Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended November 1, 2025
or
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _____________ to _____________
Commission File Number: 001-33764
ULTA BEAUTY, INC.
(Exact name of Registrant as specified in its charter)
incorporation or organization)
Identification No.)
Delaware
(State or other jurisdiction of incorporation or organization)
38-4022268
(I.R.S. Employer Identification No.)
1000 Remington Blvd., Suite 120
Bolingbrook, Illinois
(Address of principal executive offices)
60440
(Zip code)
Registrant’s telephone number, including area code: (630) 410-4800
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, par value $0.01 per share
ULTA
The NASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding as of December 1, 2025 was 44,362,172 shares.
TABLE OF CONTENTS
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
3
Consolidated Statements of Income
4
Consolidated Statements of Cash Flows
5
Consolidated Statements of Stockholders’ Equity
6
Notes to Consolidated Financial Statements
8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
18
Item 3. Quantitative and Qualitative Disclosures about Market Risk
27
Item 4. Controls and Procedures
28
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
29
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
30
SIGNATURES
31
2
Item 1.Financial Statements
Ulta Beauty, Inc.
November 1,
February 1,
November 2,
(In thousands, except per share data)
2025
2024
Assets
(Unaudited)
Current assets:
Cash and cash equivalents
$
204,921
703,201
177,782
Receivables, net
237,352
223,334
213,621
Merchandise inventories, net
2,743,639
1,968,214
2,365,186
Prepaid expenses and other current assets
158,394
129,113
135,514
Prepaid income taxes
26,465
4,946
62,759
Total current assets
3,370,771
3,028,808
2,954,862
Property and equipment, net
1,366,504
1,239,295
1,264,419
Operating lease assets
1,710,804
1,609,870
1,619,055
Goodwill
392,606
10,870
Other intangible assets, net
6,089
204
281
Deferred compensation plan assets
52,684
47,951
48,872
Other long-term assets
112,834
64,695
60,127
Total assets
7,012,292
6,001,693
5,958,486
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
759,001
563,761
593,219
Accrued liabilities
473,949
380,241
333,463
Deferred revenue
462,964
500,585
405,040
Current operating lease liabilities
290,716
288,114
284,985
Accrued income taxes
—
46,777
Short-term debt
551,721
199,700
Total current liabilities
2,538,351
1,779,478
1,816,407
Non-current operating lease liabilities
1,732,219
1,635,120
1,656,317
Deferred income taxes
45,312
42,593
91,729
Other long-term liabilities
63,396
56,149
65,024
Total liabilities
4,379,278
3,513,340
3,629,477
Commitments and contingencies (Note 7)
Stockholders' equity:
Common stock, $0.01 par value, 400,000 shares authorized; 45,383, 46,809, and 47,412 shares issued; 44,502, 45,965, and 46,569 shares outstanding; at November 1, 2025 (unaudited), February 1, 2025, and November 2, 2024 (unaudited), respectively
454
468
474
Treasury stock-common, at cost
(120,298)
(106,793)
(106,598)
Additional paid-in capital
1,175,122
1,120,769
1,104,952
Retained earnings
1,577,736
1,473,909
1,330,181
Total stockholders’ equity
2,633,014
2,488,353
2,329,009
Total liabilities and stockholders’ equity
See accompanying notes to consolidated financial statements.
13 Weeks Ended
39 Weeks Ended
Net sales
2,857,623
2,530,100
8,494,459
7,808,035
Cost of sales
1,701,958
1,524,456
5,132,879
4,754,434
Gross profit
1,155,665
1,005,644
3,361,580
3,053,601
Selling, general and administrative expenses
840,920
682,259
2,293,270
1,992,993
Pre-opening expenses
5,326
4,883
12,260
11,957
Operating income
309,419
318,502
1,056,050
1,048,651
Interest expense (income), net
4,123
(1,674)
(837)
(13,100)
Income before income taxes and equity net loss of affiliate
305,296
320,176
1,056,887
1,061,751
Income tax expense
73,436
77,997
257,875
253,903
Income before equity net loss of affiliate
231,860
242,179
799,012
807,848
Equity net loss of affiliate
985
2,210
Net income
230,875
796,802
Net income per common share:
Basic
5.16
17.70
17.00
Diluted
5.14
17.65
16.93
Weighted average common shares outstanding:
44,731
46,928
45,016
47,519
44,895
47,092
45,151
47,710
(In thousands)
Operating activities
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
218,985
197,075
Non-cash lease expense
260,632
235,950
(1,613)
5,808
Stock-based compensation expense
30,324
27,691
Loss on disposal of property and equipment
7,398
7,280
Change in operating assets and liabilities:
Receivables
(13,138)
(5,682)
Merchandise inventories
(702,678)
(623,050)
(14,088)
(19,916)
Income taxes
(67,994)
(69,818)
123,911
54,210
6,567
(45,777)
(41,642)
(31,551)
Operating lease liabilities
(261,864)
(250,267)
Other assets and liabilities
(21,628)
12,240
Net cash provided by operating activities
322,184
302,041
Investing activities
Capital expenditures
(243,262)
(300,536)
Acquisitions, net of cash acquired
(386,793)
Other investments
(25,445)
(6,108)
Net cash used in investing activities
(655,500)
(306,644)
Financing activities
Borrowings from short-term debt
1,641,844
Payments on short-term debt
(1,118,683)
Repurchase of common shares
(703,960)
(765,384)
Stock options exercised
30,103
9,200
Purchase of treasury shares
(13,505)
(23,566)
Debt issuance costs
(763)
(4,159)
Net cash used in financing activities
(164,964)
(584,209)
Net decrease in cash and cash equivalents
(498,280)
(588,812)
Cash and cash equivalents at beginning of period
766,594
Cash and cash equivalents at end of period
Supplemental information
Income taxes paid, net of refunds
326,360
316,790
Non-cash investing and financing activities:
Non-cash capital expenditures
88,468
47,431
Repurchase of common shares in accrued liabilities
3,999
Treasury -
Common Stock
Additional
Total
Issued
Treasury
Paid-In
Retained
Stockholders'
Shares
Amount
Capital
Earnings
Equity
Balance – February 1, 2025
46,809
(844)
305,052
Stock-based compensation
11,418
Stock options exercised and other awards
100
1
480
481
(36)
(12,911)
Repurchase of common shares, including excise tax
(987)
(10)
(3,358)
(358,722)
(362,090)
Balance – May 3, 2025
45,922
459
(880)
(119,704)
1,129,309
1,420,239
2,430,303
260,875
8,920
78
14,369
14,370
(1)
(327)
(244)
(2)
(740)
(109,539)
(110,281)
Balance – August 2, 2025
45,756
458
(881)
(120,031)
1,151,858
1,571,575
2,603,860
9,986
54
15,252
(267)
(427)
(4)
(1,974)
(224,714)
(226,692)
Balance – November 1, 2025
45,383
Balance – February 3, 2024
49,123
491
(799)
(83,032)
1,075,104
1,286,765
2,279,328
313,113
10,082
153
8,911
8,913
(44)
(23,283)
(588)
(6)
(2,275)
(285,129)
(287,410)
Balance – May 4, 2024
48,688
487
(843)
(106,315)
1,091,822
1,314,749
2,300,743
252,556
9,190
283
(176)
(550)
(2,098)
(212,332)
(214,436)
Balance – August 3, 2024
48,143
(106,491)
1,099,197
1,354,973
2,348,160
8,419
(107)
(731)
(7)
(2,668)
(266,971)
(269,646)
Balance – November 2, 2024
47,412
7
(In thousands, except per share and store count data) (Unaudited)
1.Business and basis of presentation
Ulta Beauty, Inc. and its subsidiaries operate specialty retail stores selling cosmetics, fragrance, haircare products, skincare and wellness products, and related accessories and services. Nearly every store in the United States (U.S.) features a full-service salon.
