"Ulta Beauty posted Q4 FY2026 EPS of $8.01, well ahead of the $7.15 analyst estimate. Revenue came in at $3.9 billion, topping the $3.83 billion consensus and growing 11.78% year over year. Comparable sales grew 5.8%, driven by a 4.2% increase in average ticket and 1.6% growth in transactions."
"Despite selling more, Ulta Beauty made less. Operating income fell 7.94% year over year to $476.9 million, and net income dropped 9.3% to $356.7 million. Revenue went up. Profits went down. That is margin compression in plain terms, and investors hate it."
"The culprit is SG&A (selling, general, and administrative) costs, which climbed to 25.7% of sales from 23.4% a year ago. Enterprise investments and higher advertising spend are eating into what used to be a very clean cost structure. The company is spending more to grow, and the returns on that spending are not yet visible in the income statement."
"For FY2027, Ulta Beauty guided to net sales growth of 6% to 7%, a noticeable step down from the 9.71% full-year revenue growth the company just delivered. Comparable sales growth is expected to slow to just 2.5% to 3.5%."
Ulta Beauty reported Q4 FY2026 earnings that exceeded analyst expectations on revenue and EPS, with revenue reaching $3.9 billion and EPS at $8.01. However, the company experienced significant margin compression as operating income fell 7.94% and net income dropped 9.3% year-over-year despite 11.78% revenue growth. SG&A costs increased to 25.7% of sales from 23.4%, driven by enterprise investments and higher advertising spending. The market reaction intensified due to FY2027 guidance showing deceleration, with net sales growth projected at 6-7% compared to prior-year 9.71% growth, and comparable sales growth expected to slow to 2.5-3.5%. This forward-looking weakness, combined with profitability concerns, drove the stock down approximately 8% in early trading.
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]