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Key Takeaways Ulta Beauty views international expansion as a key driver of future accretive growth.ULTA's Space NK continues to grow while expanding its customer base and market share.ULTA added stores in Mexico and the Middle East to strengthen its international footprint. Ulta Beauty, Inc. (ULTA - Free Report) expects to generate incremental accretive growth as it continues to scale its newer businesses, including its international expansion initiatives. These investments will play an important role in the company’s long-term growth strategy while supporting the continued expansion of its global business. Ulta Beauty further strengthened its international footprint by opening new stores across multiple overseas markets, reinforcing its commitment to expanding beyond the United States.

The company highlighted the continued strength of Space NK, its U.K. and Ireland business, which continues to deliver healthy and well-balanced growth. Space NK is expanding its loyal customer base while steadily gaining market share. Ulta Beauty believes this consistent performance reinforces the strength of its international operations and provides a solid foundation for broader global expansion over the long term.

Ulta Beauty also expanded its presence in Mexico by opening two new stores, including the Madero location, a distinctive two-story location that blends modern beauty retail with the historic architecture and character of central Mexico City. In addition, franchise partner Alshaya Group opened the company’s third Middle East location at Dubai Mall, further extending Ulta Beauty’s presence across international markets through continued store expansion. While the company acknowledged that conditions in the Middle East remain fluid, it remains optimistic about the long-term potential of its flagship location and broader opportunities in the region.

Overall, Ulta Beauty continues to pursue a disciplined long-term international expansion strategy as it invests in newer growth businesses. As the company continues to expand its international operations through Space NK, Mexico and the Middle East, management expects these newer businesses to contribute incremental accretive growth over time while supporting its long-term growth strategy.

The Zacks Rundown for ULTAThe company’s shares have lost 4.6% in the past year compared with the industry’s 13.8% decline.

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From a valuation standpoint, ULTA trades at a forward price-to-earnings ratio of 15.06, higher than the industry’s average of 14.41. ULTA currently carries a Zacks Rank #3 (Hold).

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The Zacks Consensus Estimate for ULTA’s current and next fiscal year earnings implies a year-over-year rise of 11.8% and 11.3%, respectively.

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The Zacks Consensus Estimate for FIVE’s current fiscal-year sales and earnings implies growth of 14.7% and 34.3%, respectively, from the year-ago figures. FIVE delivered a trailing four-quarter earnings surprise of 70.1%, on average.

The Estée Lauder Companies Inc. (EL - Free Report) manufactures, markets, and sells skin care, makeup, fragrance, and hair care products worldwide. At present, EL flaunts a Zacks Rank of 1.

The Zacks Consensus Estimate for EL’s current fiscal-year sales and earnings indicates growth of 4.5% and 59.6%, respectively, from the year-ago figures. EL delivered a trailing four-quarter earnings surprise of 39.1%, on average.

Interparfums, Inc. (IPAR - Free Report) manufactures, markets, and distributes a range of fragrances and fragrance-related products in the United States and internationally. At present, the company carries a Zacks Rank of 2 (Buy).

The consensus estimate for Interparfums’ current fiscal-year sales and earnings implies a decline of 0.1% and 8%, respectively, from the year-ago figures. IPAR delivered a trailing four-quarter earnings surprise of 8%, on average.

A month has gone by since the last earnings report for Ulta Beauty (ULTA - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ulta due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Ulta Beauty Lifts FY26 View as Q1 Earnings Beat, Comps Rise 5.3%Ulta Beauty reported first-quarter fiscal 2026 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. The company delivered double-digit sales and earnings growth, driven by broad-based strength across channels and product categories, along with contributions from the Space NK acquisition.

The beauty retailer reported first-quarter fiscal 2026 earnings per share of $7.74, beating the Zacks Consensus Estimate of $6.90. The bottom line increased 15.5% from the year-ago quarter’s reported figure of $6.70.

Net sales rose 11.1% year over year to $3,163.9 million and surpassed the Zacks Consensus Estimate of $3,113 million. Growth was primarily driven by higher comparable sales, contributions from the Space NK acquisition and sales from new stores. Comparable sales increased 5.3%, supported by a 3.7% rise in average ticket and a 1.6% jump in transactions.

ULTA’s Quarterly Results: Key Metrics & InsightsUlta Beauty’s gross profit increased 13.8% year over year to $1,267.6 million. Gross margin expanded 100 basis points to 40.1% from 39.1%, primarily due to lower inventory shrink and higher merchandise margin. Improvements in inventory productivity and favorable category mix also aided profitability.