As used in these notes and throughout this Quarterly Report on Form 10-Q, all references to “we,” “us,” “our,” “Ulta Beauty,” or the “Company” refer to Ulta Beauty, Inc. and its consolidated subsidiaries.
As of November 1, 2025, the Company operated 1,584 stores worldwide: 1,500 Ulta Beauty stores in the U.S. located in 50 states (detailed below), 82 Space NK stores located in the United Kingdom (U.K.), and two Space NK stores located in Ireland.
Number of
Location
stores
Alabama
Montana
Alaska
Nebraska
Arizona
40
Nevada
16
Arkansas
11
New Hampshire
California
179
New Jersey
47
Colorado
New Mexico
Connecticut
20
New York
62
North Carolina
51
Florida
108
North Dakota
Georgia
Ohio
49
Hawaii
Oklahoma
23
Idaho
10
Oregon
21
Illinois
55
Pennsylvania
Indiana
Rhode Island
Iowa
14
South Carolina
Kansas
15
South Dakota
Kentucky
Tennessee
36
Louisiana
19
Texas
141
Maine
Utah
Maryland
Vermont
Massachusetts
Virginia
37
Michigan
Washington
38
Minnesota
22
West Virginia
Mississippi
Wisconsin
24
Missouri
Wyoming
1,500
The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and the U.S. Securities and Exchange Commission’s Article 10, Regulation S-X. These financial statements were prepared on a consolidated basis to include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts, transactions, and unrealized profit were eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary to fairly state the financial position and results of operations and cash flows for the interim periods presented.
The Company’s business is subject to seasonal fluctuation, with significant portions of net sales and net income being realized during the fourth quarter of the fiscal year due to the holiday selling season. The results for the 13 and 39 weeks ended November 1, 2025 are not necessarily indicative of the results to be expected for the fiscal year ending January 31, 2026, or for any other future interim period or for any future year.
These unaudited interim consolidated financial statements and the related notes should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended February 1, 2025. All amounts are stated in thousands, with the exception of per share amounts and number of stores.
2.Summary of significant accounting policies
Information regarding significant accounting policies is contained in Note 2, “Summary of significant accounting policies,” to the consolidated financial statements in the Annual Report on Form 10-K for the year ended February 1, 2025. Presented below and in the following notes is supplemental information that should be read in conjunction with “Notes to Consolidated Financial Statements” in the Annual Report.
Fiscal quarter
The Company’s quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31. The third quarter in fiscal 2025 and 2024 ended on November 1, 2025 and November 2, 2024, respectively.
Use of estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the accounting period. Actual results could differ from those estimates. The Company considers its accounting policies relating to inventory valuations, vendor allowances, impairment of long-lived tangible and right-of-use assets, loyalty program, and income taxes to be the most significant accounting policies that involve management estimates and judgments. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.
Recent accounting pronouncements not yet adopted
Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The guidance is effective for fiscal years beginning after December 15, 2024 and should be applied either prospectively or retrospectively. Early adoption is permitted. The adoption of ASU 2023-09 is not expected to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.
9
Income Statement – Reporting Comprehensive Income (Topic 220-40): Expense Disaggregation Disclosures
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income (Topic 220-40): Expense Disaggregation Disclosures. This update requires, among other things, more detailed disclosure about types of expenses in commonly presented expense captions such as cost of sales and SG&A and is intended to improve the disclosures about an entity’s expenses including purchases of inventory, employee compensation, depreciation, and amortization. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of adopting ASU 2024-03 on the consolidated financial statements and disclosures.
Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software
In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU is intended to improve and modernize the accounting for software costs to better align with the evolution of software development. The ASU is effective for fiscal years beginning after December 15, 2027, and interim reporting periods within fiscal years beginning after December 15, 2027. Early adoption is permitted as of the beginning of an annual reporting period. The amendments should be applied on a prospective transition basis to financial statements issued for reporting periods after the effective date of the update, on a modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption, or on a retrospective transition basis to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting ASU 2025-06 on the consolidated financial statements.
3.Revenue
Net sales include retail stores and e-commerce merchandise sales as well as salon services and other revenue. Other revenue includes the private label and co-branded credit card programs, royalties derived from the partnership with Target Corporation, and deferred revenue related to the loyalty program and gift card breakage.
Disaggregated revenue
The following table sets forth the approximate percentage of net sales by primary category:
(Percentage of net sales)
Cosmetics
41%
40%
Skincare and wellness
24%
23%
Haircare
19%
20%
Fragrance
11%
10%
Services
3%
4%
Other
2%
100%
Deferred revenueDeferred revenue primarily represents contract liabilities for the obligation to transfer additional goods or services to a guest for which the Company has received consideration, such as unredeemed loyalty points and unredeemed gift cards. In addition, breakage on gift cards is recognized proportionately as redemption occurs.The following table provides a summary of the changes included in deferred revenue during the 13 and 39 weeks ended November 1, 2025 and November 2, 2024:
Beginning balance
451,968
387,817
492,907
428,788
Additions to contract liabilities (1)
130,377
124,188
307,706
279,195
Deductions to contract liabilities (2)
(127,030)
(114,071)
(345,298)
(310,049)
Ending balance
455,315
397,934
Other amounts included in deferred revenue were $7,649 and $7,106 at November 1, 2025 and November 2, 2024, respectively.
