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Item 7. Management’s Discussion and Analysis

2026-03-26 compared with 2025-03-27 · 136 added, 134 removed, 210 unchanged (56% of the section changed)

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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 estimate there are approximately 140 million beauty enthusiasts in the U.S.

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 the premier beauty destination for cosmetics, fragrance, skin care products, hair care products, wellness products, 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 more than 1,400 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;

Based on our consumer insights research, we estimate there are approximately 140 million beauty enthusiasts in the U.S.

We believe our strategy provides us with competitive advantages that have contributed to our financial performance.

Today, our U.S.

operations (“Ulta U.S.”) make us the largest specialty beauty retailer in the United States and the premier beauty destination for cosmetics, fragrance, skin care, bath and body products, hair care, salon styling tools, wellness products, and salon services.

In addition to our U.S.

operations, we are expanding our presence internationally through our subsidiary, Space NK, a luxury beauty retailer operating in the U.K.

and Ireland, our joint venture in Mexico, and our franchise in the Middle East.

Key points of strategic differentiation include:

a differentiated assortment of established and emerging brands across a variety of categories and price points;

our convenient omnichannel footprint, offering products through our stores, delivering immersive and personalized experiences through our digital platforms, and providing the Ulta Beauty experience internationally through our partnerships;

our best-in-class loyalty program that enables members to earn points for products and beauty services and provides us with a deep understanding of our customers and their preferences;

and our ability to cultivate human connection with warm and welcoming guest experiences across all of our channels.

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;

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 U.S.

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.

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 three foundational focus areas, as outlined in our Ulta Beauty Unleashed strategy:

1) Drive Core Business Growth through operational excellence and an elevated go-to-market approach;

2) Scale New, Accretive Businesses by capitalizing on key growth opportunities to ensure relevancy in a rapidly changing world;

and 3) Align Our Foundation for Future Success by optimizing our ways of working, streamlining our cost structure, and cultivating an engaging, associate-centered culture.

operates in the large and growing U.S.

beauty products and salon services industry, and we 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 U.S.

economic conditions, changes in merchandise strategy or mix, and timing and effectiveness of our marketing activities, among others.

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, advertising, and depreciation.

Long-term operating profit is expected to increase as a result of our efforts to drive revenue growth, leverage fixed costs, increase

operating efficiencies, and grow other revenue, partially offset by incremental investments to enhance the guest experience, people, assortment, advertising, and depreciation.

Current Trends

Industry trend s

The overall beauty market expanded in 2023 and 2024, 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.

The overall U.S.

beauty market expanded in 2024 and 2025, supported by ongoing consumer engagement with and resilience in the beauty category.

beauty category over the long term.

Impact of inflation and other macroeconomic trends

Persistent inflationary and macroeconomic pressures have impacted consumer spending habits broadly, which we believe may have contributed to lower sales trends throughout fiscal 2024.

The continuation of inflationary and macroeconomic pressures could further impact our ability to grow sales and maintain historical profitability levels.

In addition, inflation could cause the interest rates on any future debt to remain at an elevated level or increase.

Persistent inflationary and macroeconomic pressures have impacted consumer spending habits broadly.

The continuation of inflationary and macroeconomic pressures could 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

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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.

Accordingly, we recognize revenue for our single performance obligation related to online sales at the time control of the merchandise passes to the guest, which is at the time of shipment or guest pickup.

We 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.

State sales taxes are presented on a net basis as we consider ourselves 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.

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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 14 th month of operation.

Other revenue includes private label and co-branded credit card programs, deferred revenue related to the loyalty program and gift card breakage, and royalties.

Comparable sales reflect sales for stores and e-commerce platforms beginning on the first day of the 14 th 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.

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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 facility, which is structured as an asset-based lending instrument.

Our credit facility interest 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.

Interest income represents interest from cash equivalents, which includes 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.

Our credit facility interest rates are based on a variable rate structure which can result in increased cost in periods of rising or elevated interest rates.

Income tax expense reflects the federal and foreign statutory tax rates and the weighted average state statutory tax rate for the states in which we operate stores.

Equity net loss of affiliate represents our proportionate share of net loss from equity method investees.

Results of operations

Our fiscal years are the 52- or 53-week periods ending on the Saturday closest to January 31.

The Company’s fiscal years ended February 1, 2025 (fiscal 2024), February 3, 2024 (fiscal 2023), and January 28, 2023 (fiscal 2022) were 52, 53, and 52 week years, respectively.