Selling, general and administrative (SG&A) expenses increased 14.6% to $814.7 million from $710.6 million reported in the prior-year quarter. As a percentage of net sales, SG&A expenses rose to 25.8% from 24.9%. The increase was primarily due to the acquisition of Space NK, strategic enterprise investments and higher store-related expenses, partially offset by leverage in advertising expenses.

Operating income surged 11.6% to $448.3 million from $401.8 million in the year-ago quarter. As a percentage of net sales, operating income improved slightly to 14.2% from 14.1% in the prior-year period.

ULTA’s Category Performance Remains Broad-BasedPerformance was broad-based across all major categories in the quarter. Fragrance remained the strongest category, delivering high-teens comparable sales growth, driven by newness from luxury brands such as YSL, Carolina Herrera, Valentino and Balmain, as well as innovation from exclusive fragrance brand NOYZ.

Haircare generated high-single-digit comparable growth, supported by strength in prestige haircare, new and exclusive brands, and healthy demand for hair-treatment products.

Makeup posted low-single-digit comparable sales growth, aided by prestige makeup performance and the successful launch of Rare Beauty. Skincare and wellness delivered low-single-digit comparable growth, benefiting from prestige skincare, mass skincare and continued momentum in supplements and self-care products. Services revenues increased in the mid-single-digit range, supported by strong member engagement.

Ulta Beauty’s Strategic Initiatives Gain TractionUlta Beauty continued to advance its “Ulta Beauty Unleashed” strategy during the quarter. The company launched TikTok Shop, positioning itself as a key beauty discovery platform and strengthening engagement with younger consumers. Ulta Beauty also added more than 20 new brands during the quarter, expanded its marketplace assortment to more than 325 brands and 8,000 SKUs and grew its loyalty program to approximately 46.9 million members, up 4% year over year.

The company continued expanding its international presence through Space NK, Mexico and the Middle East. Management also announced plans for a highly experiential flagship location in Times Square, NY, which is expected to open in late 2027.

ULTA’s Financial Health Snapshot & Store UpdateThe company ended the quarter with cash and cash equivalents of $166.3 million and short-term investments of $55 million. Merchandise inventories increased 12.5% year over year to $2.4 billion. Short-term debt totaled $144.9 million, while stockholders’ equity stood at $2.58 billion at quarter-end.

Net cash provided by operating activities was $261.9 million in the first quarter. Capital expenditures totaled $58.3 million, primarily related to investments in new and existing stores.

During the quarter, Ulta Beauty repurchased 958,323 shares of its common stock for $555 million. As of May 2, 2026, approximately $1.3 billion was available under the company’s $3 billion share buyback authorization announced in October 2024.

Ulta Beauty opened 16 net new stores in the United States and one net new Space NK store during the quarter. The company ended the period with 1,521 Ulta Beauty stores and 87 Space NK stores.

What to Expect From ULTA in FY26?Following its better-than-expected first-quarter performance, Ulta Beauty updated its fiscal 2026 outlook.

The company continues to expect net sales growth of 6% to 7% and comparable sales growth of 2.5% to 3.5%. Management now anticipates operating income growth of 6.5% to 9% compared with its previous expectation of 6% to 9%.

Ulta Beauty raised its fiscal 2026 earnings per share guidance to the range of $28.36-$28.80 from the prior range of $28.05-$28.55.

How Have Estimates Been Moving Since Then?It turns out, estimates review have trended downward during the past month.

VGM ScoresAt this time, Ulta has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a score of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Ulta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry PlayerUlta is part of the Zacks Retail - Miscellaneous industry. Over the past month, Bath & Body Works (BBWI - Free Report) , a stock from the same industry, has gained 24.1%. The company reported its results for the quarter ended April 2026 more than a month ago.

Bath & Body Works reported revenues of $1.38 billion in the last reported quarter, representing a year-over-year change of -3.2%. EPS of $0.32 for the same period compares with $0.49 a year ago.

For the current quarter, Bath & Body Works is expected to post earnings of $0.23 per share, indicating a change of -37.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.7% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Bath & Body Works. Also, the stock has a VGM Score of A.

Key Takeaways Ulta Beauty cites inflation, fuel costs and competition as key headwinds for fiscal 2026.ULTA delivered 11.1% sales growth and 5.3% comparable sales growth in the first quarter.ULTA expands loyalty, AI capabilities and international stores to deepen customer engagement. Ulta Beauty, Inc.’s (ULTA - Free Report) shares have plunged 24.5% in the past six months, underperforming the Zacks industry’s decline of 18.1%. The stock has also underperformed the broader sector’s 3.3% decline and the S&P 500 Index’s 7.7% increase in the same period.