4. Acquisitions
On July 10, 2025, the Company acquired 100% ownership in Space NK, a luxury beauty retailer operating in the U.K. and Ireland. The acquisition was funded with cash on hand and borrowings under the Company’s existing credit facility. The acquisition is not material to the Company’s consolidated financial statements.
Preliminary Allocation of the Purchase Price
The Company has not yet finalized the process of measuring the fair value of assets acquired and liabilities assumed in accordance with Accounting Standards Codification Topic 805, “Business Combinations” as of November 1, 2025. Accordingly, the purchase price allocation is preliminary. The Company expects to obtain the information necessary to finalize the purchase price allocation during the measurement period, not to exceed one year from the acquisition date. Any changes to the preliminary estimates of the fair value during the measurement period will be recorded as adjustments to those assets and liabilities with a corresponding adjustment to goodwill.
The preliminary allocation of the purchase price consideration to the estimated fair value of the assets acquired and liabilities assumed on July 10, 2025 are as follows:
12,359
72,747
44,678
Other assets (1)
22,005
(44,476)
(52,984)
Other liabilities (2)
(36,913)
Estimated fair value excluding goodwill
17,416
381,736
Net assets acquired
399,152
Transaction costs related to the acquisition of Space NK were expensed as incurred and are included in selling, general and administrative expenses in the consolidated statements of income.
The results of operations of Space NK are included in the consolidated financial statements since the date of the acquisition.
5.Goodwill and other intangible assets
Goodwill, which represents the excess of cost over the fair value of net assets acquired, was $392,606, $10,870, and $10,870 at November 1, 2025, February 1, 2025, and November 2, 2024, respectively. No additional goodwill was recognized during the 13 weeks ended November 1, 2025. Goodwill of $381,736 was recognized during the 39 weeks ended November 1, 2025 related to the Company’s acquisition of Space NK. The recoverability of goodwill is reviewed annually during the fourth quarter or more frequently if an event occurs or circumstances change that would indicate that impairment may exist.
Other definite-lived intangible assets are amortized over their useful lives. The recoverability of intangible assets is reviewed whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.
6.Leases
The Company leases retail stores, distribution centers, fast fulfillment centers, market fulfillment centers, corporate offices, and certain equipment under non-cancelable operating leases with various expiration dates through 2037. All leases are classified as operating leases and generally have initial lease terms of 10 years and, when determined applicable, include renewal options under substantially the same terms and conditions as the original leases. Leases do not contain any material residual value guarantees or material restrictive covenants.
12
Lease cost
The majority of operating lease cost relates to retail stores, distribution centers, fast fulfillment centers, and market fulfillment centers and is classified within cost of sales. Operating lease cost for corporate offices is classified within selling, general and administrative expenses. Operating lease cost from the control date through store opening date is classified within pre-opening expenses.
The following table presents a summary of operating lease costs:
Operating lease cost
93,932
88,965
281,448
265,200
Other information
The following table presents supplemental disclosures of cash flow information related to operating leases:
Cash paid for operating lease liabilities (1)
319,867
307,732
Operating lease assets obtained in exchange for operating lease liabilities (non-cash)
361,566
280,476
7.Commitments and contingencies
The Company is involved in various legal proceedings that are incidental to the conduct of the business including both class action and single plaintiff litigation. In the opinion of management, the amount of any liability with respect to these proceedings, either individually or in the aggregate, will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
8.Debt
On August 27, 2025, the Company entered into Amendment No. 4 to the Second Amended and Restated Loan Agreement (as so amended, the Loan Agreement) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and a Lender thereunder; Wells Fargo Bank, National Association and JPMorgan Chase Bank, N.A., as Lead Arrangers and Bookrunners; JPMorgan Chase Bank, N.A., as Syndication Agent and a Lender; and the other lenders party thereto. The Loan Agreement matures on March 13, 2029, provides maximum revolving loans equal to the lesser of $1,000,000 or a percentage of eligible owned inventory and eligible owned receivables (which borrowing base may, at the election of the Company and satisfaction of certain conditions, include a percentage of qualified cash), and contains a $50,000 subfacility for letters of credit. The Loan Agreement requires the Company to maintain a minimum fixed charge coverage ratio of 1.0 whenever availability under the Loan Agreement falls below the specified threshold. Substantially all of the Company’s assets are pledged as collateral for outstanding borrowings under the Loan Agreement. Outstanding borrowings bear interest, at the Company’s election, at either a base rate plus a margin of 0.5% to 1.0% or the Term Secured Overnight Financing Rate plus a margin of 1.5% to 2.0%, and a credit spread adjustment of 0.10%, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.25% to 0.375% per annum.
As of November 1, 2025 and November 2, 2024, there was $488,300 and $199,700, respectively, of borrowings outstanding under this credit facility. The weighted average interest rate was 6.42% and 7.15% for the 39 weeks ended
13
November 1, 2025 and November 2, 2024, respectively. As of February 1, 2025, there were no borrowings outstanding under the credit facility. As of November 1, 2025, the Company was in compliance with all terms and covenants of the Loan Agreement.
Ulta Beauty’s wholly owned subsidiary, Space NK, maintains a multi-currency revolving credit facility (the Facility Agreement) with National Westminster Bank plc, providing up to £40,000 for working capital requirements. The Facility Agreement, maturing on April 17, 2028, allows Space NK to increase the revolving facility by an additional £10,000 with lender consent. The facility is secured by the assets of Space NK and contains a requirement to maintain an interest coverage ratio not less than 4.0 to 1.0 and a leverage ratio not to exceed 2.0 to 1.0 for any relevant period. Borrowings bear interest at either the compound or term Sterling Overnight Index Average plus a margin of 1.75%, and an unused line fee of 0.60% per annum. As of November 1, 2025, there was $63,421 outstanding under this credit facility. As of November 1, 2025, Space NK was in compliance with all terms and covenants of the Facility Agreement.
