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Investing.com -- Ulta Beauty Inc (NASDAQ:ULTA) shares surged 5.7% in after-hours trading Thursday after the company reported second-quarter results that exceeded Wall Street expectations and raised its full-year guidance. The performance was driven by broad-based strength across categories and notable improvements in operating efficiency.
The beauty retailer posted earnings per diluted share of $5.78, beating the consensus estimate of $4.99. Net sales rose 9.3% to $2.79 billion, ahead of the $2.66 billion forecast from analysts, with comparable sales up 6.7% following a 1.2% decline in the same period last year.
Gross profit as a percentage of sales improved to 39.2%, up from 38.3%, boosted by lower inventory shrink and higher merchandise margins. Operating income was $344.9 million, or 12.4% of net sales, down modestly from 12.9% a year ago due to elevated payroll and incentive compensation costs.
“The Ulta Beauty team delivered strong results in the second quarter, including 6.7% comparable sales growth,” said Chief Executive Officer Kecia Steelman. “Outstanding top line performance, fueled by growth across all major categories, drove market share growth and better-than-expected profitability.”
The second quarter’s strength comes as Ulta executes on its expansion strategy, bolstered by the recent acquisition of UK-based Space NK. Together, Ulta and Space NK added 62 net new locations, which, along with an uptick in transactions and average ticket size, contributed to the sales increase.
Investors also welcomed an improved 2025 outlook, with Ulta now forecasting sales of $12.0 billion to $12.1 billion, up from $11.5 billion to $11.7 billion previously. Earnings guidance was raised to a range of $23.85 to $24.30 per share, compared to the earlier target of $22.65 to $23.20.
Ulta repurchased around 244,559 shares for $109.5 million during the quarter as part of its multi-billion-dollar buyback program and now operates 1,473 stores in the U.S., excluding the 83 acquired Space NK locations abroad. Inventory increased 20.5% year-over-year to support new brand launches and store expansion.
Despite uncertainty around consumer demand in the second half of 2025, Ulta’s updated guidance signals growing confidence internally and easing investor concerns over profitability trends and competitive pressures across the beauty category.