Ulta Beauty raises profit forecast as prestige demand holds strong
Ulta Beauty lifted its profit outlook after comparable sales rose 5.3%, signaling shoppers are still trading up for prestige cosmetics, fragrance and skincare.
Ulta Beauty lifted its full-year profit forecast after a quarter that showed consumers still willing to pay for prestige cosmetics, fragrance and skincare even as spending across the broader economy stayed uneven.
The beauty retailer said comparable sales rose 5.3% in the fiscal quarter ended May 2, well ahead of Wall Street’s 4.5% expectation and up from 2.9% a year earlier. First-quarter earnings per share came in at $7.74, above the $6.86 consensus estimate, and the company raised full-year EPS guidance to $28.36 to $28.80 from a prior range of $28.05 to $28.55. Shares rose about 5% in extended trading after the announcement.
The numbers point to a selective spending economy rather than a broad-based rebound. Ulta is seeing customers pull back in some areas while still reaching for premium beauty products, a pattern that fits a K-shaped consumer recovery in which higher-income households keep spending on discretionary items while lower-income shoppers remain more cautious. For Ulta, that split matters because prestige beauty is where it is gaining ground and where pricing power appears to be holding up.
Chief executive Kecia Steelman said Ulta gained share in prestige beauty and was roughly flat in mass beauty, a sign that the chain’s assortment continues to resonate with shoppers looking for new launches and higher-end labels. The company has also benefited from celebrity-backed brands that keep traffic flowing through its stores and website, including Rihanna’s Fenty Beauty, Selena Gomez’s Rare Beauty and Beyoncé’s Cécred. Those names have become part of the chain’s draw, especially for younger shoppers who follow product drops closely.
Ulta’s outlook also suggests the “small luxury” effect is still alive in U.S. retail. Consumers may be cutting back on bigger-ticket purchases, but prestige lipstick, fragrance and skincare remain attainable upgrades, especially for affluent shoppers who are less squeezed by borrowing costs and inflation. The contrast with many other retailers’ cautious commentary shows where demand is still strongest and where consumers are willing to trade up, even in an uneven economy. Ulta’s latest quarter suggests that, for now, beauty remains one of the clearest pockets of resilience in discretionary spending.
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