Have you ever watched a stock you thought was dead in the water suddenly come roaring back to life? That’s exactly what happened Thursday after the close when Ulta Beauty dropped its fiscal third quarter numbers. I’ll be honest – I wasn’t expecting much. The consumer has been picky lately, trading down in so many categories, and yet… here we are. Shares jumped more than 10% in after-hours trading, and for good reason.
Something interesting is happening in beauty right now, and Ulta seems to have cracked the code while so many other retailers are still scratching their heads.
Ulta Just Raised Guidance – Again
Let’s start with the headline numbers because they’re kind of stunning when you really look at them.
The company now expects full-year sales to land around $12.3 billion – that’s up from the previous range of $12.0 to $12.1 billion. More importantly, they lifted the comparable sales outlook from 2.5%-3.5% growth to 4.4%-4.7%. That’s the second consecutive quarter they’ve raised guidance, which is about as strong a signal as you can get that the underlying business is accelerating, not just holding steady.
Earnings per share guidance also got a healthy bump to $25.20-$25.50 from the earlier $23.85-$24.30 range. In a market where companies are guiding down left and right, seeing a retailer confidently move numbers higher feels almost… refreshing?
The Actual Quarter Was Even Better
The third quarter itself was a clear beat across the board.
- Earnings per share: $5.14 vs $4.64 expected
- Revenue: $2.86 billion vs $2.72 billion expected
- That’s a nearly 13% surprise on the top line – not exactly pocket change
Traffic was up. Average ticket was up. Membership in the Ultamate Rewards program continued growing. Everything that matters in retail right now was moving in the right direction.
When consumers are stressed about the economy, they may skip the new handbag or delay buying new jeans, but many still find room for a $45 lipstick or a new skincare routine. Beauty has become the affordable luxury.
I’ve noticed this phenomenon personally – friends who swear they’re “cutting back” still show up with new Glossier blush or a fresh Dyson Airwrap. There’s something psychological happening here that’s worth digging into.
Why Beauty Keeps Winning When Everything Else Struggles
Look, the consumer isn’t made of money. We all know that. Department stores are seeing weaker traffic. Apparel has been soft. Even some of the fast-fashion players have started whispering about caution.
But beauty? Beauty is up mid-single digits this year across both prestige and mass categories. Market research shows U.S. prestige beauty dollar sales rose 4% in the first nine months of 2025, while mass beauty grew 5%. That’s not just resilient – that’s genuinely impressive in this environment.
Part of it is the “lipstick effect” – the idea that in tough times, people buy small luxuries they can justify. A $30 foundation feels a lot less painful than a $300 pair of shoes. But I think there’s more to it than that.
Social media has completely changed how people discover and engage with beauty products. TikTok didn’t just create trends – it created an entire generation that views makeup and skincare as content, entertainment, and self-expression all rolled into one. When was the last time you saw someone post a haul video for dish soap?
The Competition Is Fiercer Than Ever
Let’s not sugarcoat this – Ulta isn’t operating in a vacuum.
Walmart has dramatically expanded its beauty aisles. Target’s gone all-in on clean beauty and inclusive shade ranges. Amazon continues to dominate online search for everything from drugstore shampoo to high-end serums. And then there are the new disruptors – the direct-to-consumer brands, the TikTok-native lines, the celebrity launches dropping every week.
Yet somehow Ulta is gaining share. How?
- Exclusive partnerships with brands like Chanel and Dyson that you can’t get at big-box stores
- The Ultamate Rewards program that actually works (and keeps customers coming back)
- In-store experiences – the ability to touch, test, and get advice from trained staff
- A mix of prestige and mass that no one else has quite replicated at scale
It’s not perfect. Margins came in a touch lower than last year, which makes sense with all the investment they’re making. But the volume growth appears to be more than offsetting that pressure.
What About the Holiday Season?
Here’s where things get really interesting.
Surveys are showing that beauty products are expected to be more popular as gifts this year than last – especially in higher-income households and homes with kids. Think teenage girls getting their first real makeup palette, or the viral skincare sets that every influencer is pushing.
If Ulta’s third quarter was this strong heading into the holidays, the fourth quarter could be massive. Gift sets, limited-edition palettes, fragrance coffrets – this is beauty’s Super Bowl.
The Stock: From Hated to Hero?
Full disclosure – Ulta stock has been a roller coaster. It got absolutely crushed earlier in the year as investors worried about consumer health and competition. But year-to-date, shares are now up about 23%, beating the S&P 500’s 17% gain.
Thursday’s move feels different though. This wasn’t just a relief rally. This was a fundamental re-rating based on actual results and improved visibility.
Is the stock cheap? Not screamingly. But growing comps in the mid-single digits with the potential for margin expansion as scale benefits kick in? That’s a combination growth investors dream about.
The Bigger Picture for Retail Investors
Here’s what I find most fascinating about this report.
In a market obsessed with “consumer weakness,” Ulta is proving that not all discretionary spending is created equal. Some categories can actually thrive when people feel uncertain – especially when they deliver joy in small, affordable packages.
It’s a reminder that broad narratives about “the consumer” often miss the nuance. Yes, many people are trading down. Yes, others are still spending freely in categories that matter to them. The winners right now are the ones who understand that distinction and execute flawlessly against it.
Ulta Beauty, for now at least, looks like one of those winners.
Whether that continues into 2026 is the big question – but after Thursday’s report, I’m a lot more interested in finding out the answer.
