Ulta Beauty Inc. (NASDAQ:ULTA) heads into its second-quarter earnings report this week with momentum from resilient sales and expanding international ambitions, even as margin pressures and shifting consumer spending patterns test the retailer’s ability to sustain growth.
The company will report second-quarter fiscal 2025 results on Thursday, Aug. 28, after the market close. Telsey Advisory Group analyst Dana Telsey raised her estimates ahead of the release, pointing to continued momentum despite a tough operating backdrop.
The analyst reaffirmed its Outperform rating on Ulta and lifted the price forecast to $590 from $520, a valuation that reflects a 21.4x multiple on forward earnings, slightly above recent trading levels but still below Ulta’s 10-year average.
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Telsey now projects earnings of $5.07 per share for the quarter, up from her prior $4.87 estimate, aligning with Wall Street expectations but down from $5.30 a year ago.
Revenue is forecast to rise 4.7% year-over-year to $2.67 billion, a modest beat over consensus at $2.66 billion. Gross margins are expected to narrow by 20 basis points to 38.1%, while operating margins are seen contracting 160 basis points to 11.3%.
Telsey noted Ulta’s strong loyalty program, brand relationships, store base, and international expansion plans as key long-term advantages.
Recent corporate updates include the planned conclusion of Ulta’s Target (NYSE:TGT) shop-in-shop program in 2026, the acquisition of U.K.-based retailer Space NK, and international expansion initiatives in Mexico and the Middle East.
Leadership changes also continue under new CEO Kecia Steelman, who took the helm in June following the departure of CFO Paula Oyibo.
For fiscal 2025, Ulta reaffirmed guidance, forecasting sales of $11.5 billion to $11.7 billion and earnings of $22.65 to $23.30 per share. Telsey raised her own EPS estimate to $23.45. Management expects operating margins between 11.7% and 11.8%, down from 13.9% last year, as cost pressure persists.
Telsey flagged consumer spending trends as the largest risk in the back half of the year. Tariffs are unlikely to weigh significantly, given Ulta imports about 1% of its merchandise. Fragrance remains the standout category, while skincare, wellness, and makeup show a more mixed performance.
Recently, JPMorgan’s Christopher Horvers reaffirmed an Overweight rating and lifted his Ulta price forecast to $600, citing stronger comps and innovation. Peers including Barclays, Oppenheimer, Canaccord, and DA Davidson also raised forecasts, reflecting broad optimism despite margin headwinds.
Price Action: ULTA shares were trading lower by 0.58% to $526.41 at last check Monday.
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