ( | ( | — | — | — | ( | ||||||||||||||
Repurchase of common shares, including excise tax | ( | ( | — | — | ( | ( | — | ( | ||||||||||||||
Balance – May 2, 2026 | | $ | | ( | $ | ( | $ | | $ | | $ | | $ | | ||||||||
Net income | — | — | — | — | — | | — | | ||||||||||||||
Stock-based compensation | — | — | — | — | | — | — | | ||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | ( | ( | ||||||||||||||
Stock options exercised and other awards | | — | — | — | | — | — | | ||||||||||||||
Purchase of treasury shares | — | — | — | ( | — | — | — | ( | ||||||||||||||
Repurchase of common shares, including excise tax | ( | ( | — | — | ( | ( | — | ( | ||||||||||||||
Balance – August 1, 2026 | | $ | | ( | $ | ( | $ | | $ | | $ | ( | $ | | ||||||||
See accompanying notes to consolidated financial statements.
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Ulta Beauty, Inc.
Consolidated Statements of Stockholders’ Equity
(Unaudited)
Treasury - | |||||||||||||||||||
Common Stock | Common Stock | Additional | Total | ||||||||||||||||
Issued | Treasury | Paid-In | Retained | Stockholders' | |||||||||||||||
(In thousands) | | Shares | | Amount | | Shares | | Amount | | Capital | | Earnings | | Equity | |||||
Balance – February 1, 2025 | | $ | | ( | $ | ( | $ | | $ | | $ | | |||||||
Net income | — | — | — | — | — | | | ||||||||||||
Stock-based compensation | — | — | — | — | | — | | ||||||||||||
Stock options exercised and other awards | | | — | — | | — | | ||||||||||||
Purchase of treasury shares | — | — | ( | ( | — | — | ( | ||||||||||||
Repurchase of common shares, including excise tax | ( | ( | — | — | ( | ( | ( | ||||||||||||
Balance – May 3, 2025 | | $ | | ( | $ | ( | $ | | $ | | $ | | |||||||
Net income | — | — | — | — | — | | | ||||||||||||
Stock-based compensation | — | — | — | — | | — | | ||||||||||||
Stock options exercised and other awards | | | — | — | | — | | ||||||||||||
Purchase of treasury shares | — | — | ( | ( | — | — | ( | ||||||||||||
Repurchase of common shares, including excise tax | ( | ( | — | — | ( | ( | ( | ||||||||||||
Balance – August 2, 2025 | | $ | | ( | $ | ( | $ | | $ | | $ | | |||||||
See accompanying notes to consolidated financial statements.
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Ulta Beauty, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share and store count data) (Unaudited)
1.Business and basis of presentation
Ulta Beauty, Inc. was founded in 1990 to operate specialty retail stores selling cosmetics, fragrance, haircare and skincare products, and related accessories and services. Nearly every store in the United States (U.S.) features a full-service salon. As used in these notes and throughout this Quarterly Report on Form 10-Q, all references to “we,” “us,” “our,” “Ulta Beauty,” or the “Company” refer to Ulta Beauty, Inc. and its consolidated subsidiaries.
As of August 1, 2026, the Company operated
The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and the U.S. Securities and Exchange Commission’s Article 10, Regulation S-X. These financial statements were prepared on a consolidated basis to include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts, transactions, and unrealized profit were eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary to fairly state the financial position and results of operations and cash flows for the interim periods presented.
The Company’s business is subject to seasonal fluctuation, with significant portions of net sales and net income being realized during the fourth quarter of the fiscal year due to the holiday selling season. The results for the 13 and 26 weeks ended August 1, 2026 are not necessarily indicative of the results to be expected for the fiscal year ending January 30, 2027, or for any other future interim period or any future year.
These unaudited interim consolidated financial statements and the related notes should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended January 31, 2026. All amounts are stated in thousands, with the exception of per share amounts and number of stores.
2.Summary of significant accounting policies
Information regarding significant accounting policies is contained in Note 2, “Summary of significant accounting policies,” to the consolidated financial statements in the Annual Report on Form 10-K for the year ended January 31, 2026. Presented below and in the following notes is supplemental information that should be read in conjunction with “Notes to Consolidated Financial Statements” in the Annual Report.
Fiscal quarter
The Company’s quarterly periods are the
Use of estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the accounting period. Actual results could differ from those estimates. The Company considers its accounting policies relating to inventory valuations, vendor allowances, impairment of long-lived tangible and right-of-use assets, impairment of goodwill and other intangible assets, loyalty program, income taxes, and business combinations to be the most significant accounting policies that involve management estimates and judgments. Significant changes, if any, in those
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estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.
Recent accounting pronouncements not yet adopted
Income Statement – Reporting Comprehensive Income (Topic 220-40): Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income (Topic 220-40): Expense Disaggregation Disclosures. This update requires, among other things, more detailed disclosure about types of expenses in commonly presented expense captions such as cost of sales and selling, general and administrative (SG&A) expenses and is intended to improve the disclosures about an entity’s expenses including purchases of inventory, employee compensation, depreciation, and amortization. The ASU is effective for fiscal years beginning after December 15, 2026, and interim reporting periods within fiscal years beginning after December 15, 2027. The Company is evaluating the impact of adopting ASU 2024-03 on the consolidated financial statements and disclosures.
Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software
In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU is intended to improve and modernize the accounting for software costs to better align with the evolution of software development. The ASU is effective for fiscal years beginning after December 15, 2027, and interim reporting periods within fiscal years beginning after December 15, 2027. Early adoption is permitted as of the beginning of an annual reporting period. The amendments may be applied prospectively, retrospectively to prior periods presented, or using an alternative transition approach that applies prospective transition to new projects and in-process projects for which capitalization has not begun and modified retrospective transition to in-process projects for which capitalization has begun as of the date of adoption. The Company is evaluating the impact of adopting ASU 2025-06 on the consolidated financial statements.
Interim Reporting (Topic 270)
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This ASU provides enhancements and clarifications to interim disclosure requirements and the applicability of Accounting Standards Codification (“ASC”) Topic 270 – Interim Reporting. The amendments establish a comprehensive listing of required interim disclosures and improve navigability and consistency in interim reporting. The ASU also introduces a new disclosure principle that requires entities to disclose events occurring after the end of the most recent annual period that have a material impact on the entity. Additionally, the amendments clarify the types of interim financial statements subject to GAAP (including condensed statements) and provide presentation and content requirements for interim periods. The guidance is effective for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of adopting ASU 2025-11 on the consolidated financial statements and related disclosures.
