• Net Sales: Decreased 1.9% to $3.5 billion for the fourth quarter.
• Comparable Sales: Increased 1.5% for the 13-week period.
• Gross Margin: Increased 50 basis points to 38.2% for the quarter.
• SG&A Expenses: $816 million, $5 million lower than last year.
• Operating Profit: Approximately flat with last year, with an operating margin increase of 30 basis points to 14.8% of sales.
• Diluted EPS: Increased 4.7% to $8.46 for the quarter.
• Full-Year Net Sales: Increased 0.8% to $11.3 billion.
• Full-Year Comparable Sales: Increased 0.7%.
• Full-Year Gross Margin: Deleveraged 30 basis points to 38.8%.
• Full-Year Operating Profit: 13.9% of sales compared to 15% in fiscal 2023.
• Full-Year Diluted EPS: Decreased 2.7% to $25.34 per share.
• Cash and Cash Equivalents: $703 million at the end of the quarter.
• Inventory: Increased 13% to $2 billion.
• Cash from Operations: Generated more than $1.3 billion.
• Stock Buyback Program: Returned $1 billion in capital to shareholders.
• 2025 Net Sales Outlook: Expected between $11.5 billion and $11.6 billion.
• 2025 Operating Margin Outlook: Expected between 11.7% and 11.8% of net sales.
• 2025 Diluted EPS Outlook: Expected between $22.50 and $22.90 per share.
• 2025 CapEx: Planned between $425 million and $500 million.

• Warning! GuruFocus has detected 5 Warning Sign with DOCU.

Release Date: March 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ulta Beauty Inc (NASDAQ:ULTA) finished the year ahead of expectations, with strong revenue growth and better-than-expected performance across the P&L.
• The company successfully launched 40 new brands, including exclusive ones like XO Khloe and WYN BEAUTY, enhancing its assortment.
• Ulta Beauty Inc (NASDAQ:ULTA) expanded its accessibility by opening 60 net new stores and 100 new Ulta Beauty at Target shop-in-shop locations.
• The loyalty program grew by 3% to a record high of 44.6 million members, indicating strong customer engagement.
• The company initiated plans to expand internationally, including launching in Mexico and the Middle East in 2025.

Negative Points

• Ulta Beauty Inc (NASDAQ:ULTA) lost market share in the beauty category for the first time in 2024, highlighting increased competitive pressure.
• The in-store presentation and guest experience were not as strong as desired, indicating execution challenges.
• Operating profit is expected to decrease in the low-double-digit range in 2025 due to strategic investments and inflationary pressures.
• The company anticipates a transitional year in 2025, with flat to 1% comp sales growth, reflecting cautious guidance amidst consumer uncertainty.
• Gross margin is expected to deleverage in 2025, primarily due to store occupancy and supply chain costs, despite efforts to optimize costs.

Q & A Highlights

Q: With the Ulta Beauty Unleashed plan, how are you thinking about the in-store experience and guest presentation, and what needs to change to achieve the long-term sales growth target? A: Kecia Steelman, CEO, emphasized the importance of simplifying focus for internal teams to prioritize driving core business growth, building new accretive businesses, and realigning the foundation. The plan is not new information but a refined approach to execution. Paula Oyibo, CFO, added that 2025 is expected to be a transition year, with no further transitional periods anticipated. The comp sales growth is expected to be flat to up 1%, with Q2 and Q3 having the greatest opportunity.

Q: Can you provide an update on the new store openings and expectations for their performance? A: Kecia Steelman, CEO, stated that Ulta Beauty has a robust process for real estate site selection, using rich member data to identify infill opportunities and market share expansion areas. The new store openings will be a mix of formats, maintaining a balanced approach. Paula Oyibo, CFO, noted strong performance from the 2024 class of new stores and anticipates similar results for 2025.

Q: What are the most important factors to rebuild Ulta's competitive moat given the current industry dynamics? A: Kecia Steelman, CEO, highlighted the need for a balanced approach, focusing on brand building, marketplace expansion, personalization, and digital acceleration. The Ulta Beauty Unleashed plan aims to leverage strengths and supercharge them, with a focus on keeping the guest at the center of all decisions and aligning associates to enhance the guest experience.

Q: How is Ulta Beauty planning to expand into new categories like wellness, and what are the near-term and long-term opportunities? A: Kecia Steelman, CEO, mentioned that wellness is a growing category with consumer engagement and product innovation. Ulta plans to expand its wellness assortment with at least 20 new brands and implement an expanded in-store presentation in select stores. A new dedicated commercial leader and team will drive wellness initiatives, recognizing the merging of beauty and wellness.

Q: How is Ulta Beauty addressing the competitive pressures and potential impacts on market share and margins? A: Kecia Steelman, CEO, acknowledged the competitive intensity in the beauty category and emphasized the Ulta Beauty Unleashed plan's focus on differentiation and guest-centric decisions. Paula Oyibo, CFO, noted that maintaining margins around 12% is part of the long-term strategy, with investments in growth areas like brand building and digital acceleration to fuel market share gains.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.