9.Fair value measurements
The carrying value of cash and cash equivalents, accounts receivable, accounts payable, and debt approximates their estimated fair values due to the short maturities of these instruments.
Fair value is measured using inputs from the three levels of the fair value hierarchy, which are described as follows:
As of November 1, 2025, February 1, 2025, and November 2, 2024, there were liabilities related to the non-qualified deferred compensation plan included in other long-term liabilities on the consolidated balance sheets of $51,115, $43,117, and $51,916, respectively. The liabilities are categorized as Level 2 as they are based on third-party reported values, which are based primarily on quoted market prices of underlying assets of the funds within the plan.
10.Stock-based compensation
Stock-based compensation expense is measured on the grant date based on the fair value of the award. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period for awards expected to vest. The estimated grant date fair value of stock options was determined using a Black-Scholes valuation model using the following weighted-average assumptions for the periods indicated:
Volatility rate
34.0%
33.0%
Average risk-free interest rate
3.9%
4.4%
Average expected life (in years)
3.4
3.5
Dividend yield
The expected volatility is based on the historical volatility of the Company’s common stock. The risk-free interest rate is based on the United States Treasury yield curve in effect on the date of grant for the respective expected life of the option. The expected life represents the time the options granted are expected to be outstanding. The expected life of options granted is derived from historical data on Ulta Beauty stock option exercises. Forfeitures of stock options are estimated at the grant date based on historical rates of stock option activity and reduce the stock-based compensation expense recognized. The Company does not currently pay a regular dividend.
The Company granted 144 and 56 stock options during the 39 weeks ended November 1, 2025 and November 2, 2024, respectively. Stock-based compensation expense for stock options was $1,650 and $1,531 for the 13 weeks ended November 1, 2025 and November 2, 2024, respectively. Stock-based compensation expense for stock options was $6,700 and $4,716 for the 39 weeks ended November 1, 2025 and November 2, 2024, respectively. The weighted-average grant date fair value of these stock options was $111.68 and $157.66 for the 39 weeks ended November 1, 2025 and November 2, 2024, respectively. At November 1, 2025, there was approximately $16,079 of unrecognized stock-based compensation expense related to unvested stock options.
There were 111 and 53 restricted stock units issued during the 39 weeks ended November 1, 2025 and November 2, 2024, respectively. Stock-based compensation expense for restricted stock units was $5,770 and $5,176 for the 13 weeks ended November 1, 2025 and November 2, 2024, respectively. Stock-based compensation expense for restricted stock units was $16,742 and $14,561 for the 39 weeks ended November 1, 2025 and November 2, 2024, respectively. At November 1, 2025, there was approximately $43,998 of unrecognized stock-based compensation expense related to restricted stock units.
There were no performance-based restricted stock units issued during the 39 weeks ended November 1, 2025. There were 71 performance-based restricted stock units issued during the 39 weeks ended November 2, 2024. Stock-based compensation expense for performance-based restricted stock units was $2,566 and $1,712 for the 13 weeks ended November 1, 2025 and November 2, 2024, respectively. Stock-based compensation expense for performance-based restricted stock units was $6,882 and $8,414 for the 39 weeks ended November 1, 2025 and November 2, 2024, respectively. At November 1, 2025, there was approximately $4,287 of unrecognized stock-based compensation expense related to performance-based restricted stock units.
11.Income taxes
Income tax expense reflects the federal statutory tax rate and the weighted average state statutory tax rate for the states in which the Company operates stores. Income tax expense of $73,436 for the 13 weeks ended November 1, 2025 represents an effective tax rate of 24.1%, compared to $77,997 of tax expense representing an effective tax rate of 24.4% for the 13 weeks ended November 2, 2024.
Income tax expense of $257,875 for the 39 weeks ended November 1, 2025 represents an effective tax rate of 24.4%, compared to $253,903 of tax expense representing an effective tax rate of 23.9% for the 39 weeks ended November 2, 2024.
On July 4, 2025, the U.S. enacted new tax legislation, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), which included changes in tax laws that may affect recorded deferred tax assets and deferred tax liabilities, as well as the Company’s effective tax rate, in the future. While the Company is continuing to review the potential impact of OBBBA, it anticipates an impact to its deferred tax and income tax payable as a result of reinstating the 100% bonus depreciation provision for assets placed in service after January 19, 2025, and restoring the full expensing of qualifying domestic research and development expenditures. The Company does not expect any material changes to the consolidated financial statements or ongoing tax rate as a result of this legislation.
12.Net income per common share
The following is a reconciliation of net income and the number of shares of common stock used in the computation of net income per basic and diluted common share:
Numerator:
Denominator:
Weighted-average common shares – Basic
Dilutive effect of stock options and non-vested shares
164
135
191
Weighted-average common shares – Diluted
The denominator for diluted net income per common share for the 13 weeks ended November 1, 2025 and November 2, 2024 excludes 82 and 176 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects. The denominator for diluted net income per common share for the 39 weeks ended November 1, 2025 and November 2, 2024 excludes 261 and 206 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects. Outstanding performance-based restricted stock units are included in the computation of dilutive shares only to the extent that the underlying performance conditions are satisfied prior to the end of the reporting period or would be considered satisfied if the end of the reporting period were the end of the related contingency period and the results would be dilutive under the treasury stock method.
13.Share repurchase program
In March 2024, the Board of Directors authorized a share repurchase program (the March 2024 Share Repurchase Program) pursuant to which the Company could repurchase up to $2,000,000 of the Company’s common stock. The March 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts from the earlier share repurchase program. The March 2024 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.
In October 2024, the Board of Directors authorized a share repurchase program (the October 2024 Share Repurchase Program) pursuant to which the Company may repurchase up to $3,000,000 of the Company’s common stock. The October 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts from the March 2024 Share Repurchase Program. The October 2024 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time.
A summary of common stock repurchase activity is presented in the following table:
Shares repurchased
1,658
1,869
Total cost of shares repurchased, including excise tax
699,063
771,492
14. Segment reporting
The Company has one reportable segment, which includes retail stores, salon services, and e-commerce. Within the reportable segment, there are significant expense categories included in the measure of the segment’s net income as shown below:
Less:
Cost of sales (1)
Associate expenses (2)
437,572
347,181
1,232,301
1,055,058
Advertising expense, net (3)
116,524
107,701
287,751
268,004
Other segment expenses (1) (4)
286,824
227,377
773,218
669,931
Included within cost of sales and other segment expenses is depreciation and amortization expense of $75,787 and $67,021 for the 13 weeks ended November 1, 2025 and November 2, 2024, respectively, and $218,985 and $197,075 for the 39 weeks ended November 1, 2025 and November 2, 2024, respectively.