Codification Improvements
In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which represents changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. The amendments make the Codification easier to understand and apply. The amendments are effective for interim and annual periods beginning after December 15, 2026, with early adoption permitted. The Company is evaluating the impact of adopting ASU 2025-12 on the consolidated financial statements and related disclosures.
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3.Revenue
Net sales include retail stores and e-commerce merchandise sales as well as salon services and other revenue. Other revenue includes other revenue sources such as the private label and co-branded credit card programs, deferred revenue related to the loyalty program and gift card breakage, royalties, and commissions.
Disaggregated revenue
The following table sets forth the approximate percentage of net sales by primary category:
13 Weeks Ended | 26 Weeks Ended | ||||||||
August 1, | August 2, | August 1, | August 2, | ||||||
(Percentage of net sales) | 2026 | 2025 | 2026 | 2025 | |||||
Cosmetics | |||||||||
Skincare and wellness | |||||||||
Haircare | |||||||||
Fragrance | |||||||||
Services | |||||||||
Other | |||||||||
Deferred revenue
Deferred revenue primarily represents contract liabilities for the obligation to transfer additional goods or services to a guest for which the Company has received consideration, such as unredeemed loyalty points and unredeemed gift cards. In addition, breakage on gift cards is recognized proportionately as redemption occurs.
The following table provides a summary of the changes included in deferred revenue during the 13 and 26 weeks ended August 1, 2026 and August 2, 2025:
13 Weeks Ended | 26 Weeks Ended | |||||||||||
August 1, | August 2, | August 1, | August 2, | |||||||||
(In thousands) | 2026 | 2025 | 2026 | | 2025 | |||||||
Beginning balance | $ | | $ | | $ | | $ | | ||||
Additions to contract liabilities (1) | | | | | ||||||||
Deductions to contract liabilities (2) | ( | ( | ( | ( | ||||||||
Ending balance | $ | | $ | | $ | | $ | | ||||
| (1) | Loyalty points and gift cards issued in the current period but not redeemed or expired. |
| (2) | Revenue recognized in the current period related to the beginning liability. |
Other amounts included in deferred revenue were $
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4.Goodwill and other intangible assets
Goodwill
Goodwill represents the excess of cost over the fair value of net assets acquired. The recoverability of goodwill is reviewed annually during the fourth quarter or more frequently if an event occurs or circumstances change that would indicate that impairment may exist. The changes in the carrying amounts of goodwill during the 26 weeks ended August 1, 2026 and August 2, 2025 were as follows:
August 1, | August 2, | |||||
(In thousands) | 2026 | | 2025 | |||
Beginning balance | $ | | $ | | ||
Acquisitions | — | | ||||
Effect of exchange rate changes | ( | — | ||||
Ending balance | $ | | $ | | ||
Other intangible assets
Intangible assets with definite lives are amortized over their useful lives. The recoverability of definite-lived intangible assets is reviewed whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.
Intangible assets with indefinite lives, which primarily consist of trademarks, are not amortized but instead evaluated for impairment annually or more frequently if events or circumstances indicate that the intangible asset might be impaired. This analysis is dependent upon a number of uncertain factors and is typically performed in conjunction with the goodwill impairment analysis discussed above and is similar to the analysis performed at acquisition.
The changes in the carrying amounts of other intangible assets during the 26 weeks ended August 1, 2026 and August 2, 2025 were as follows:
August 1, | August 2, | |||||
(In thousands) | 2026 | | 2025 | |||
Beginning balance | $ | | $ | | ||
Acquisitions | — | | ||||
Amortization | — | ( | ||||
Effect of exchange rate changes | ( | — | ||||
Ending balance | $ | | $ | | ||
5.Leases
The Company leases retail stores, distribution centers, fast fulfillment centers, market fulfillment centers, corporate offices, and certain equipment under non-cancelable operating leases with various expiration dates through 2041. All leases are classified as operating leases and generally have initial lease terms of
Lease cost
The majority of operating lease cost relates to retail stores, distribution centers, fast fulfillment centers, and market fulfillment centers and is classified within cost of sales. Operating lease cost for corporate offices is classified within selling, general and administrative expenses. Operating lease cost from the control date through store opening date is classified within pre-opening expenses.
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The following table presents a summary of operating lease costs:
13 Weeks Ended | 26 Weeks Ended | |||||||||||
August 1, | August 2, | August 1, | August 2, | |||||||||
(In thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||
Operating lease cost | $ | | $ | | $ | | $ | | ||||
Other information
The following table presents supplemental disclosures of cash flow information related to operating leases:
| 26 Weeks Ended | |||||
August 1, | August 2, | |||||
(In thousands) | | 2026 | 2025 | |||
Cash paid for operating lease liabilities (1) | $ | | $ | | ||
Operating lease assets obtained in exchange for operating lease liabilities (non-cash) | | | ||||
| (1) | Excludes $ |
6.Commitments and contingencies
The Company is involved in various legal proceedings that are incidental to the conduct of its business including both class action and single plaintiff litigation. In the opinion of management, the amount of any liability with respect to these proceedings, either individually or in the aggregate, would not have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.
7.Debt
On August 27, 2025, the Company entered into Amendment No. 4 to the Second Amended and Restated Loan Agreement (as so amended, the “Loan Agreement”) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent, and a Lender thereunder; Wells Fargo Bank, National Association and JPMorgan Chase Bank, N.A., as Lead Arrangers and Bookrunners; JPMorgan Chase Bank, N.A., as Syndication Agent and a Lender; and the other lenders party thereto. The Loan Agreement matures on March 13, 2029, provides maximum revolving loans equal to the lesser of $
Ulta Beauty’s wholly owned subsidiary, Space NK Limited (“Space NK”), maintains a multi-currency revolving credit facility (the “Facility Agreement”) with National Westminster Bank plc, providing up to £
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2026, and August 2, 2025, there was $
As of August 1, 2026, the Company was in compliance with all terms and covenants of the Loan Agreement and Facility Agreement.
