“The competitive environment in beauty has never been more intense,” according to Ulta Beauty CEO Kecia Steelman. The beauty industry is swimming with competitive sharks, namely Sephora, but that hasn’t stopped big-box chains like Target from swooping in and seizing customers. With the conclusion of fiscal 2024, Ulta is ready for a financial reset.
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Ulta released its Q4 earnings—and a “transition year” ahead.
Net sales at Ulta are slipping through the cracks. During a Q4 2024 earnings call, senior vice president of finance Paula Oyibo revealed that net sales hit $3.5 billion, a 1.9 percent drop from the year prior. Net income was also down, though only slightly: $393.3 million compared to last year’s $394.4 million.
While those margins aren’t in the green, Oyibo said Ulta delivered a “better-than-expected performance” across the profit and loss sector, “reflecting stronger revenue growth, lower inventory shrink, better merchandise margin and continued financial discipline and expense management.”
This was reflected—albeit marginally—in the company’s annual outlook. Comparable sales were up 0.7 percent, while annual net sales saw a 0.8 percent increase.
However, CNBC reports that “beauty sales remained strong at retailers like Macy’s and Target” last year.
Therefore, Steelman predicts that 2025 will be a “transition year” due to “uncertain consumer spending,” according to CNBC. The company expects 2025 profits to be lower than what Wall Street initially predicted.
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But Ulta’s CEO has a plan.
Ulta’s newly minted president and CEO has unveiled operation “Ulta Beauty Unleashed” to help get the business back on track. The plan will aim to “drive core business growth,” “scale new accretive businesses,” and “realign our foundation for the future,” Steelman told analysts on the call.
In this post-pandemic era, many retailers are struggling to stay afloat—even more so with President Donald Trump’s imposed tariff mandates. But while Ulta has seen a small hindrance to its profit margins, retail giants like Macy’s and Target are benefiting from its beauty sales, per CNBC. There’s also makeup rival Sephora.
“We recognize the need to move quickly, and we will be deliberate about pacing and prioritization to ensure that we can execute well and manage the short-term financial impact,” said Steelman.
Be that as it may, Ulta is busy investing in its physical footprint. In 2024, the beauty retailer opened 66 new locations and remodeled 41 stores. Ulta also expanded its shop-in-shop partnership with Target. The brand says it expects to achieve similar results in 2025.
“I’ve shared our plan to make important guest-facing investments, which are necessary to improve our competitiveness and re-accelerate long-term share growth,” Steelman said elsewhere during the call. “These investments will pressure profitability in 2025, but we believe they are critical to driving long-term sustainable growth in a competitive, innovative category.”
Looking ahead, Ulta Beauty Unleashed will prioritize the customer. Steelman said Ulta’s app and website will get much-needed glow-ups, and the company will be launching a new e-commerce platform called Ulta Beauty Marketplace in the latter half of 2025. As for inventory, Ulta is investing in more wellness merchandise.
“Fiscal 2025 will be a pivotal year as we make purposeful investments to fuel our future growth and move quickly to optimize our business,” Steelman told analysts. “While it will take time to see the impact of these efforts, we are confident these investments will help reignite our momentum and unlock sustained growth and long-term value for our shareholders.”