Associate expenses include salaries, wages, bonus, and other forms of compensation related to associates.
(3)
Advertising expense, net consists of print, digital and social media, and television and radio advertising, net of vendor income that is a reimbursement of specific, incremental, and identifiable costs.
(4) Other segment expenses include other corporate overhead and store operating expenses within SG&A expenses.
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this quarterly report. This discussion contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “plans,” “estimates,” “targets,” “strategies,” or other comparable words. Any forward-looking statements contained in this Form 10-Q are based upon our historical performance and on current plans, estimates, and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates, targets, strategies, or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties, which include, without limitation:
Except to the extent required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
References in the following discussion to “we,” “us,” “our,” “Ulta Beauty,” the “Company,” and similar references mean Ulta Beauty, Inc. and its consolidated subsidiaries, unless otherwise expressly stated or the context otherwise requires.
Overview
We were founded in 1990 as a beauty retailer at a time when prestige, mass, and salon products were sold through distinct channels – department stores for prestige products; drug stores and mass merchandisers for mass products; and salons and authorized retail outlets for professional hair care products. We developed a unique specialty retail concept that offers a broad range of brands and price points, select beauty services, and a convenient and welcoming shopping environment. We define our target consumer as a beauty enthusiast, a consumer who is passionate about the beauty category, uses beauty for self-expression, experimentation, and self-investment, and has high expectations for the shopping experience. We believe our strategy provides us with the competitive advantages that have contributed to our financial performance.
Today, we are the largest specialty beauty retailer in the United States and a leading destination for cosmetics, fragrance, skin care, hair care, wellness and salon services. Key aspects of our business include: a differentiated assortment of approximately 29,000 beauty products across a variety of categories and price points as well as a variety of beauty services, including salon services, in 1,500 Ulta Beauty stores predominantly located in convenient, high-traffic locations; engaging digital experiences delivered through our website, Ulta.com, and our mobile applications; our best-in-class loyalty program that enables members to earn points for every dollar spent on products and beauty services and provides us with deep, proprietary customer insights; and our ability to cultivate human connection with warm and welcoming guest experiences across all of our channels. In addition to our domestic operations, Ulta Beauty is expanding our presence internationally through a joint venture in Mexico, a franchise in the Middle East, and our subsidiary, Space NK, a luxury beauty retailer operating in the U.K. and Ireland.
The continued growth of our business and any future increases in net sales, net income, and cash flows is dependent on our ability to execute our strategic priorities across four foundational focus areas: 1) Assortment: curating the best of all things beauty and wellness for all beauty enthusiasts; 2) Experience: fostering authentic, empowering human connections that inspire, delight and engage guests at every touchpoint; 3) Loyalty: building lifelong loyalty and brand love through member growth and personalization; and 4) Access: engaging our guests wherever they want to shop by expanding our reach through seamless and immersive omnichannel experiences. We operate in an attractive and growing beauty products and salon services industry, and believe our strong operating model, competitive advantages, and financial foundation, paired with our investments to drive our growth, position us to capture additional market share in the industry.
Comparable sales is a key metric that is monitored closely within the retail industry. Our comparable sales have fluctuated in the past, and we expect them to continue to fluctuate in the future. A variety of factors affect our comparable sales, including general economic conditions, changes in merchandise strategy or mix, and timing and effectiveness of our marketing activities, among others.
Over the long term, our growth strategy is to drive profitable growth and market share leadership in beauty and wellness through growing our comparable sales, expanding omnichannel capabilities, and opening new stores. Long-term operating profit is expected to increase as a result of our efforts to drive revenue growth, leverage fixed costs, improve
merchandise margin, increase operating efficiencies, and grow other revenue, partially offset by incremental investments in new stores and technology to enhance the guest experience, people, assortment, and advertising.
Current Trends
Industry trends
The overall beauty market expanded in 2024 and into the third quarter of 2025, supported by on-going consumer engagement with the beauty category. We remain confident that our differentiated and diverse business model, our commitment to strategic investments, and our highly engaged associates will continue to drive market share gains over the long term.
Persistent inflationary and macroeconomic pressures, including existing and potential tariffs, have impacted consumer spending habits broadly, which we believe could contribute to lower sales trends throughout the remainder of fiscal 2025. The continuation of inflationary and macroeconomic pressures, including existing and potential tariffs, could further impact our ability to grow sales and maintain historical profitability levels. In addition, inflation could cause the interest rates on any debt to remain at an elevated level or increase.
Basis of presentation
The Company has one reportable segment, which includes retail stores, salon services, and e-commerce.
We recognize merchandise revenue at the point of sale in our retail stores. E-commerce sales are recognized upon shipment or guest pickup of the merchandise based on meeting the transfer of control criteria. Retail store and e-commerce sales are recorded net of estimated returns. Shipping and handling are treated as costs to fulfill the contract and not a separate performance obligation. Accordingly, we recognize revenue for our single performance obligation related to online sales at the time control of the merchandise passes to the customer, which is at the time of shipment or guest pickup. We generally provide refunds for merchandise returns within 30 days from the original purchase date. State sales taxes are presented on a net basis as we consider our self a pass-through conduit for collecting and remitting state sales tax. Salon service revenue is recognized at the time the service is provided to the guest. Gift card sales revenue is deferred until the guest redeems the gift card. Company coupons and other incentives are recorded as a reduction of net sales. Other revenue includes the private label and co-branded credit card programs, royalties derived from the partnership with Target Corporation, and deferred revenue related to the loyalty program and gift card breakage.
Comparable sales reflect sales for stores beginning on the first day of the 14th month of operation. Therefore, a store is included in our comparable store base on the first day of the period after one year of operations plus the initial one-month grand opening period. Non-comparable store sales include sales from new stores that have not yet completed their 13th month of operation and stores that were closed for part or all of the period in either year. Remodeled stores are included in comparable sales unless the store was closed for a portion of the current or prior period. Comparable sales include retail sales, salon services, and e-commerce. In fiscal years with 53 weeks, the 53rd week of comparable sales is included in the calculation. In the year following a 53-week year, the prior year period is shifted by one week to compare similar calendar weeks. There may be variations in the way in which some of our competitors and other retailers calculate comparable or same store sales.