8.Fair value measurements
The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximates their estimated fair values due to the short maturities of these instruments.
Fair value is measured using inputs from the three levels of the fair value hierarchy, which are described as follows:
| ● | Level 1 – observable inputs such as quoted prices for identical instruments in active markets. |
| ● | Level 2 – inputs other than quoted prices in active markets that are observable either directly or indirectly through corroboration with observable market data. |
| ● | Level 3 – unobservable inputs in which there is little or no market data, which would require the Company to develop its own assumptions. |
Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analyses of goodwill, other intangible assets, and long-lived tangible assets. These involve fair value measurements on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy.
The fair value of other intangible assets, net was valued under the relief from royalty method, which is equal to the present value of the after-tax royalty savings attributable to owning the intangible assets as opposed to paying a third party for the use of those assets. The fair value measurement was based on significant unobservable inputs (Level 3) developed using company-specific information. The key assumptions in applying the relief from royalty method include the applicable projected revenues, discount rate, remaining useful life, and estimated royalty rate.
As of , , and , there were liabilities related to the non-qualified deferred compensation plan included in other long-term liabilities on the consolidated balance sheets of $
9.Stock-based compensation
Stock-based compensation expense is measured on the grant date based on the fair value of the award. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period for awards expected to vest. The estimated grant date fair value of stock options was determined using a Black-Scholes valuation model using the following weighted-average assumptions for the periods indicated:
| |||||
26 Weeks Ended | |||||
August 1, | August 2, | ||||
| 2026 | | 2025 | ||
Volatility rate |
| ||||
Average risk-free interest rate |
| ||||
Average expected life (in years) |
|
| |||
Dividend yield |
| |
| | |
The expected volatility is based on the historical volatility of the Company’s common stock. The risk-free interest rate is based on the United States Treasury yield curve in effect on the date of grant for the respective expected life of the option. The expected life represents the time the options granted are expected to be outstanding. The expected life of options granted is derived from historical data on Ulta Beauty stock option exercises. Forfeitures of stock options are
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estimated at the grant date based on historical rates of stock option activity and reduce the stock-based compensation expense recognized. The Company does not currently pay a regular dividend.
The Company granted
There were
There were
There were
10.Income taxes
Income tax expense reflects the federal statutory tax rate and the weighted average state statutory tax rate for the states in which the Company operates stores. Income tax expense of $
Income tax expense of $
15
11.Net income per common share
The following is a reconciliation of net income and the number of shares of common stock used in the computation of net income per basic and diluted common share:
13 Weeks Ended | 26 Weeks Ended | |||||||||||
August 1, | August 2, | August 1, | August 2, | |||||||||
(In thousands, except per share data) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Numerator: | ||||||||||||
Net income | | $ | | $ | | $ | | $ | | |||
Denominator: | ||||||||||||
Weighted-average common shares – Basic | | | | | ||||||||
Dilutive effect of stock options and non-vested shares | | | | | ||||||||
Weighted-average common shares – Diluted | | | | | ||||||||
Net income per common share: | ||||||||||||
Basic | $ | | $ | | $ | | $ | | ||||
Diluted | $ | | $ | | $ | | $ | | ||||
The denominator for diluted net income per common share for the 13 weeks ended August 1, 2026 and August 2, 2025 excludes
12.Share repurchase program
In October 2024, the Board of Directors authorized a share repurchase program (the “October 2024 Share Repurchase Program”) pursuant to which the Company may repurchase up to $
A summary of common stock repurchase activity is presented in the following table:
26 Weeks Ended | ||||||
August 1, | August 2, | |||||
(In thousands) | 2026 | | 2025 | |||
Shares repurchased | | | ||||
Total cost of shares repurchased, including excise tax | $ | | $ | | ||
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13. Segment reporting
The Company has
13 Weeks Ended | 26 Weeks Ended | ||||||||||||
August 1, | August 2, | August 1, | August 2, | ||||||||||
(In thousands) | 2026 | | 2025 | | 2026 | | 2025 | | |||||
Net sales | $ | | $ | | $ | | $ | | |||||
Less: | |||||||||||||
Cost of sales (1) | | | | | |||||||||
Associate expenses (2) | | | | | |||||||||
Advertising expense, net (3) | | | | | |||||||||
Pre-opening expenses | | | | | |||||||||
Other segment expenses (1) (4) | | | | | |||||||||
Interest expense (income), net | | ( | | ( | |||||||||
Income tax expense | | | | | |||||||||
Equity net loss of affiliate | | | | | |||||||||
Net income | $ | | $ | | $ | | $ | | |||||
(1) | Included within cost of sales and other segment expenses is depreciation and amortization expense of $ |
(2) | Associate expenses include salaries, wages, bonus, and other forms of compensation related to associates. |
(3) | Advertising expense, net consists of print, digital and social media, and television and radio advertising, net of vendor income that is a reimbursement of specific, incremental, and identifiable costs. |
(4) Other segment expenses include other corporate overhead and store operating expenses within SG&A expenses.
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this Quarterly Report. This discussion contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which reflect our current views with respect to, among other things, future events and financial performance. These forward-looking statements are included throughout this Quarterly Report on Form 10-Q, and relate to matters such as our industry, business strategy, goals, and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity, share repurchases, and capital resources and other financial and operating information. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “plans,” “estimates,” “targets,” “strategies,” or other comparable words.
Any forward-looking statements contained in this Quarterly Report on Form 10-Q are based upon our historical performance and on current plans, estimates, and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates, targets, strategies, or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict or quantify. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that our expectations, beliefs, and projections will result or be achieved. Actual results may differ materially from these expectations due to changes in global, regional, or local economic, business, competitive, market, regulatory, and other factors, many of which are beyond our control. We believe that these factors include but are not limited to those described under Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended January 31, 2026, as such risk factors may be updated from time to time in our periodic filings with the U.S. Securities and Exchange Commission (“SEC”), and are accessible on the SEC's website at www.sec.gov.
Any forward-looking statements made by us in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report and are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments, or other strategic transactions we may make. Except to the extent required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
References in the following discussion to “we,” “us,” “our,” “Ulta Beauty,” the “Company” and similar references mean Ulta Beauty, Inc. and its consolidated subsidiaries, unless otherwise expressly stated or the context otherwise requires.