As of February 1, 2025, we operated 1,445 stores across 50 states.

Our fiscal years are the 52- or 53-week periods ending on the Saturday closest to January 31 each year.

The Company’s fiscal years ended January 31, 2026 (fiscal 2025), February 1, 2025 (fiscal 2024), and February 3, 2024 (fiscal 2023) were 52-, 52-, and 53-week years, respectively.

The following tables present the components of our consolidated results of operations for the periods indicated:

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Operating income

Interest income, net

Income before income taxes

Interest expense (income), net

Income before income taxes and equity net loss of affiliate

Income tax expense

Income before equity net loss of affiliate

Equity net loss of affiliate

Other operating data:

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Comparable sales

(1) Includes 1,505 Ulta Beauty stores located in the U.S.

and 86 Space NK stores located in the U.K.

and Ireland as of January 31, 2026.

Fiscal Year Ended

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Operating income

Interest income, net

Income before income taxes

Interest expense (income), net

Income before income taxes and equity net loss of affiliate

Income tax expense

Income before equity net loss of affiliate

Equity net loss of affiliate

Fiscal year 2025 versus fiscal year 2024

Net sales increased $88.4 million, or 0.8%, to $11.3 billion in fiscal 2024 compared to $11.2 billion in fiscal 2023.

The net sales increase was primarily due to new store performance, increased comparable sales, and an increase of $3.7 million in other revenue, partially offset by the benefit of an extra week of sales in fiscal 2023.

Net sales for the 53 rd week of fiscal 2023 were approximately $181.9 million.

The total comparable sales increase of 0.7% in fiscal 2024, was driven by a 1.1% increase in average ticket and a 0.4% decrease in transactions.

Net sales increased $1.1 billion, or 9.7%, to $12.4 billion in fiscal 2025 compared to $11.3 billion in fiscal 2024.

The net sales increase was primarily due to increased comparable sales, the acquisition of Space NK, and sales from new stores.

The total comparable sales increase of 5.4% in fiscal 2025 was driven by a 3.3% increase in average ticket and a 2.0% increase in transactions.

The total comparable sales increase in fiscal 2024 was 0.7%.

Gross profit increased $458.0 million, or 10.4%, to $4.8 billion in fiscal 2025 compared to $4.4 billion in fiscal 2024.

Gross profit as a percentage of net sales decreased 30 basis points to 38.8% in fiscal 2024 compared to 39.1% in fiscal 2023.

The decrease in gross profit margin was primarily due to:

● 40 basis points of deleverage in merchandise margins driven by lapping favorable price increase impacts from the prior year and higher promotional activity;

● 20 basis points of deleverage of store fixed costs driven by more net new store openings;

● 10 basis points of deleverage due to higher supply chain costs;

partially offset by

● 20 basis points of leverage in inventory shrink;

● 20 basis points of leverage due to favorable channel mix.

Gross profit as a percentage of net sales increased to 39.1% in fiscal 2025 compared to 38.8% in fiscal 2024.

The increase in gross profit margin was primarily due to lower inventory shrink and higher merchandise margin, partially offset by adverse channel mix, deleverage of other revenue, and deleverage of store fixed expenses.

Selling, general and administrative expenses

SG&A expenses increased $487.8 million, or 17.4%, to $3.3 billion in fiscal 2025 compared to $2.8 billion in fiscal 2024.

As a percentage of net sales, SG&A expenses increased 90 basis points to 24.9% in fiscal 2024 compared to 24.0% in fiscal 2023.

The deleverage of SG&A expenses was primarily due to:

● 60 basis points of deleverage of store payroll and benefits due to wage investments;

● 40 basis points of deleverage of corporate overhead primarily due to strategic investments;

● 10 basis points of deleverage of store expenses due to ongoing inflationary pressures;

partially offset by

● 20 basis points of leverage due to lower incentive compensation.

As a percentage of net sales, SG&A expenses increased to 26.6% in fiscal 2025 compared to 24.9% in fiscal 2024.

The deleverage of SG&A expenses was primarily due to higher incentive compensation, higher store payroll and benefits, higher corporate overhead primarily due to strategic investments, and higher store expenses.

Pre-opening expenses

Pre-opening expenses increased $2.1 million, or 15.6%, to $15.8 million in fiscal 2025 compared to $13.7 million in fiscal 2024.

