With new leadership and an aggressive turnaround plan, Ulta Beauty is hoping to eke out 1 percent growth at most in the coming fiscal year, according to its earnings report published on Thursday.
The company reported a 1.9 percent net sales decrease for its fourth quarter, bringing 2024 sales growth to 0.8 percent, for a total of $11.3 billion. Its 2025 full-year comparable sales projection is at least flat, with net sales estimated between $11.5 and $11.6 billion.
On the earnings call, executives noted that natural disasters combined with economic and political turmoil have dented beauty sales so far this year.
“January and February were impacted by a combination of some weather and fires in LA and heightened economic and geopolitical volatility,” said Ulta Beauty’s president and chief executive Kecia Steelman, adding that it’s “too early” to know if these are longer-term structural issues. “In this environment, we’re really focused on controlling what we can control.”
Steelman, who took the helm of the company on Jan. 6 upon the retirement of former CEO Dave Kimbell, also highlighted a slew of recent executive changes to usher in a turnaround plan, called “Ulta Beauty Unleashed.” Her ascension was quickly followed by the appointment of a new CMO, Kelly Mahoney, who was promoted to the role in February after overseeing the retailer’s growing loyalty programme. Other new appointments include Amiee Bayer-Thomas in a newly created chief retail officer role, Mike Maresco as chief technology and transformation officer, and a soon-to-be-named chief merchandising officer.
The company also announced an Amazon-esque marketplace set to launch in late 2025.
Steelman highlighted Ulta Beauty’s attempts to fortify its core business by offering continued newness in its product assortment and greater personalisation, pointing out improved in-store experience and inventory management as particular areas of focus.
Keeping Up and Standing Out
After alluding to pressure on sales from Sephora’s expansion into strip malls via its Kohl’s partnership, Ulta Beauty has continued to move in on the LVMH-owned retailer’s territory in terms of brand assortment and positioning.
The number of former Sephora exclusives in its lineup continues to grow — most recently, with the addition of Milk Makeup in March 2025 and Tatcha in December 2024, following earlier entries by Sol de Janeiro and Charlotte Tilbury. The retailer’s efforts to convert so-called “Sephora tweens” have resulted in more Gen Alpha-oriented brand launches like body-care label Daise and press-on nails brand Digi. It also announced its first-ever Ulta Beauty World event, mirroring the success of the Sephoria beauty gatherings held annually around the world since 2018.
“They will have to operate in a world where Sephora is competing much closer than they were before,” said Simeon Siegel, a managing director of equity research at BMO. “The question becomes, how do they continue to ensure that they have the right product? How do they continue to ensure that they’re offering something that continues to make them special?”
For Ulta Beauty, that point of differentiation has meant lining up its own exclusives. In February, the retailer announced it will be first to carry Beyoncé’s Cécred line, which was highlighted on the call along with K-beauty brand Anua, Serena Williams’ Wyn Beauty and Gen Z-focused fragrance label Noyz.
“There’s only so many ways as a beauty retailer that you can be truly unique from one another,” said Jon Tenan, a managing director at investment bank Baird, who noted that store experience is important, but “exclusives is probably the number one.”
To entice brands into exclusive partnerships, Ulta Beauty is offering them promotional opportunities such as endcaps and in-store displays.
Doubling down on the relationship allows brands to access a much broader array of partnership opportunities, said Greg Maged, the CEO of scalp health-focused Seen Hair Care, an Ulta Beauty exclusive.
“As a young brand, we want to be considered for all the exciting opportunities at Ulta — secondary exposures, front of store opportunities, endcaps,” said Maged. Seen is also a graduate of the Sparked programme, the retailer’s incubator, and part of its mission to support startup brands in a fast-changing beauty market.
“Beauty is becoming more fashionable, and you’ve got to be on the cutting edge of the trends,” Steelman noted on the earnings call. Overall, the company increased their roster by 40 brands in 2024. But keeping up with trends requires ensuring items are in stock, Steelman added, acknowledging that the retailer’s inventory management needs improvement.
Physical stores have also been a major part of Ulta Beauty’s turnaround strategy. Ninety percent of locations were subject to “competitive openings” in 2024, according to Steelman, without explicitly naming Sephora at Kohl’s. Ulta Beauty opened 60 new stores in 2024, with hopes to open a total of 200 within three years. But while Sephora’s Kohl’s partnership exposes it to a newer customer group, Ulta Beauty’s similar Target shop-in-shops may be competing with its standalone locations for the same shoppers.
“There’s probably more cannibalisation,” said Tenan of Ulta Beauty at Target compared to Sephora at Kohl’s. “You see more natural overlap between the Venn diagram of who’s going to one or the other.”
The US retailer will finally expand its reach outside the US in 2025, with its first international locations opening in Mexico and the Middle East later this year.
Future Headwinds
Ulta Beauty executives, and the beauty industry at large, are expecting both internal and external pressures for the rest of this year, with a trade war raging and consumers more uncertain than ever.
For the retailer specifically, the key will be continuing to find points of differentiation as they premiumise their selection while remaining true to a more accessible customer. Middle America continues to be a focus for Ulta Beauty — the retailer chose San Antonio, Texas for its inaugural Ulta Beauty World, following the success of Sephora’s Sephoria events in New York and Dubai.
The company is also addressing the threat of Amazon head-on with its new closed marketplace, which Steelman noted will be unveiled in late 2025 and will feature more curation and vetting than Amazon. Brands will need to be approved by Ulta Beauty to sell on the marketplace; purchases will count for Ulta Beauty points and can be returned in-store.
But the continued state of the US economy and consumer sentiment is the real wild card for all beauty retailers and brands this year.
“Every company is facing a tremendous amount of uncertainty,” said Siegel. “It doesn’t mean they can’t have a great year. It doesn’t mean they can’t take their business under their own control. But generally speaking, there are reasons the stocks are where they are.”
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