Overview
We were founded in 1990 as a beauty retailer at a time when prestige, mass, and salon products were sold through distinct channels – department stores for prestige products; drug stores and mass merchandisers for mass products; and salons and authorized retail outlets for professional haircare products. We developed a unique specialty retail concept that offers a broad range of brands and price points, select beauty services, and a convenient and welcoming shopping environment. We define our target consumer as a beauty enthusiast, a consumer who is passionate about the beauty category, uses beauty for self-expression, experimentation, and self-investment, and has high expectations for their shopping experience. Based on our consumer insights research, we estimate there are approximately 140 million beauty enthusiasts in the U.S. We believe our strategy provides us with competitive advantages that have contributed to our financial performance.
Today, our U.S. operations (“Ulta U.S.”) make us the largest specialty beauty retailer in the United States and the premier beauty destination for cosmetics, fragrance, skincare, bath and body products, haircare, salon styling tools, wellness products, and salon services. In addition to our U.S. operations, we are expanding our presence internationally
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through our subsidiary, Space NK, a luxury beauty retailer operating in the U.K. and Ireland, our joint venture in Mexico, and our franchise in the Middle East.
Key points of strategic differentiation include: a differentiated assortment of established and emerging brands across a variety of categories and price points; our convenient omnichannel footprint, offering products and delivering immersive and personalized experiences through our stores and digital platforms, and providing the Ulta Beauty experience internationally through our partnerships; our best-in-class loyalty program that enables members to earn points for products and beauty services and provides us with a deep understanding of our customers and their preferences; and our ability to cultivate human connection with warm and welcoming guest experiences across all of our channels.
The continued growth of our business and any future increases in net sales, net income, and cash flows are dependent on our ability to execute our strategic priorities across three foundational focus areas, as outlined in our Ulta Beauty Unleashed strategy: 1) Drive Core Business Growth through operational excellence and an elevated go-to-market approach; 2) Scale New, Accretive Businesses by capitalizing on key growth opportunities to ensure relevancy in a rapidly changing world; and 3) Align Our Foundation for Future Success by optimizing our ways of working, streamlining our cost structure, and cultivating an engaging, associate-centered culture. Ulta U.S. operates in the large and growing U.S. beauty products and salon services industry, and we believe our strong operating model, competitive advantages, and financial foundation, paired with our investments to drive our growth, position us to capture additional market share in the industry.
Comparable sales is a key metric that is monitored closely within the retail industry. Our comparable sales have fluctuated in the past, and we expect them to continue to fluctuate in the future. A variety of factors affect our comparable sales, including general economic conditions, changes in merchandise strategy or mix, and timing and effectiveness of our marketing activities, among others.
Over the long term, our growth strategy is to drive profitable growth and market share leadership in beauty and wellness through growing our comparable sales, expanding omnichannel capabilities, and opening new stores. Long-term operating profit is expected to increase as a result of our efforts to drive revenue growth, leverage fixed costs, increase operating efficiencies, and grow other revenue, partially offset by incremental investments to enhance the guest experience, people, assortment, advertising, and depreciation.
Current Trends
Industry trends
The overall U.S. beauty market expanded in 2025 and the first half of 2026, supported by ongoing consumer engagement with and resilience in the beauty category. We remain confident that our differentiated and diverse business model, our commitment to strategic investments, and our highly engaged associates will continue to drive market share gains in the U.S. beauty category over the long term.
Persistent inflationary and macroeconomic pressures have impacted consumer spending habits broadly. The continuation of inflationary and macroeconomic pressures could impact our ability to grow sales and maintain historical profitability levels. In addition, inflation could cause the interest rates on any debt to remain at an elevated level or increase.
Basis of presentation
The Company has one reportable segment, which includes retail stores, salon services, and e-commerce.
We recognize merchandise revenue at the point of sale in our retail stores. E-commerce sales are recognized upon shipment or guest pickup of the merchandise based on meeting the transfer of control criteria. Retail store and e-commerce sales are recorded net of estimated returns. Shipping and handling are treated as costs to fulfill the contract and not a separate performance obligation. Accordingly, we recognize revenue for our single performance obligation related to online sales at the time control of the merchandise passes to the customer, which is at the time of shipment or
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guest pickup. We provide refunds for merchandise returns within 30 days from the original purchase date. State sales taxes are presented on a net basis as we consider ourselves a pass-through conduit for collecting and remitting state sales tax. Salon service revenue is recognized at the time the service is provided to the guest. Gift card sales revenue is deferred until the guest redeems the gift card. Company coupons and other incentives are recorded as a reduction of net sales. Other revenue includes the private label and co-branded credit card programs, deferred revenue related to the loyalty program and gift card breakage, and royalties.
Comparable sales reflect sales for stores and e-commerce platforms beginning on the first day of the 14th month of operation. Therefore, a store is included in our comparable store base on the first day of the period after one year of operations plus the initial one-month grand opening period. Non-comparable store sales include sales from new stores that have not yet completed their 13th month of operation and stores that were closed for part or all of the period in either year. Remodeled stores are included in comparable sales unless the store was closed for a portion of the current or prior period. Comparable sales include retail sales, salon services, and e-commerce. In fiscal years with 53 weeks, the 53rd week of comparable sales is included in the calculation. In the year following a 53-week year, the prior year period is shifted by one week to compare similar calendar weeks. There may be variations in the way in which some of our competitors and other retailers calculate comparable or same store sales.
Measuring comparable sales allows us to evaluate the performance of our store base as well as several other aspects of our overall strategy. Several factors could positively or negatively impact our comparable sales results:
| ● | the general national, regional, and local economic conditions and corresponding impact on customer spending levels; |
| ● | the introduction of new products or brands; |
| ● | the location of new stores in existing store markets; |
| ● | competition and/or alternative distribution channels; |
| ● | our ability to respond on a timely basis to changes in consumer preferences; |
| ● | the effectiveness of our various merchandising and marketing activities; and |
| ● | the number of new stores opened and the impact on the average age of all of our comparable stores. |
Cost of sales includes:
| ● | the cost of merchandise sold, offset by vendor income that is not a reimbursement of specific, incremental, and identifiable costs; |
| ● | distribution costs including labor and related benefits, freight, rent, depreciation and amortization, real estate taxes, utilities, and insurance; |
| ● | shipping and handling costs for e-commerce orders; |
| ● | retail store occupancy costs including rent, depreciation and amortization, real estate taxes, utilities, repairs and maintenance, insurance, and licenses; |
| ● | salon services payroll and benefits; and |
| ● | shrink and inventory valuation reserves. |
Our cost of sales may be negatively impacted as we open new stores. Changes in our merchandise or channel mix may also have an impact on cost of sales. This presentation of items included in cost of sales may not be comparable to the way in which our competitors or other retailers compute their cost of sales.