Interest income, net

Net interest income was $15.1 million in fiscal 2024 compared to $17.6 million in fiscal 2023, due to lower average cash balances.

We did not have any outstanding borrowings on our credit facility as of February 1, 2025 and February 3, 2024.

Interest expense (income), net

Net interest expense was $1.8 million in fiscal 2025 compared to $15.1 million of net interest income in fiscal 2024.

The increase in interest expense was primarily due to increased borrowings on our credit facilities in fiscal 2025.

As of January 31, 2026, we had $62.3 million outstanding under our credit facilities.

We did not have any outstanding borrowings on the credit facilities as of February 1, 2025.

Income tax expense

Income tax expense of $378.9 million in fiscal 2024 represents an effective tax rate of 24.0%, compared to fiscal 2023 income tax expense of $404.6 million and an effective tax rate of 23.9%.

Income tax expense of $373.9 million in fiscal 2025 represented an effective tax rate of 24.5%, compared to fiscal 2024 income tax expense of $378.9 million and an effective tax rate of 24.0%.

Equity net loss of affiliate

Equity net loss of affiliate was $3.9 million in fiscal 2025 related to our joint venture in Mexico.

Net income decreased $47.6 million to $1.15 billion in fiscal 2025 compared to $1.20 billion in fiscal 2024.

The decrease in net income was primarily due to a $114.0 million increase in SG&A expenses and a $5.2 million increase in pre-opening expenses, partially offset by a $25.7 million decrease in income taxes and a $6.2 million increase in gross profit.

The decrease in net income was primarily due to a $487.8 million increase in SG&A expenses, a $16.9 million increase in net interest expense, a $3.9 million increase in equity net loss of affiliate, and a $2.1 million increase in pre-opening expenses, partially offset by a $458.0 million increase in gross profit and a $5.1 million decrease in income taxes.

Fiscal year 2024 versus fiscal year 2023

Net sales increased $88.4 million, or 0.8%, to $11.3 billion in fiscal 2024 compared to $11.2 billion in fiscal 2023.

The net sales increase was primarily due to increased comparable sales, strong new store performance, an increase of $68.3 million in other revenue and the benefit of an extra week of sales in fiscal 2023.

Net sales for the 53 rd week of fiscal

2023 were approximately $181.9 million.

The total comparable sales increase of 5.7% in fiscal 2023, compared to an increase of 15.6% in fiscal 2022, was driven by a 7.4% increase in transactions and a 1.5% decrease in average ticket.

Net sales for the 53 rd week of fiscal 2023 were approximately $181.9 million.

The total comparable sales increase of 0.7% in fiscal 2024 was driven by a 1.1% increase in average ticket and a 0.4% decrease in transactions.

The total comparable sales increase in fiscal 2023 was 5.7%.

Gross profit increased $6.2 million, or 0.1%, to $4.39 billion in fiscal 2024, compared to $4.38 billion in fiscal 2023.

Gross profit as a percentage of net sales decreased 50 basis points to 39.1% in fiscal 2023 compared to 39.6% in fiscal 2022.

The decrease in gross profit margin was primarily due to:

● 80 basis points of deleverage in merchandise margins driven by higher promotional activity and category mix, as well as lapping of benefits from price increases;

● 40 basis points of deleverage in inventory shrink;

partially offset by

● 50 basis points of leverage in other revenue primarily due to credit card income growth, an increase in royalty income from our partnership with Target, and higher loyalty point redemptions;

● 20 basis points of leverage of store fixed costs attributed to the impact of higher sales.

Gross profit as a percentage of net sales decreased to 38.8% in fiscal 2024 compared to 39.1% in fiscal 2023.

The decrease in gross profit margin was primarily due to lower merchandise margin, deleverage of store fixed costs, and higher supply chain costs, partially offset by lower inventory shrink and favorable channel mix.

Selling, general and administrative expenses

SG&A expenses increased $114.0 million, or 4.2%, to $2.8 billion in fiscal 2024 compared to $2.7 billion in fiscal 2023.

As a percentage of net sales, SG&A expenses increased 50 basis points to 24.0% in fiscal 2023 compared to 23.5% in fiscal 2022.

The deleverage of SG&A expenses was primarily due to:

● 60 basis points of deleverage of corporate overhead primarily due to strategic investments;

● 20 basis points of deleverage of store payroll and benefits due to wage investments;

● 10 basis points of deleverage of store expenses due to ongoing inflationary pressures;

● 10 basis points of deleverage due to higher marketing expenses;

partially offset by

● 50 basis points of leverage due to lower incentive compensation.

