Ulta Beauty Sees Resilient Demand, Eyes Fragrance, Wellness Growth After Target Exit

Ulta Beauty executives said the company is seeing continued resilience in consumer beauty spending, supported by its broad price range, loyalty program, stores, services and investments in technology. Speaking at a Barclays conference, President and Chief Executive Officer Kecia Steelman said Ulta has not seen a meaningful change in customer shopping behavior despite what she described as a dynamic macroeconomic environment. She said customers view beauty as both an affordable luxury and a form of self-care, while Ulta’s assortment spans entry-level through luxury price points.

Steelman pointed to the company’s second-quarter results, saying Ulta exceeded its prior guidance and raised its full-year outlook. Chief Financial Officer Chris DelOrefice added that average spending per loyalty member increased during the second quarter and that the company did not see material changes in demand across age groups or income cohorts.

Steelman said fragrance is among Ulta’s fastest-growing categories and contributed to higher average transaction value in the second quarter. The company has publicly stated its goal of becoming the No. 1 fragrance retailer in the U.S., she said. Fragrance is also attracting younger male shoppers, who are increasingly buying multiple scents and layering products rather than relying on a single signature fragrance.

In skincare, Steelman said K-beauty remains an important opportunity. Ulta has been the No. 1 retailer of K-beauty for the past 18 months, according to Steelman, and exclusives accounted for 50% of the company’s K-beauty sales in the most recent quarter. She also said Ulta plans to add Proya, which she described as the leading C-beauty brand from China. Makeup trends are shifting toward heavier glam looks and eye makeup, Steelman said, while haircare demand is expanding beyond shampoo and conditioner into scalp treatments and hair health. She said GLP-1 use is influencing both skincare and haircare needs.

Ulta continues to invest in Space NK in the United Kingdom, where Steelman said the business has previously reported strong double-digit comparable sales. She described the U.K. as the sixth-largest beauty market and said Space NK remains an important growth opportunity.

Steelman said Ulta ended its Target partnership in mid-August and that prestige brands involved in the relationship returned to the Ulta ecosystem. She said the company has data on customers who shopped both Target and Ulta and is using marketing efforts to retain and regain those shoppers. She acknowledged that the Target partnership initially cannibalized Ulta...