Selling, general and administrative (SG&A) expenses include:
| ● | payroll, bonus, and benefit costs for retail store and corporate employees; |
| ● | advertising and marketing costs, offset by vendor income that is a reimbursement of specific, incremental, and identifiable costs; |
| ● | occupancy costs related to our corporate office facilities; |
| ● | stock-based compensation expense; |
| ● | depreciation and amortization for all assets, except those related to our retail stores and distribution operations, which are included in cost of sales; and |
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| ● | legal, finance, information systems, and other corporate overhead costs. |
This presentation of items in selling, general and administrative expenses may not be comparable to the way in which our competitors or other retailers compute their selling, general and administrative expenses.
Pre-opening expenses include non-capital expenditures during the period prior to store opening for new, remodeled, and relocated stores including rent during the construction period for new and relocated stores, store set-up labor, management and employee training, and grand opening advertising.
Interest income represents interest from cash equivalents, which include highly liquid investments such as money market funds and certificates of deposit with an original maturity of three months or less from the date of purchase. Interest expense includes interest costs and facility fees associated with our credit facilities, which are structured as asset-based lending instruments. Our credit facility interest rates are based on a variable interest rate structure which can result in increased costs in periods of rising or elevated interest rates.
Income tax expense reflects the federal and foreign statutory tax rate and the weighted average state statutory tax rate for the states in which we operate stores.
Equity net loss of affiliate represents our proportionate share of net loss from equity method investees.
Results of operations
Our quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31 each year. The Company’s second quarter in fiscal 2026 and 2025 ended on August 1, 2026 and August 2, 2025, respectively. Our quarterly results of operations have varied in the past and are likely to do so again in the future. As such, we believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of our future performance.
The following tables present the components of our consolidated results of operations for the periods indicated:
13 Weeks Ended | 26 Weeks Ended | |||||||||||
August 1, | August 2, | August 1, | August 2, | |||||||||
(Dollars in thousands) | 2026 | | 2025 | | 2026 | | 2025 | |||||
Net sales | $ | 3,035,676 | $ | 2,788,469 | $ | 6,199,533 | $ | 5,636,836 | ||||
Cost of sales | 1,848,724 | 1,696,773 | 3,744,961 | 3,430,921 | ||||||||
Gross profit | 1,186,952 | 1,091,696 | 2,454,572 | 2,205,915 | ||||||||
Selling, general and administrative expenses | 802,784 | 741,737 | 1,617,483 | 1,452,350 | ||||||||
Pre-opening expenses | 4,527 | 5,105 | 9,192 | 6,934 | ||||||||
Operating income | 379,641 | 344,854 | 827,897 | 746,631 | ||||||||
Interest expense (income), net | 3,684 | (1,413) | 3,032 | (4,960) | ||||||||
Income before income taxes and equity net loss of affiliate | 375,957 | 346,267 | 824,865 | 751,591 | ||||||||
Income tax expense | 91,878 | 84,795 | 198,738 | 184,439 | ||||||||
Income before equity net loss of affiliate | 284,079 | 261,472 | 626,127 | 567,152 | ||||||||
Equity net loss of affiliate | 2,073 | 597 | 3,652 | 1,225 | ||||||||
Net income | $ | 282,006 | $ | 260,875 | $ | 622,475 | $ | 565,927 | ||||
Other operating data: | ||||||||||||
Number of stores end of period | 1,622 | 1,556 | 1,622 | 1,556 | ||||||||
Comparable sales | 3.8% | 6.7% | 4.6% | 4.7% | ||||||||
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13 Weeks Ended | 26 Weeks Ended | |||||||||||
August 1, | August 2, | August 1, | August 2, | |||||||||
(Percentage of net sales) | 2026 | | 2025 | | 2026 | | 2025 | |||||
Net sales | 100.0% | 100.0% | 100.0% | 100.0% | ||||||||
Cost of sales | 60.9% | 60.8% | 60.4% | 60.9% | ||||||||
Gross profit | 39.1% | 39.2% | 39.6% | 39.1% | ||||||||
Selling, general and administrative expenses | 26.4% | 26.6% | 26.1% | 25.8% | ||||||||
Pre-opening expenses | 0.1% | 0.2% | 0.1% | 0.1% | ||||||||
Operating income | 12.5% | 12.4% | 13.4% | 13.2% | ||||||||
Interest expense (income), net | 0.1% | (0.1%) | 0.0% | (0.1%) | ||||||||
Income before income taxes and equity net loss of affiliate | 12.4% | 12.4% | 13.3% | 13.3% | ||||||||
Income tax expense | 3.0% | 3.0% | 3.2% | 3.3% | ||||||||
Income before equity net loss of affiliate | 9.4% | 9.4% | 10.1% | 10.1% | ||||||||
Equity net loss of affiliate | 0.1% | 0.0% | 0.1% | 0.0% | ||||||||
Net income | 9.3% | 9.4% | 10.0% | 10.0% | ||||||||
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Comparison of 13 weeks ended August 1, 2026 to 13 weeks ended August 2, 2025
Net sales
Net sales increased $247.2 million, or 8.9%, to $3.0 billion for the 13 weeks ended August 1, 2026, compared to $2.8 billion for the 13 weeks ended August 2, 2025. The net sales increase was primarily due to increased comparable sales, the acquisition of Space NK, and sales from new stores. The comparable sales increase of 3.8% for the 13 weeks ended August 1, 2026 was primarily driven by a 3.9% increase in average ticket. The total comparable sales increase for the 13 weeks ended August 2, 2025 was 6.7%.