As a percentage of net sales, SG&A expenses increased to 24.9% in fiscal 2024 compared to 24.0% in fiscal 2023.

The deleverage of SG&A expenses was primarily due to deleverage of store payroll and benefits, corporate overhead due to strategic investments, and store expenses, partially offset by lower incentive compensation.

Pre-opening expenses

Pre-opening expenses decreased $2.1 million, or 19.7%, to $8.5 million in fiscal 2023 compared to $10.6 million in fiscal 2022.

Pre-opening expenses increased $5.2 million, or 60.9%, to $13.7 million in fiscal 2024 compared to $8.5 million in fiscal 2023.

Interest income, net

Net interest income was $17.6 million in fiscal 2023 compared to $4.9 million in fiscal 2022, due to higher average interest rates on cash balances.

We did not have any outstanding borrowings on our credit facility as of February 3, 2024 and January 28, 2023.

Net interest income was $15.1 million in fiscal 2024 compared to $17.6 million in fiscal 2023, due to lower average cash balances.

We did not have any outstanding borrowings on our credit facilities as of February 1, 2025 and February 3, 2024.

Income tax expense

Income tax expense of $404.6 million in fiscal 2023 represents an effective tax rate of 23.9%, compared to fiscal 2022 income tax expense of $401.1 million and an effective tax rate of 24.4%.

The lower income tax rate is primarily due to a decrease in state income taxes compared to fiscal 2022 and a tax benefit from the income tax accounting for stock-based compensation.

Net income increased $48.6 million to $1.3 billion in fiscal 2023 compared to $1.2 billion in fiscal 2022.

The increase in net income was primarily due to a $336.6 million increase in gross profit, partially offset by a $299.3 million increase in SG&A expenses and a $3.5 million increase in income taxes.

Income tax expense of $378.9 million in fiscal 2024 represented an effective tax rate of 24.0%, compared to fiscal 2023 income tax expense of $404.6 million and an effective tax rate of 23.9%.

Net income decreased $89.9 million to $1.2 billion in fiscal 2024 compared to $1.3 billion in fiscal 2023.

Liquidity and capital resources

Our primary sources of liquidity are cash and cash equivalents, cash flows from operations, and borrowings under our credit facility.

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 February 1, 2025 and February 3, 2024, we had cash and cash equivalents of $703.2 million and $766.6 million, respectively.

As of January 31, 2026 and February 1, 2025, we had cash and cash equivalents of $424.2 million and $703.2 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.

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We believe our primary sources of liquidity will satisfy our cash requirements over both the short term (the next twelve months) and long term.

The following table summarizes contractual cash requirements as of February 1, 2025:

The following table summarizes contractual cash requirements as of January 31, 2026:

(In thousands)

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Also included are legally binding minimum lease payments for leases signed but not yet commenced of $128.4 million, which are excluded from operating lease liabilities shown on our consolidated balance sheets.

(2) The unrecognized tax benefit of $5.2 million as of February 1, 2025 is excluded due to uncertainty regarding the realization and timing of the related future cash flows, if any.

(2) The unrecognized tax benefit of $9.0 million as of January 31, 2026 is excluded due to uncertainty regarding the realization and timing of the related future cash flows, if any.

Purchase obligations reflect legally binding agreements entered into by the Company to purchase goods or services.

The amount of purchase obligations relates to commitments for products and services and other goods and service contracts entered into as of February 1, 2025.

The amount of purchase obligations relates to commitments for products and services and other goods and service contracts entered into as of January 31, 2026.

Excluded from purchase obligations are normal purchases and contracts entered into in the ordinary course of business.

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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 fiscal 2025 compared to fiscal 2024 is mainly due to a lower increase in merchandise inventories in fiscal 2025 and timing of accrued liabilities and deferred revenue.

Merchandise inventories, net were $2.2 billion at January 31, 2026, compared to $2.0 billion at February 1, 2025, representing an increase of $212.9 million or 10.8%.

The increase in total inventory is primarily due to new brand launches, the acquisition of Space NK, and the addition of new Ulta Beauty stores in the U.S.

The decrease in net cash provided by operating activities in fiscal 2024 compared to fiscal 2023 is mainly due to the decrease in net income, a larger increase in merchandise inventories in fiscal 2024, and timing of deferred income taxes, prepaid expenses and other current assets, accrued liabilities, accounts payable, and deferred revenue.

