Beauty, cosmetics, and personal care retailer Ulta Beauty (NASDAQ: ULTA) reported Q1 CY2025 results topping the market’s revenue expectations, with sales up 4.5% year on year to $2.85 billion. The company expects the full year’s revenue to be around $11.6 billion, close to analysts’ estimates. Its GAAP profit of $6.70 per share was 15.5% above analysts’ consensus estimates.
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Ulta (ULTA) Q1 CY2025 Highlights:
- Revenue: $2.85 billion vs analyst estimates of $2.80 billion (4.5% year-on-year growth, 1.9% beat)
- EPS (GAAP): $6.70 vs analyst estimates of $5.80 (15.5% beat)
- Adjusted EBITDA: $485.2 million vs analyst estimates of $422.5 million (17% margin, 14.8% beat)
- The company slightly lifted its revenue guidance for the full year to $11.6 billion at the midpoint from $11.55 billion
- EPS (GAAP) guidance for the full year is $22.92 at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 14.1%, in line with the same quarter last year
- Free Cash Flow Margin: 10.5%, up from 2.5% in the same quarter last year
- Locations: 1,451 at quarter end, up from 1,395 in the same quarter last year
- Same-Store Sales rose 2.9% year on year (1.6% in the same quarter last year)
- Market Capitalization: $18.83 billion
Company Overview
Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty (NASDAQ: ULTA) is an American retailer that sells makeup, skincare, haircare, and fragrance products.
Sales Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $11.42 billion in revenue over the past 12 months, Ulta is a mid-sized retailer, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.
As you can see below, Ulta’s 8.7% annualized revenue growth over the last six years (we compare to 2019 to normalize for COVID-19 impacts) was mediocre, but to its credit, it opened new stores and increased sales at existing, established locations.
This quarter, Ulta reported modest year-on-year revenue growth of 4.5% but beat Wall Street’s estimates by 1.9%.
Looking ahead, sell-side analysts expect revenue to grow 2.8% over the next 12 months, a deceleration versus the last six years. This projection is underwhelming and indicates its products will face some demand challenges. At least the company is tracking well in other measures of financial health.
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Store Performance
Number of Stores
A retailer’s store count influences how much it can sell and how quickly revenue can grow.
Ulta operated 1,451 locations in the latest quarter. It has opened new stores quickly over the last two years, averaging 3.3% annual growth, faster than the broader consumer retail sector.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
Same-Store Sales
A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales gives us insight into this topic because it measures organic growth for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year.
Ulta’s demand rose over the last two years and slightly outpaced the industry. On average, the company’s same-store sales have grown by 2.6% per year. This performance suggests its rollout of new stores could be beneficial for shareholders. When a retailer has demand, more locations should help it reach more customers and boost revenue growth.
In the latest quarter, Ulta’s same-store sales rose 2.9% year on year. This performance was more or less in line with its historical levels.
Key Takeaways from Ulta’s Q1 Results
We were impressed by how significantly Ulta blew past analysts’ EPS and EBITDA expectations this quarter. We were also glad its revenue outperformed and it lifted its full-year revenue guidance, especially given the tariff uncertainty. Overall, we think this was a solid quarter with some key metrics above expectations. The stock traded up 7.9% to $455.40 immediately following the results.
Indeed, Ulta had a rock-solid quarterly earnings result, but is this stock a good investment here? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