Measuring comparable sales allows us to evaluate the performance of our store base as well as several other aspects of our overall strategy. Several factors could positively or negatively impact our comparable sales results:
Cost of sales includes:
Our cost of sales may be negatively impacted as we open new stores. Changes in our merchandise or channel mix may also have an impact on cost of sales. This presentation of items included in cost of sales may not be comparable to the way in which our competitors or other retailers compute their cost of sales.
Selling, general and administrative expenses include:
This presentation of items in selling, general and administrative expenses may not be comparable to the way in which our competitors or other retailers compute their selling, general and administrative expenses.
Pre-opening expenses include non-capital expenditures during the period prior to store opening for new, remodeled, and relocated stores including rent during the construction period for new and relocated stores, store set-up labor, management and employee training, and grand opening advertising.
Interest income represents interest from cash equivalents, which include highly liquid investments such as money market funds and certificates of deposit with an original maturity of three months or less from the date of purchase. Interest expense includes interest costs and facility fees associated with our credit facilities, which is structured as an asset-based lending instrument. Interest on our credit facilities is based on a variable interest rate structure which can result in increased cost in periods of rising or elevated interest rates.
Income tax expense reflects the federal statutory tax rate and the weighted average state statutory tax rate for the states in which we operate stores.
Results of operations
Our quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31. The Company’s third quarter in fiscal 2025 and 2024 ended on November 1, 2025 and November 2, 2024, respectively. Our quarterly results of operations have varied in the past and are likely to do so again in the future. As such, we believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of our future performance.
The following tables present the components of our consolidated results of operations for the periods indicated:
(Dollars in thousands)
Other operating data:
Number of stores end of period (1)
1,437
Comparable sales
6.3%
0.6%
5.2%
0.3%
100.0%
59.6%
60.3%
60.4%
60.9%
40.4%
39.7%
39.6%
39.1%
29.4%
27.0%
25.5%
0.2%
0.1%
10.8%
12.6%
12.4%
13.4%
(0.1%)
0.0%
(0.2%)
10.7%
12.7%
13.6%
2.6%
3.1%
3.0%
3.3%
8.1%
9.6%
9.4%
10.3%
Comparison of 13 weeks ended November 1, 2025 to 13 weeks ended November 2, 2024
Net sales increased $327.5 million, or 12.9%, to $2.9 billion for the 13 weeks ended November 1, 2025, compared to $2.5 billion for the 13 weeks ended November 2, 2024. The net sales increase was primarily due to increased comparable sales, the acquisition of Space NK, and net new store contribution. The comparable sales increase of 6.3% was driven by a 3.8% increase in average ticket and a 2.4% increase in transactions.
Gross profit increased $150.0 million, or 14.9%, to $1.2 billion for the 13 weeks ended November 1, 2025, compared to $1.0 billion for the 13 weeks ended November 2, 2024. Gross profit as a percentage of net sales increased to 40.4% for the 13 weeks ended November 1, 2025, compared to 39.7% for the 13 weeks ended November 2, 2024. The increase in gross profit margin was primarily due to lower inventory shrink and higher merchandise margin, partially offset by unfavorable channel mix.
Selling, general and administrative (SG&A) expenses increased $158.7 million, or 23.3%, to $840.9 million for the 13 weeks ended November 1, 2025, compared to $682.3 million for the 13 weeks ended November 2, 2024. SG&A expenses as a percentage of net sales increased to 29.4% for the 13 weeks ended November 1, 2025, compared to 27.0% for the 13 weeks ended November 2, 2024, primarily due to higher incentive compensation, store payroll and benefits, higher store expenses, and amortization of cloud-based software investments.
Pre-opening expenses were $5.3 million for the 13 weeks ended November 1, 2025, compared to $4.9 million for the 13 weeks ended November 2, 2024.
Interest expense, net was $4.1 million for the 13 weeks ended November 1, 2025, compared to interest income, net of $1.7 million for the 13 weeks ended November 2, 2024. As of November 1, 2025 and November 2, 2024, we had $551.7 million and $199.7 million, respectively, outstanding under our credit facilities. We did not have any outstanding borrowings on the credit facilities as of February 1, 2025.
Income tax expense of $73.4 million for the 13 weeks ended November 1, 2025 represents an effective tax rate of 24.1%, compared to $78.0 million of income tax expense representing an effective tax rate of 24.4% for the 13 weeks ended November 2, 2024.
Net income was $230.9 million for the 13 weeks ended November 1, 2025, compared to $242.2 million for the 13 weeks ended November 2, 2024. The decrease in net income is primarily due to the $158.7 million increase in SG&A expenses, the $5.8 million increase in interest expense, net, and the $0.4 million increase in pre-opening expenses, partially offset by the $150.0 million increase in gross profit and the $4.6 million decrease in income taxes.
Comparison of 39 weeks ended November 1, 2025 to 39 weeks ended November 2, 2024
Net sales increased $686.4 million, or 8.8%, to $8.5 billion for the 39 weeks ended November 1, 2025, compared to $7.8 billion for the 39 weeks ended November 2, 2024. The net sales increase was primarily due to increased comparable
sales, the acquisition of Space NK, and net new store contribution. The comparable sales increase of 5.2% was driven by a 3.0% increase in average ticket and a 2.2% increase in transactions.
Gross profit increased $308.0 million, or 10.1%, to $3.4 billion for the 39 weeks ended November 1, 2025, compared to $3.1 billion for the 39 weeks ended November 2, 2024. Gross profit as a percentage of net sales increased to 39.6% for the 39 weeks ended November 1, 2025, compared to 39.1% for the 39 weeks ended November 2, 2024. The increase in gross profit margin was primarily due to lower inventory shrink and higher merchandise margin, partially offset by deleverage of other revenue.
SG&A expenses increased $300.3 million, or 15.1%, to $2.3 billion for the 39 weeks ended November 1, 2025, compared to $2.0 billion for the 39 weeks ended November 2, 2024. SG&A expenses as a percentage of net sales increased to 27.0% for the 39 weeks ended November 1, 2025, compared to 25.5% for the 39 weeks ended November 2, 2024, primarily due to deleverage of store payroll and benefits, higher incentive compensation, and higher store expenses.