Merchandise inventories, net were $2.0 billion at February 1, 2025, compared to $1.7 billion at February 3, 2024, representing an increase of $226.1 million or 13.0%.

The increase in total inventory is primarily due to the following:

● $131 million increase due to new key brand launches and inventory investments;

● $95 million increase due to the addition of 60 net new stores opened since February 3, 2024.

The decrease in net income was primarily due to an increase in SG&A expenses and pre-opening expenses, partially offset by a decrease in income taxes and an increase in gross profit.

The decrease in net cash provided by operating activities in fiscal 2023 compared to fiscal 2022 is mainly due to the timing of accrued liabilities, accounts payable, receivable collections, prepaid income taxes, and prepaid expenses and other current assets and a larger increase in merchandise inventories in fiscal 2023, partially offset by the increase in net income and non-cash lease expense.

Investing activities

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Investment activities for capital expenditures were $434.8 million during fiscal 2025, compared to $374.5 million during fiscal 2024.

Purchases of short-term investments were $70.0 million during fiscal 2025 and consisted of certificates of deposit with maturities of three to twelve months from the date of purchase.

The increase in net cash used in investing activities in fiscal 2025 relative to fiscal 2024 was primarily due to the acquisition of Space NK in the second quarter of fiscal 2025.

The decrease in net cash used in investing activities in fiscal 2024 relative to fiscal 2023 was primarily due to less capital expenditures for information technology systems and supply chain, partially offset by more capital expenditures for new, remodeled, and relocated stores compared to fiscal 2023.

The increase in net cash used in investing activities in fiscal 2023 relative to fiscal 2022 was primarily due to more capital expenditures for new, remodeled, and relocated stores and information technology systems compared to fiscal 2022.

Capital expenditures

The following table presents a summary of our store activities during the last three years:

The following table presents a summary of our consolidated store activities during the last three years:

Fiscal Year Ended

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Stores relocated

During fiscal 2024, the average investment required to open a new Ulta Beauty store was approximately $2.1 million, which includes capital investment net of landlord contributions, pre-opening expenses, and initial inventory net of payables.

Capital expenditures during the last three years by major category are as follows:

(In millions)

New, Remodeled, and Relocated Stores

Merchandising and Refreshed Stores

Information Technology Systems

Store Maintenance and Other

During fiscal 2025, the average investment required to open a new Ulta Beauty store in the U.S.

was approximately $2.4 million, which included capital investment net of landlord contributions, pre-opening expenses, and initial inventory net of payables.

Capital expenditures were $434.8 million, $374.5 million, and $435.3 million in fiscal 2025, fiscal 2024, and fiscal 2023, respectively.

Our future investments will depend primarily on the number of new, remodeled, and relocated stores, information technology systems investments, and supply chain investments that 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.

We expect fiscal 2025 capital expenditures will be up to $500 million and will be used primarily to fund our new, remodeled, and relocated stores and strategic priorities, including investments in information technology systems and supply chain optimization.

We expect capital expenditures will not be greater than $450 million in fiscal 2026 and will

primarily be used to fund our new, remodeled, and relocated stores and strategic priorities, including investments in information technology systems and supply chain optimization.

Financing activities

Financing activities include share repurchases, borrowing and repayment of our revolving credit facility, and capital stock transactions.

Financing activities include share repurchases, borrowings and repayments under our revolving credit facilities, 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 fiscal 2025 relative to fiscal 2024 was primarily due to a decrease in share repurchases.

The increase in net cash used in financing activities in fiscal 2024 relative to fiscal 2023 was primarily due to an increase in share repurchases.

The increase in net cash used in financing activities in fiscal 2023 relative to fiscal 2022 was primarily due to an increase in share repurchases and less stock options exercised.

We had no borrowings outstanding under the credit facility at the end of fiscal 2024, 2023, and 2022.

The zero outstanding borrowings position is due to a combination of factors including sales demand, overall performance of management initiatives including expense control, and inventory and other working capital reductions.

We may require borrowings under the facility from time to time in future periods for unexpected business disruptions, to support our new store program, seasonal inventory needs, or share repurchases.

As of January 31, 2026, we had $62.3 million outstanding under our credit facilities.

We did not have any outstanding borrowings on the credit facilities as of February 1, 2025 or February 3, 2024.

