Beauty, cosmetics, and personal care retailer Ulta Beauty (NASDAQ: ULTA) announced better-than-expected revenue in Q1 CY2026, with sales up 11.1% year on year to $3.16 billion. Its GAAP profit of $7.74 per share was 12% above analysts’ consensus estimates.
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Ulta (ULTA) Q1 CY2026 Highlights:
- Revenue: $3.16 billion vs analyst estimates of $3.12 billion (11.1% year-on-year growth, 1.5% beat)
- EPS (GAAP): $7.74 vs analyst estimates of $6.91 (12% beat)
- EPS (GAAP) guidance for the full year is $28.30 at the midpoint, missing analyst estimates by 1.1%
- Operating Margin: 14.2%, in line with the same quarter last year
- Free Cash Flow Margin: 6.4%, up from 4.9% in the same quarter last year
- Same-Store Sales rose 5.3% year on year (2.9% in the same quarter last year)
- Market Capitalization: $21.81 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.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
With $12.71 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 sales grew at a tepid 6.6% compounded annual growth rate over the last three years, but to its credit, it opened new stores and increased sales at existing, established locations.
This quarter, Ulta reported year-on-year revenue growth of 11.1%, and its $3.16 billion of revenue exceeded Wall Street’s estimates by 1.5%.
Looking ahead, sell-side analysts expect revenue to grow 5.4% over the next 12 months, similar to its three-year rate. We still think its growth trajectory is attractive given its scale and implies the market is baking in success for its products.
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Store Performance
Number of Stores
The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.
Over the last two years, Ulta opened new stores at a rapid clip by averaging 4.2% annual growth, among the fastest in the consumer retail sector. This gives it a chance to become a large, scaled business over time.
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.
Note that Ulta reports its store count intermittently, so some data points are missing in the chart below.
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 provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
Ulta’s demand has been spectacular for a retailer over the last two years. On average, the company has increased its same-store sales by an impressive 3.5% per year. This performance suggests its rollout of new stores is beneficial for shareholders. We like this backdrop because it gives Ulta multiple ways to win: revenue growth can come from new stores, e-commerce, or increased foot traffic and higher sales per customer at existing locations.
In the latest quarter, Ulta’s same-store sales rose 5.3% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.
Key Takeaways from Ulta’s Q1 Results
We were impressed by how significantly Ulta blew past analysts’ EBITDA expectations this quarter. We were also happy its gross margin outperformed Wall Street’s estimates. On the other hand, its full-year EPS guidance slightly missed. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 4.2% to $515.94 immediately following the results.
Indeed, Ulta had a rock-solid quarterly earnings result, but is this stock a good investment here? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