Pre-opening expenses were $12.3 million for the 39 weeks ended November 1, 2025, compared to $12.0 million for the 39 weeks ended November 2, 2024.
Interest income, net
Interest income, net was $0.8 million for the 39 weeks ended November 1, 2025, compared to interest income, net of $13.1 million for the 39 weeks ended November 2, 2024. As of November 1, 2025 and November 2, 2024, we had $551.7 million and $199.7 million, respectively, outstanding under our credit facilities. We did not have any outstanding borrowings on the credit facilities as of February 1, 2025.
Income tax expense of $257.9 million for the 39 weeks ended November 1, 2025 represents an effective tax rate of 24.4%, compared to $253.9 million of income tax expense representing an effective tax rate of 23.9% for the 39 weeks ended November 2, 2024.
Net income was $796.8 million for the 39 weeks ended November 1, 2025, compared to $807.8 million for the 39 weeks ended November 2, 2024. The decrease in net income is primarily due to the $300.3 million increase in SG&A expenses, the $12.3 million decrease in interest income, net, and the $4.0 million increase in income taxes, partially offset by the $308.0 million increase in gross profit.
Liquidity and capital resources
Our primary sources of liquidity are cash and cash equivalents, cash flows from operations, and borrowings under our credit facilities. The most significant components of our working capital are merchandise inventories, cash and cash equivalents, and receivables, reduced by accounts payable, deferred revenue, and accrued liabilities. As of November 1, 2025, February 1, 2025, and November 2, 2024, we had cash and cash equivalents of $204.9 million, $703.2 million, and $177.8 million, respectively.
Our primary cash needs are for rent, capital expenditures for new, remodeled, and relocated stores, increased merchandise inventories related to store expansion and new brand additions, supply chain improvements, share repurchases, and continued investment in our information technology systems.
Our most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for lease expenses, inventory, labor, distribution, advertising and marketing, and tax liabilities) as well as periodic spend for capital expenditures, investments, and share repurchases. Our working capital needs are greatest from August through November each year as a result of our inventory build-up during this period for the approaching holiday season.
Long-term cash requirements primarily relate to funding lease expenses and other purchase commitments.
We generally fund short-term and long-term cash requirements with cash from operating activities. We believe our primary sources of liquidity will satisfy our cash requirements over both the short term (the next twelve months) and long term.
Cash flows
We believe our ability to generate substantial cash from operating activities and readily secure financing at competitive rates are key strengths that give us significant flexibility to meet our short and long-term financial commitments.
The following table presents a summary of our cash flows:
Operating activities consist of net income adjusted for certain non-cash items, including depreciation and amortization, non-cash lease expense, deferred income taxes, stock-based compensation expense, realized gains or losses on disposal of property and equipment, and the effect of working capital changes.
The increase in net cash provided by operating activities in the first 39 weeks of fiscal 2025 compared to the first 39 weeks of fiscal 2024 was mainly due to the timing of accounts payable and accrued liabilities, partially offset by a larger increase in merchandise inventories in the first 39 weeks of fiscal 2025, the net increase in other assets and liabilities, and the decrease in net income.
Merchandise inventories, net were $2.7 billion at November 1, 2025 compared to $2.4 billion at November 2, 2024, representing an increase of $378.5 million or 16.0%. The increase in total inventory is primarily due to the following:
We have historically used cash primarily for new, remodeled, relocated, and refreshed stores, supply chain investments, short-term investments, and investments in information technology systems. Investing activities for capital expenditures were $243.3 million during the 39 weeks ended November 1, 2025, compared to $300.5 million during the 39 weeks ended November 2, 2024.
During the 39 weeks ended November 1, 2025, we opened 58 new stores, closed three stores, relocated four stores, and remodeled 24 stores, compared to the 39 weeks ended November 2, 2024, when we opened 57 new stores, closed five stores, relocated two stores, and remodeled 36 stores.
25
The increase in net cash used in investing activities in the first 39 weeks of fiscal 2025 compared to the first 39 weeks of fiscal 2024 was primarily due to the acquisition of Space NK in the second quarter of fiscal 2025.
Our future investments will depend primarily on the number of new, remodeled, and relocated stores, information technology systems, and supply chain investments we undertake and the timing of these expenditures. Based on past performance and current expectations, we believe our sources of liquidity will be sufficient to fund future capital expenditures.
Financing activities include share repurchases, borrowing and repayment of our short-term debt, and capital stock transactions. Purchases of treasury shares represent the fair value of common shares repurchased from plan participants in connection with shares withheld to satisfy minimum statutory tax obligations upon the vesting of restricted stock.
The decrease in net cash used in financing activities in the first 39 weeks of fiscal 2025 compared to the first 39 weeks of fiscal 2024 was primarily due to borrowings from short-term debt and a decrease in the dollar amount of share repurchases.
As of November 1, 2025 and November 2, 2024, we had $551.7 million and $199.7 million, respectively, outstanding under our credit facilities. We did not have any outstanding borrowings on the credit facilities as of February 1, 2025.
Share repurchase program
In March 2024, the Board of Directors authorized a share repurchase program (the March 2024 Share Repurchase Program) pursuant to which the Company could repurchase up to $2.0 billion of the Company’s common stock. The March 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts from the earlier share repurchase program. The March 2024 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.
In October 2024, the Board of Directors authorized a share repurchase program (the October 2024 Share Repurchase Program) pursuant to which the Company may repurchase up to $3.0 billion of the Company’s common stock. The October 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts from the March 2024 Share Repurchase Program. The October 2024 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time.
(Dollars in millions)
1,658,206
1,869,314
699.1
771.5
Credit facility
On August 27, 2025, we entered into Amendment No. 4 to the Second Amended and Restated Loan Agreement (as so amended, the Loan Agreement) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and a Lender thereunder; Wells Fargo Bank, National Association and JPMorgan Chase Bank, N.A., as Lead Arrangers and Bookrunners; JPMorgan Chase Bank, N.A., as Syndication Agent and a Lender; and the other lenders party thereto. The Loan Agreement matures on March 13, 2029, provides maximum revolving loans equal to the lesser of $1.0 billion or a percentage of eligible owned inventory and eligible owned receivables (which borrowing base may, at the election of the Company and satisfaction of certain conditions, include a percentage of qualified cash), and contains a $50.0 million subfacility for letters of credit. The Loan Agreement requires the Company to maintain a minimum fixed charge coverage ratio of 1.0 whenever availability under the Loan Agreement falls below the specified threshold. Substantially all of the Company’s assets are pledged as collateral for outstanding borrowings under the Loan Agreement. Outstanding
26
borrowings bear interest, at the Company’s election, at either a base rate plus a margin of 0.5% to 1.0% or the Term Secured Overnight Financing Rate plus a margin of 1.5% to 2.0%, and a credit spread adjustment of 0.10%, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.25% to 0.375% per annum.