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During the same period, Ulta Beauty has trailed the performance of Sally Beauty Holdings, Inc. (SBH - Free Report) , The Estee Lauder Companies Inc. (EL - Free Report) and Interparfums, Inc. (IPAR - Free Report) . Shares of EL and SBH have plunged 22% and 12.1%, respectively, in the past six months, while shares of IPAR have risen 16.6%.

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ULTA Stock Falls on Macro Threats & Moderating GrowthUlta Beauty faces several near-term headwinds stemming from a challenging macroeconomic environment, rising competitive intensity and increasingly difficult year-over-year comparisons. At its first-quarter fiscal 2026 earnings call, management noted that the operating environment remains pressured by economic uncertainty, persistent inflation and higher fuel prices. These factors are making value a more important consideration for consumers when making purchasing decisions. At the same time, elevated fuel costs have pushed transportation expenses higher, highlighting the impact of broader economic conditions on the business.

SG&A expenses rose 14.6% year over year to $815 million in the first quarter, adding further strain to the company’s cost structure. The increase was largely due to the ongoing investments supporting the Ulta Beauty Unleashed strategy and spending initiatives implemented during the second half of fiscal 2025 that have not yet completed one year. As a result, the company continues to face elevated operating costs and challenging expense comparisons.

In addition, Ulta Beauty operates in a highly competitive market where rivals are expected to intensify efforts to capture market share. This dynamic is likely to increase execution pressure and require the company to perform at a higher level to protect its competitive position and sustain performance throughout the remainder of the year.

Per the last earnings call, management expects growth trends to moderate in the back half of the year as the company laps a period of stronger prior-year performance. This tougher comparison base is likely to create a more challenging growth environment and could slow the pace of expansion relative to earlier periods.

ULTA Drives Growth Through Loyalty, AI and Global ExpansionDespite these near-term challenges, Ulta Beauty continues to benefit from several long-term growth drivers that support customer engagement, market share gains and profitable growth. The company’s growth is supported by its differentiated beauty ecosystem, which combines a broad mass-to-luxury assortment, omnichannel convenience, strong brand partnerships and a large loyalty base. These strengths help the company attract a wide range of beauty consumers, support market share gains in prestige beauty and reinforce its position in mass beauty.

A major driver is the Ulta Beauty Rewards program, which has expanded to nearly 47 million members. This large first-party database enables more personalized marketing, better product recommendations and improved customer engagement across stores, digital channels and the app. As personalization becomes more important in beauty retail, Ulta Beauty’s loyalty platform remains a key competitive advantage.

Ulta Beauty is also strengthening growth through digital and social commerce. Investments in e-commerce, same-day delivery, buy-online-pickup-in-store and emerging platforms such as TikTok Shop allow the company to meet customers where they discover and purchase beauty products. Events like Ulta Beauty World further support brand awareness, social engagement and customer acquisition, particularly among younger consumers.

International expansion provides another long-term growth avenue. Space NK continues to build momentum in the U.K. and Ireland, while Ulta Beauty is expanding in Mexico and the Middle East through new stores and partnerships. These markets offer opportunities to extend brand reach and diversify growth beyond the United States.

Artificial intelligence is also becoming an important enabler. Ulta AI is designed to improve discovery, personalization and the online shopping journey, while broader AI and automation initiatives can enhance operational efficiency over time.

How Have Estimates Shaped Up for ULTA?The Zacks Consensus Estimate for ULTA’s current quarter earnings per share has remained unchanged at $6.16, and the current year earnings per share have improved by 1 cent to $28.67 per share in the past seven days. This reflects steady analyst confidence in Ulta Beauty's earnings outlook.

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Ulta Beauty’s Valuation PictureUlta Beauty is currently trading at a forward 12-month P/E multiple of 15.31, slightly above the industry average of 14.71 but well below the S&P 500 multiple of 21.32. The stock is also trading below its 12-month median P/E of 20.25.

ULTA’s current valuation suggests investors remain cautious about near-term growth prospects, while still assigning the stock a modest premium for its market position and long-term growth potential.

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How to Play ULTA Stock?Ulta Beauty is navigating a period of heightened macroeconomic uncertainty and competitive pressure, which may temper near-term performance. However, the company continues to benefit from a differentiated business model built around a strong loyalty ecosystem, omnichannel capabilities, exclusive brand partnerships and expanding digital engagement. Ongoing investments in personalization, artificial intelligence and international expansion provide additional avenues for long-term growth. Given the balance between near-term headwinds and long-term growth opportunities, investors may prefer to remain on the sidelines until there is greater visibility into the pace of growth and margin trends.

At present, ULTA carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.