Ulta Beauty slides 10% on CEO's warning of global uncertainty
Specialty retailer beats quarterly estimates but cautious 2026 outlook sparks sell-off in beauty stocks
Ulta Beauty shares plunged 10.2% on Friday after Chief Executive Kecia Steelman warned of mounting global uncertainty, overshadowing stronger-than-expected quarterly results. The stock fell to $560.75, wiping roughly $3.1 billion from the beauty retailer's market capitalization and extending its decline from an October peak above $710.
The Bolingbrook, Illinois-based company reported net sales of $3.898 billion for the fourth quarter ended January 31, 2026, an 11.8% increase year-over-year that surpassed analyst expectations of $3.802 billion, according to the company's official earnings release. Comparable sales rose 5.8%, outpacing the 1.5% growth recorded in the prior-year quarter. Diluted earnings per share reached $8.01, slightly ahead of the $7.97 consensus estimate.
Despite these headline beats, investors focused on management's tempered outlook for fiscal 2026. The company forecast net sales growth of 6% to 7%, which translates to $13.14 billion to $13.26 billion—slightly above the $13.06 billion consensus. However, comparable sales growth guidance of 2.5% to 3.5% represents a notable slowdown relative to fiscal 2025's 5.4% increase. The comp guidance midpoint of 3% also falls below the analyst estimate of 3.47%.
Steelman attributed the conservative guidance to broader macroeconomic headwinds. "We are increasingly mindful of rising global conflicts that could impact economic conditions," she stated, as reported by Morningstar/MarketWatch. The CEO characterized the environment as one with "ongoing global uncertainty and potential economic volatility" into fiscal 2026, and noted consumers' "increasing discernment in spending decisions" over the past year.
The 2026 earnings outlook also fell short of Wall Street expectations. Ulta projected diluted earnings per share of $28.05 to $28.55, with the midpoint below the analyst consensus of $28.38, according to Seeking Alpha's coverage. Operating income is forecast to grow 6% to 9%, while capital expenditures are planned in the range of $400 million to $450 million.
For the full fiscal 2025 year, net sales rose 9.7% to $12.393 billion, and comparable sales increased 5.4% versus 0.7% in the prior year. Diluted EPS increased to $25.64 from $25.34 a year earlier. Operating income was $1.5 billion, or 12.4% of net sales.
The sell-off reflects investor concerns that even a category leader like Ulta faces pressure as consumers prioritize value. Steelman observed that guests remained "focused on value and affordability" and showed more discerning spending choices throughout the year—themes expected to persist. Analysts have questioned whether the softer comp outlook and compressed earnings growth reflect intensifying competition and a normalizing post-pandemic demand environment.
Yet the company maintained a positive long-term stance. "Looking ahead, we are well positioned for sustainable, profitable growth in 2026 and beyond," Steelman said in the press release, citing the company's "Ulta Beauty Unleashed" strategy.
Prior to Friday's decline, Ulta shares were down roughly 7% year-to-date, lagging the broader consumer discretionary sector. The drop pushed the stock below its 50-day moving average of $664.18, though it remains above its 200-day average of $554.16. At current levels, Ulta trades at approximately 21.5 times forward earnings, compared with a five-year average that analysts say has generally been in the low-to-mid 20s range for specialty retail peers with comparable growth profiles.
The company returned $890.5 million to shareholders via buybacks during fiscal 2025, repurchasing 2.0 million shares, which could support the stock if management accelerates repurchases amid the decline. However, analysts have noted that the decelerating comp growth and cautious tone could keep the shares range-bound until economic visibility improves.
For now, investors remain focused on whether Steelman's cautionary stance proves prescient or overly conservative. With the beauty category facing renewed scrutiny over pricing power and promotional activity, Ulta's ability to sustain mid-single-digit comparable sales growth while protecting margins will be a key test in the year ahead.