Gross profit
Gross profit increased $95.3 million, or 8.7%, to $1.2 billion for the 13 weeks ended August 1, 2026, compared to $1.1 billion for the 13 weeks ended August 2, 2025. Gross profit as a percentage of net sales decreased to 39.1% for the 13 weeks ended August 1, 2026, compared to 39.2% for the 13 weeks ended August 2, 2025. The decrease in gross profit margin was primarily due to the impact of the Space NK business mix.
Selling, general and administrative expenses
Selling, general and administrative (SG&A) expenses increased $61.0 million, or 8.2%, to $802.8 million for the 13 weeks ended August 1, 2026, compared to $741.7 million for the 13 weeks ended August 2, 2025. SG&A expenses as a percentage of net sales decreased to 26.4% for the 13 weeks ended August 1, 2026, compared to 26.6% for the 13 weeks ended August 2, 2025, primarily due to lower incentive compensation and leverage of corporate overhead due to strategic enterprise investments, partially offset by higher advertising expenses.
Pre-opening expenses
Pre-opening expenses were $4.5 million for the 13 weeks ended August 1, 2026, compared to $5.1 million for the 13 weeks ended August 2, 2025.
Interest expense (income), net
Interest expense, net was $3.7 million for the 13 weeks ended August 1, 2026, compared to interest income, net of $1.4 million for the 13 weeks ended August 2, 2025. As of August 1, 2026 and August 2, 2025, we had $339.6 million and $289.1 million, respectively, outstanding under our credit facilities.
Income tax expense
Income tax expense of $91.9 million for the 13 weeks ended August 1, 2026 represents an effective tax rate of 24.6%, compared to $84.8 million of income tax expense representing an effective tax rate of 24.5% for the 13 weeks ended August 2, 2025.
Equity net loss of affiliate
Equity net loss of affiliate was $2.1 million for the 13 weeks ended August 1, 2026 compared to $0.6 million for the 13 weeks ended August 2, 2025, and was related to our joint venture in Mexico in both periods.
Net income
Net income increased 8.1% to $282.0 million for the 13 weeks ended August 1, 2026, compared to $260.9 million for the 13 weeks ended August 2, 2025. The increase in net income is primarily due to the $95.3 million increase in gross profit, partially offset by the $61.0 million increase in SG&A expenses, the $7.1 million increase in income taxes, and the $5.1 million increase in interest expense, net.
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Comparison of 26 weeks ended August 1, 2026 to 26 weeks ended August 2, 2025
Net sales
Net sales increased $562.7 million, or 10.0%, to $6.2 billion for the 26 weeks ended August 1, 2026, compared to $5.6 billion for the 26 weeks ended August 2, 2025. The net sales increase was primarily due to increased comparable sales, the acquisition of Space NK, and sales from new stores. The comparable sales increase of 4.6% for the 26 weeks ended August 1, 2026 was driven by a 3.8% increase in average ticket and a 0.8% increase in transactions. The total comparable sales increase for the 26 weeks ended August 2, 2025 was 4.7%.
Gross profit
Gross profit increased $248.7 million, or 11.3%, to $2.5 billion for the 26 weeks ended August 1, 2026, compared to $2.2 billion for the 26 weeks ended August 2, 2025. Gross profit as a percentage of net sales increased to 39.6% for the 26 weeks ended August 1, 2026, compared to 39.1% for the 26 weeks ended August 2, 2025. The increase in gross profit margin was primarily due to lower inventory shrink and higher merchandise margin, partially offset by unfavorable channel and business mix.
Selling, general and administrative expenses
SG&A expenses increased $165.1 million, or 11.4%, to $1.6 billion for the 26 weeks ended August 1, 2026, compared to $1.5 billion for the 26 weeks ended August 2, 2025. SG&A expenses as a percentage of net sales increased to 26.1% for the 26 weeks ended August 1, 2026, compared to 25.8% for the 26 weeks ended August 2, 2025, primarily due to higher corporate overhead due to strategic enterprise investments and higher store expenses, partially offset by lower incentive compensation.
Pre-opening expenses
Pre-opening expenses were $9.2 million for the 26 weeks ended August 1, 2026, compared to $6.9 million for the 26 weeks ended August 2, 2025.
Interest expense (income), net
Interest expense, net was $3.0 million for the 26 weeks ended August 1, 2026, compared to interest income, net of $5.0 million for the 26 weeks ended August 2, 2025. As of August 1, 2026 and August 2, 2025, we had $339.6 million and $289.1 million, respectively, outstanding under our credit facilities.
Income tax expense
Income tax expense of $198.7 million for the 26 weeks ended August 1, 2026 represents an effective tax rate of 24.2%, compared to $184.4 million of income tax expense representing an effective tax rate of 24.5% for the 26 weeks ended August 2, 2025. The lower income tax rate is primarily due to the purchase of transferable federal tax credits. These federal tax credits were purchased at a negotiated discount, resulting in an income tax benefit recorded during the 26 weeks ended August 1, 2026.
Equity net loss of affiliate
Equity net loss of affiliate was $3.7 million for the 26 weeks ended August 1, 2026 compared to $1.2 million for the 26 weeks ended August 2, 2025, and was related to our joint venture in Mexico in both periods.
Net income
Net income increased 10.0% to $622.5 million for the 26 weeks ended August 1, 2026, compared to $565.9 million for the 26 weeks ended August 2, 2025. The increase in net income is primarily due to the $248.7 million increase in gross profit, partially offset by the $165.1 million increase in SG&A expenses, the $14.3 million increase in income taxes, the $8.0 million increase in interest expense, net, and the $2.4 million increase in equity net loss of affiliate.
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Liquidity and capital resources
Our primary sources of liquidity are cash and cash equivalents, cash flows from operations, and borrowings under our credit facilities. The most significant components of our working capital are merchandise inventories, cash and cash equivalents, and receivables, reduced by accounts payable, deferred revenue, and accrued liabilities. As of August 1, 2026, January 31, 2026, and August 2, 2025, we had cash and cash equivalents and short-term investments of $213.5 million, $494.2 million, and $242.7 million, respectively.
Our primary cash needs are for rent, capital expenditures for new, remodeled, and relocated stores, increased merchandise inventories related to store expansion and new brand additions, supply chain improvements, share repurchases, and continued investment in our information technology systems.