As of November 1, 2025 and November 2, 2024, the Company had $488.3 million and $199.7 million, respectively, of borrowings outstanding under this credit facility. The weighted average interest rate was 6.42% and 7.15% for the 39 weeks ended November 1, 2025 and November 2, 2024, respectively. As of February 1, 2025, there were no borrowings outstanding under the credit facility. As of November 1, 2025, we were in compliance with all terms and covenants of the Loan Agreement.
Ulta Beauty’s wholly owned subsidiary, Space NK, maintains a multi-currency revolving credit facility (the Facility Agreement) with National Westminster Bank plc, providing up to £40.0 million for working capital requirements. The Facility Agreement, maturing on April 17, 2028, allows Space NK to increase the revolving facility by an additional £10.0 million with lender consent. The facility is secured by the assets of Space NK and contains a requirement to maintain an interest coverage ratio not less than 4.0 to 1.0 and a leverage ratio not to exceed 2.0 to 1.0 for any relevant period. Borrowings bear interest at either the compound or term Sterling Overnight Index Average plus a margin of 1.75%, and an unused line fee of 0.60% per annum. As of November 1, 2025, there was $63.4 million outstanding under this credit facility. As of November 1, 2025, Space NK was in compliance with all terms and covenants of the Facility Agreement.
Seasonality
Our business is subject to seasonal fluctuation. Significant portions of our net sales and profits are realized during the fourth quarter of the fiscal year due to the holiday selling season. To a lesser extent, our business is also affected by Mother’s Day and Valentine’s Day. Any decrease in sales during these higher sales volume periods could have an adverse effect on our business, financial condition, or operating results for the entire fiscal year. Our quarterly results of operations have varied in the past and are likely to do so again in the future. As such, we believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of our future performance.
Critical accounting policies and estimates
Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements required the use of estimates and judgments that affect the reported amounts of our assets, liabilities, revenues, and expenses. Management bases estimates on historical experience and other assumptions it believes to be reasonable under the circumstances and evaluates these estimates on an on-going basis. Actual results may differ from these estimates. There have been no significant changes to the critical accounting policies and estimates included in our Annual Report on Form 10-K for the fiscal year ended February 1, 2025.
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates. We continually monitor this risk and may develop strategies to manage it. We do not hold or issue financial instruments for trading purposes.
Interest rate risk
We are exposed to interest rate risks primarily through borrowings under our credit facilities. Interest on our borrowings is based upon variable rates. As of November 1, 2025 and November 2, 2024, we had $551.7 million and $199.7 million, respectively, outstanding under our credit facilities. We did not have any outstanding borrowings on the credit facility as of February 1, 2025.
A hypothetical 1% increase in interest rates on variable debt would not have a material impact on our operating income for the 39 weeks ended November 1, 2025.
Foreign currency exchange rate risk
We are exposed to risks from foreign currency exchange rate fluctuations on the translation of our foreign operations into U.S. dollars and on the purchase of goods by these foreign operations that are not denominated in their local currencies. Our exposure to foreign currency rate fluctuations is not material to our financial condition or results of operations.
Item 4.Controls and Procedures
Evaluation of disclosure controls and procedures over financial reporting
We have established disclosure controls and procedures to ensure that material information relating to the Company is made known to the officers who certify our financial reports and to the members of our senior management and Board of Directors.
Based on management’s evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), were effective as of November 1, 2025 to ensure that the information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting
There were no changes to our internal controls over financial reporting during the 13 weeks ended November 1, 2025 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Item 1.Legal Proceedings
See Note 7 to our consolidated financial statements, “Commitments and contingencies,” for information on legal proceedings.
Item 1A.Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended February 1, 2025, which could materially affect our business, financial condition, financial results, or future performance. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended February 1, 2025.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
The following table sets forth repurchases of our common stock during the third quarter of fiscal 2025:
Period
Total numberof shares purchased (1)
Averageprice paidper share
Total numberof sharespurchased aspart of publiclyannouncedplans orprograms
Approximatedollar value ofshares that may yetbe purchasedunder plans or programs(in thousands) (2)
August 3, 2025 to August 30, 2025
108,677
517.48
2,171,559
August 31, 2025 to September 27, 2025
120,069
526.65
119,822
2,109,041
September 28, 2025 to November 1, 2025
198,662
541.06
198,415
2,002,745
13 weeks ended November 1, 2025
427,408
531.01
426,914
Item 3.Defaults Upon Senior Securities
None
Item 4.Mine Safety Disclosures
Item 5.Other Information
During the 13 weeks ended November 1, 2025, no director or Section 16 officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.
Item 6.Exhibits
The exhibits listed in the Exhibit Index below are filed as part of this Quarterly Report on Form 10-Q.
EXHIBIT INDEX
Incorporated by Reference
ExhibitNumber
Description of document
Filed Herewith
Form
File
Number
Filing Date
3.1
Certificate of Incorporation of Ulta Beauty, Inc., as amended through June 1, 2023
8-K
001-33764
6/07/2023
3.2
Bylaws of Ulta Beauty, Inc., as amended through June 1, 2023
3.3
10.1
Letter Agreement dated October 8, 2025 between Ulta Inc. and Christopher DelOrefice
X
31.1
Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification of the Interim Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32
Certification of the Chief Executive Officer and Interim Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS
Inline XBRL Instance
101.SCH
Inline XBRL Taxonomy Extension Schema
101.CAL
Inline XBRL Taxonomy Extension Calculation
101.LAB
Inline XBRL Taxonomy Extension Labels
101.PRE
Inline XBRL Taxonomy Extension Presentation
101.DEF
Inline XBRL Taxonomy Extension Definition
104
Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on December 4, 2025 on its behalf by the undersigned, thereunto duly authorized.
By:
/s/ Christopher Lialios
Christopher LialiosInterim Chief Financial Officer
(principal financial and accounting officer and authorized signatory)