Ulta Beauty (ULTA, Financials) stock surged 13.8% on Friday, trading for $357.95 as of 2:30 p.m. GMT-4, after the company reported stronger-than-expected fourth-quarter earnings.

• Warning! GuruFocus has detected 5 Warning Signs with EL.

Supported by reduced inventory decrease, a better sales mix, and greater merchandise margins, earnings per share came in at $8.46, $1.31 above consensus projections while gross margin expanded by 500 basis points to 38.2%.But the fiscal 2025 projection from Ulta Beauty fell short of expectations. With the top end below the $11.67 billion analyst estimate, the business expected revenues between $11.5 billion and $11.6 billion. From $25.34 in FY24 down to the $23.54 average forecast, EPS is likely to be between $22.50 and $22.90. While the operating margin is expected to be 11.7% to 11.8%, just behind the 11.9% projection, comparable sales are projected to be flat to up 1%. This lags the 1.24% prediction.Rivals like e.l.f. Beauty (ELF, Financials) and Estee Lauder (EL, Financials) have issued cautious advice, therefore reducing customer demand in the beauty industry. Economic uncertainty, post-holiday pullbacks, and outside events such as weather and wildfires have affected consumer spending.Though she emphasized that the advantages of strategic investments may take years to show, Ulta Beauty CEO Kecia Steelman said 2025 will be a critical year for company efficiency and long-term success.