Our most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for lease expenses, inventory, labor, distribution, advertising and marketing, and tax liabilities) as well as periodic spend for capital expenditures, investments, and share repurchases. Our working capital needs are greatest from August through November each year as a result of our inventory build-up during this period for the approaching holiday season.
Long-term cash requirements primarily relate to funding lease expenses and other purchase commitments.
We generally fund short-term and long-term cash requirements with cash from operating activities. We believe our primary sources of liquidity will satisfy our cash requirements over both the short term (the next twelve months) and long term.
Cash flows
We believe our ability to generate substantial cash from operating activities and readily secure financing at competitive rates are key strengths that give us significant flexibility to meet our short and long-term financial commitments.
The following table presents a summary of our cash flows:
26 Weeks Ended | ||||||
August 1, | August 2, | |||||
(In thousands) | | 2026 | | 2025 | ||
Net cash provided by operating activities | $ | 381,591 | $ | 316,543 | ||
Net cash used in investing activities | (133,980) | (559,911) | ||||
Net cash used in financing activities | (512,914) | (217,088) | ||||
Effect of exchange rate changes on cash and cash equivalents | (489) | — | ||||
Net decrease in cash and cash equivalents | $ | (265,792) | $ | (460,456) | ||
Operating activities
Operating activities consist of net income adjusted for certain non-cash items, including depreciation and amortization, non-cash lease expense, deferred income taxes, stock-based compensation expense, realized gains or losses on disposal of property and equipment, and the effect of working capital changes.
The increase in net cash provided by operating activities in the first 26 weeks of fiscal 2026 compared to the first 26 weeks of fiscal 2025 was mainly due to the increase in net income, a smaller increase in merchandise inventories in the first 26 weeks of fiscal 2026, and the timing of accounts receivable, prepaid expenses, accounts payable, and accrued liabilities.
Merchandise inventories, net were $2.4 billion at August 1, 2026, remaining flat as compared to $2.4 billion at August 2, 2025, primarily due improved inventory management, partially offset by inventory to support new brand launches and the addition of new stores.
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Investing activities
We have historically used cash primarily for new, remodeled, relocated, and refreshed stores, supply chain investments, short-term investments, and investments in information technology systems. Investing activities for capital expenditures were $139.5 million during the 26 weeks ended August 1, 2026, compared to $156.0 million during the 26 weeks ended August 2, 2025.
The following table presents a summary of consolidated store activities:
26 Weeks Ended | ||||
August 1, | | August 2, | ||
2026 | 2025 | |||
Stores opened | 34 | 30 | ||
Stores remodeled | 7 | 9 | ||
Stores relocated | 5 | 4 | ||
The decrease in net cash used in investing activities in the first 26 weeks of fiscal 2026 compared to the first 26 weeks of fiscal 2025 was primarily due to the acquisition of Space NK in the second quarter of fiscal 2025.
Our future investments will depend primarily on the number of new, remodeled, and relocated stores, information technology systems, and supply chain investments we undertake and the timing of these expenditures. Based on past performance and current expectations, we believe our sources of liquidity will be sufficient to fund future capital expenditures.
Financing activities
Financing activities include share repurchases, borrowing and repayment of our short-term debt, and capital stock transactions. Purchases of treasury shares represent the fair value of common shares repurchased from plan participants in connection with shares withheld to satisfy minimum statutory tax obligations upon the vesting of restricted stock.
The increase in net cash used in financing activities in the first 26 weeks of fiscal 2026 compared to the first 26 weeks of fiscal 2025 was primarily due to an increase in share repurchases, partially offset by borrowings from short-term debt.
As of August 1, 2026, January 31, 2026, and August 2, 2025, we had $339.6 million, $62.3 million, and $289.1 million, respectively, outstanding under our credit facilities. Short-term debt at the end of the second quarter of fiscal 2026 was primarily to support working capital needs and ongoing capital allocation priorities, including share repurchases.
Share repurchase program
In October 2024, the Board of Directors authorized a share repurchase program (the October 2024 Share Repurchase Program) pursuant to which the Company may repurchase up to $3.0 billion of the Company’s common stock. The October 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts under the share repurchase program authorized in March 2024. The October 2024 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time.
A summary of common stock repurchase activity is presented in the following table:
26 Weeks Ended | ||||||
August 1, | August 2, | |||||
(Dollars in millions) | 2026 | | 2025 | |||
Shares repurchased | 1,438,761 | 1,231,292 | ||||
Total cost of shares repurchased, including excise tax | $ | 798.6 | $ | 472.4 | ||
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Credit facilities
On August 27, 2025, we entered into Amendment No. 4 to the Second Amended and Restated Loan Agreement (as so amended, the “Loan Agreement”) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent, and a Lender thereunder; Wells Fargo Bank, National Association and JPMorgan Chase Bank, N.A., as Lead Arrangers and Bookrunners; JPMorgan Chase Bank, N.A., as Syndication Agent and a Lender; and the other lenders party thereto. The Loan Agreement matures on March 13, 2029, provides maximum revolving loans equal to the lesser of $1.0 billion or a percentage of eligible owned inventory and eligible owned receivables (which borrowing base may, at the election of the Company and satisfaction of certain conditions, include a percentage of qualified cash), and contains a $50.0 million subfacility for letters of credit. The Loan Agreement contains a requirement to maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 whenever availability under the Loan Agreement falls below a specified threshold. Substantially all of the Company’s assets are pledged as collateral for outstanding borrowings under the Loan Agreement. Outstanding borrowings bear interest, at the Company’s election, at either a base rate plus a margin of 0.5% to 1.0% or the Term Secured Overnight Financing Rate plus a margin of 1.5% to 2.0%, and a credit spread adjustment of 0.10%, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.25% to 0.375% per annum.
As of August 1, 2026 and August 2, 2025, the Company had $287.0 million and $237.7 million, respectively, of borrowings outstanding under this credit facility. The weighted average interest rate was 6.05% and 6.89% for the 26 weeks ended August 1, 2026 and August 2, 2025, respectively. As of January 31, 2026, there were no borrowings outstanding under this credit facility.
Ulta Beauty’s wholly owned subsidiary, Space NK, maintains a multi-currency revolving credit facility (the Facility Agreement) with National Westminster Bank plc, providing up to £40.0 million for working capital requirements. The Facility Agreement, maturing on April 17, 2028, allows Space NK to increase the revolving facility by an additional £10.0 million with lender consent. The facility is secured by the assets of Space NK and contains a requirement to maintain an interest coverage ratio of not less than 4.0 to 1.0 and a leverage ratio not to exceed 2.0 to 1.0 for any relevant period. Borrowings bear interest at either the compound or term Sterling Overnight Index Average plus a margin of 1.75%, and an unused line fee of 0.60% per annum. As of August 1, 2026 and August 2, 2025, there was $52.6 million and $51.4 million, respectively, outstanding under this credit facility.
As of August 1, 2026, we were in compliance with all terms and covenants of the Loan Agreement and Facility Agreement.
Seasonality
Our business is subject to seasonal fluctuation. Significant portions of our net sales and profits are realized during the fourth quarter of the fiscal year due to the holiday selling season. To a lesser extent, our business is also affected by Mother’s Day and Valentine’s Day. Any decrease in sales during these higher sales volume periods could have an adverse effect on our business, financial condition, or operating results for the entire fiscal year. Our quarterly results of operations have varied in the past and are likely to do so again in the future. As such, we believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of our future performance.
Critical accounting policies and estimates
Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements required the use of estimates and judgments that affect the reported amounts of our assets, liabilities, revenues, and expenses. Management bases estimates on historical experience and other assumptions it believes to be reasonable under the circumstances and evaluates these estimates on an on-going basis. Actual results may differ from these estimates. There have been no significant changes to the critical accounting policies and estimates included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.
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Item 3.Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates. We continually monitor these risks and may develop strategies to manage them. We do not hold or issue financial instruments for trading purposes.
Interest rate risk
We are exposed to interest rate risks primarily through borrowings under our credit facilities. Interest on our borrowings is based upon variable rates. As of August 1, 2026, January 31, 2026, and August 2, 2025, we had $339.6 million, $62.3 million, and $289.1 million, respectively, outstanding under our credit facilities.
A hypothetical 1% increase in interest rates on variable debt would not have a material impact on our consolidated financial statements for the 26 weeks ended August 1, 2026.
Foreign currency exchange rate risk
We are subject to foreign currency exchange rate risks primarily through our foreign subsidiaries. The currency effects of translating the financial statements of foreign subsidiaries are included in accumulated other comprehensive (loss) income and will not be recognized in the statement of income until there is a liquidation or sale of foreign subsidiaries.
Item 4.Controls and Procedures
Evaluation of disclosure controls and procedures over financial reporting
We have established disclosure controls and procedures to ensure that material information relating to the Company is made known to the officers who certify our financial reports and to the members of our senior management and Board of Directors.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended). Based on management’s evaluation as of August 1, 2026, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that the information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting
There were no changes to our internal controls over financial reporting during the 13 weeks ended August 1, 2026 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Part II - Other Information
Item 1.Legal Proceedings
See Note 6 to our consolidated financial statements, “Commitments and contingencies,” for information on legal proceedings.
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Item 1A.Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended January 31, 2026, which could materially affect our business, financial condition, financial results, or future performance. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended January 31, 2026.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
The following table sets forth repurchases of our common stock during the second quarter of fiscal 2026:
Period | | Total number | | Average | | Total number | | Approximate | ||
May 3, 2026 to May 30, 2026 | 276,116 | $ | 511.50 | 276,108 | $ | 1,110,428 | ||||
May 31, 2026 to June 27, 2026 | 103,308 | 470.58 | 103,255 | 1,062,131 | ||||||
June 28, 2026 to August 1, 2026 | 101,202 | 479.57 | 101,075 | 1,014,131 | ||||||
Total (13 weeks ended August 1, 2026) | 480,626 | 495.98 | 480,438 | 1,014,131 | ||||||
| (1) | There were 480,438 shares repurchased during the 13 weeks ended August 1, 2026 and there were 188 shares transferred from employees in satisfaction of minimum statutory tax withholding obligations upon the vesting of restricted stock during the period. |
| (2) | We may repurchase up to $3.0 billion of the Company’s common stock under the share repurchase program the Board of Directors authorized in October 2024, which revoked the previously authorized but unused amounts under the share repurchase program the Board of Directors authorized in March 2024. As of August 1, 2026, $1.0 billion remained available under the October 2024 Share Repurchase Program. |
Item 3.Defaults Upon Senior Securities
None
Item 4.Mine Safety Disclosures
None
Item 5.Other Information
During the 13 weeks ended August 1, 2026,
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Item 6.Exhibits
The exhibits listed in the Exhibit Index below are filed as part of this Quarterly Report on Form 10-Q.
EXHIBIT INDEX
Incorporated by Reference | ||||||
|---|---|---|---|---|---|---|
Exhibit | Description of document | Filed Herewith | Form | Exhibit | File Number | Filing Date |
3.1 | Certificate of Incorporation of Ulta Beauty, Inc., as amended through June 9, 2026 | X | ||||
3.2 | Bylaws of Ulta Beauty, Inc., as amended through June 1, 2023 | 8-K | 3.3 | 001-33764 | 6/07/2023 | |
10.1 | 8-K | 10.1 | 001-33764 | 6/9/2026 | ||
10.2 | Form of Restricted Stock Unit Award Agreement under the 2026 Incentive Award Plan* | X | ||||
10.3 | Form of Option Award Agreement under the 2026 Incentive Award Plan* | X | ||||
31.1 | X | |||||
31.2 | X | |||||
32 | X | |||||
101.INS | Inline XBRL Instance | X | ||||
101.SCH | Inline XBRL Taxonomy Extension Schema | X | ||||
101.CAL | Inline XBRL Taxonomy Extension Calculation | X | ||||
101.LAB | Inline XBRL Taxonomy Extension Labels | X | ||||
101.PRE | Inline XBRL Taxonomy Extension Presentation | X | ||||
101.DEF | Inline XBRL Taxonomy Extension Definition | X | ||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101). | |||||
* A management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on August 27, 2026 on its behalf by the undersigned, thereunto duly authorized.
ULTA BEAUTY, INC. | ||
By: | /s/ Christopher Lialios | |
Christopher Lialios (Principal Accounting Officer) | ||
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