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Earnings season may be bringing mixed results on the beauty front, but for one retailer things are looking up. Ulta Beauty reported a better-than-expected performance for its first quarter in 2025 and raised its full-year outlook from $11.6 billion to $11.7 billion. Net sales increased 4.5 per cent to $2.8 billion in the quarter ended 3 May 2025, beating analyst expectations of $2.7 billion. In after-hours trading, the beauty retailer’s stock jumped 8.4 per cent.
“Fiscal 2025 is off to an encouraging start with stronger-than-expected performance. Our Ulta Beauty ‘Unleashed’ plan is resonating with guests, energising our team and fuelling growth,” said Kecia Steelman, president and CEO, in a statement. The retailer’s ‘Unleashed’ strategy, announced in March to combat slowing sales, places focus on streamlining leadership, improving store presentation and inventory levels, and diversifying its brand portfolio across beauty and wellness. “The operating environment is fluid, and our outlook reflects uncertainty around how consumer demand could evolve. We believe our model uniquely positions us to win, and we will continue to focus on serving our guests while staying agile as we move through the year.”
Kecia Steelman is taking over from Dave Kimbell at the helm of the American retailer, effective immediately.
Ulta’s comparable store sales — the sales for stores open in the last 14 months, plus e-commerce sales — increased 2.9 per cent year-on-year. Steelman said e-commerce sales success was down to its app usage and engagement among customers (more than 60 per cent of e-commerce sales are made through the app).
By category, fragrance sales were up 11 per cent, compared with the same period a year prior, skincare and wellness increased 25 per cent, while services (such as hair salons) were flat, contributing 4 per cent in net sales. Haircare sales fell 1 per cent year-on-year to 18 per cent, and cosmetics dropped 2 per cent to 40 per cent for the quarter. On the investor call, Steelman highlighted fragrance as the retailer’s strongest performing category, driven by newness in women’s and gender neutral fragrance brands as well as the likes of XO Khloé by Khloé Kardashian, Noise, Valentino and Billie Eilish.
The skincare and wellness category saw growth in bodycare, suncare and wellness, with new brands like Tatcha, Naturium and Inua driving consumer spending. Interest in Sol de Janeiro and Touchland, the trending hand sanitiser brand, also continues to excite consumers in-store. However, Steelman said that skincare alone is proving to be a challenge; its prestige skincare category was flat for the quarter, while mass skincare decreased modestly.
Fuelling the haircare category were haircare tools, mass haircare (a portfolio including Dyson, Shark beauty and Olaplex) and the “much anticipated [retail] debut of Beyoncé’s Cecred haircare line”, Steelman added.
Like with many of the larger beauty players, such as Coty and Estée Lauder Companies (ELC), makeup continues to face headwinds for the retailer as it grapples with dupes and consumers’ ongoing preference for barely-there looks. Steelman said there are green shoots, however. “In-store, engagement with newer brands like Ilia, Milk Makeup and Dibs, as well as exclusive newness from Mac Cosmetics and Lancôme, offset headwinds,” she said.
Steelman is confident that Ulta’s marketing strategy, designed to spark excitement, awareness, engagement and retain loyal customers, was off to a strong and renewed start. “We activated key moments with precision,” she said. “Our Super Bowl campaign, which celebrated women in sports, delivered record social impressions and engagement, amplifying reach and cultural relevance.” The CEO also highlighted the success of the brand’s inaugural beauty festival, Ulta Beauty World, and becoming the sponsor for Beyoncé’s Cowboy Carter tour, which featured curated beauty looks as well as exclusive hair product assortments across the US leg of the tour.
Both Steelman and CFO Paula Ojibow remain aware of the challenges ahead, particularly when it comes to US tariffs and wavering consumer confidence. “While the beauty category has historically been resilient through economic downturns, it has not been immune to consumer pressure. The operating environment continues to be very dynamic, and the evolving global trade landscape has created more uncertainty related to consumer pressures, especially for the second half of the year,” Ojibow told investors. For Ojibow, the first quarter was positive, but she is aware that one quarter does not make a trend. A cautious and uncertain outlook persists for the second half of the year.
To prepare, Steelman said the retailer will double down on its in-store customer experience. Plus, Ulta Beauty will continue to drive bold marketing campaigns and focus on bringing newness and exclusives to its shelves. “It’s about being focused on controlling what we can control in a pretty dynamic and ever-changing environment,” she concluded.
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