Share repurchase program

In March 2022, the Board of Directors authorized a share repurchase program (the 2022 Share Repurchase Program) pursuant to which the Company could repurchase up to $2.0 billion of the Company’s common stock.

The 2022 Share Repurchase Program revoked the previously authorized but unused amounts from the earlier share repurchase program.

The 2022 Share Repurchase Program revoked the previously authorized but unused amounts from an earlier share repurchase program.

The 2022 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

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 2022 Share Repurchase Program.

The March 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts under the 2022 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 authorization revoked the previously authorized but unused amounts under 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.

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Total cost of shares repurchased

Credit facility

On March 13, 2024, we entered into Amendment No.

Credit facilities

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;

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JPMorgan Chase Bank, N.A., as Syndication Agent and a Lender;

PNC Bank, National Association, as Documentation 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 $800.0 million 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), contains a $50.0 million subfacility for letters of credit and allows the Company to increase the revolving facility by an additional $200.0 million, subject to the consent by each lender and other conditions.

The Loan Agreement contains a requirement to maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 during such periods when availability under the Loan Agreement falls below a specified threshold.

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 to 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 February 1, 2025 and February 3, 2024, we had no borrowings outstanding under the credit facility and we were in compliance with all terms and covenants of the Loan Agreement.

The unused line fee is 0.25% to 0.375% per annum.

As of January 31, 2026 and February 1, 2025, there were no borrowings outstanding under 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 January 31, 2026, there was $62.3 million outstanding under the Facility Agreement.

As of January 31, 2026, we were in compliance with all terms and covenants of the Loan Agreement and Facility Agreement.

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.

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.

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The preparation of these 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.

Management bases estimates on historical experience and other assumptions it believes to be reasonable under the circumstances and evaluates these estimates on an ongoing basis.

Actual results may differ from these estimates.

A discussion of our more significant estimates follows.

Management has discussed the development, selection, and disclosure of these estimates and assumptions with the Audit Committee of the Board of Directors.

Management has discussed the development, selection, and disclosure of these estimates and assumptions with the Audit Committee.

Inventory valuation

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Impairment of long-lived tangible assets

We review long-lived tangible assets whenever events or circumstances indicate these assets might not be recoverable.

We review long-lived tangible assets for impairment quarterly or more frequently if events or circumstances indicate these assets might be impaired.

Assets are primarily reviewed at the store level, which is the lowest level for which cash flows can be identified.

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We do not believe there is a reasonable likelihood there will be a material change in the future estimates or assumptions we use to calculate our impairment charges.

No impairment charges were recognized in fiscal 2024, 2023, and 2022.

No impairment charges were recognized in fiscal 2025, 2024, or 2023.

Impairment of goodwill and other intangible assets

We review goodwill and other intangible assets for impairment annually or more frequently if events or circumstances indicate these assets might be impaired.

An impairment loss would be recorded if the carrying amount of goodwill or other intangible assets exceeds their respective fair value.

We do not believe there is a reasonable likelihood there will be a material change in the future estimates or assumptions we use to calculate our impairment charges.

No impairment charges were recognized in fiscal 2025, 2024, or 2023.

Loyalty program

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An increase or decrease in the estimated redemption rate of 5% would not have a material impact on our operating income in fiscal 2025.

We are subject to income taxes in the United States.

Judgment is required in determining our provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.

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Variations in the actual outcome of these future tax consequences could materially impact our consolidated financial statements.

Business combinations

Business combinations are accounted for using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired and liabilities assumed are recorded at their respective fair values at the date of acquisition.

The determination of the acquisition date fair values of identifiable assets acquired and liabilities assumed requires estimates and the use of valuation techniques when fair value is not readily available and requires judgment.

For the valuation of indefinite-lived intangible assets acquired in a business combination, the Company typically uses the relief from royalty method, which utilizes the present value of the after-tax royalty savings attributable to owning the intangible assets as opposed to paying a third party for its use.

The significant assumptions used to estimate the fair values of intangible assets include projected revenues, discount rate, remaining useful life, and estimated royalty rate.

Although the Company believes its estimates of acquisition date fair values are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates.

Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on the determination of the fair values of the intangible assets acquired.

If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges.

In addition, we have estimated the economic lives of certain acquired tangible and intangible assets and these lives are used to calculate depreciation and amortization expense.

If our estimates of the economic lives change, depreciation or amortization expenses could increase or decrease, or the acquired asset could be impaired.

Recently adopted accounting pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis