What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-06-02 compared with 2025-12-04 · 110 added, 134 removed, 146 unchanged (63% of the section changed)

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This discussion contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which reflect our current views with respect to, among other things, future events and financial performance.

These forward-looking statements are included throughout this Quarterly Report on Form 10-Q, and relate to matters such as our industry, business strategy, goals, and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity, and capital resources and other financial and operating information.

You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “plans,” “estimates,” “targets,” “strategies,” or other comparable words.

Any forward-looking statements contained in this Form 10-Q are based upon our historical performance and on current plans, estimates, and expectations.

Any forward-looking statements contained in this Quarterly Report on Form 10-Q are based upon our historical performance and on current plans, estimates, and expectations.

The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates, targets, strategies, or expectations contemplated by us will be achieved.

Such forward-looking statements are subject to various risks and uncertainties, which include, without limitation:

● macroeconomic conditions, including inflation and elevated interest rates, as well as prior labor, transportation, and shipping cost pressures, have had, and may continue to have, a negative impact on our business, financial condition, profitability, and cash flows (including future uncertain impacts, especially when combined with increased tariffs);

● changes in the overall level of consumer spending and volatility in the economy, including as a result of macroeconomic conditions, tariffs, and geopolitical events;

● our ability to sustain our growth plans and successfully implement our long-range strategic and financial plan, including our international expansion in Mexico, the Middle East, the U.K., and Ireland;

● the ability to execute our operational excellence priorities, including continuous improvement and supply chain optimization;

● our ability to gauge beauty trends and react to changing consumer preferences in a timely manner;

● the possibility that we may be unable to compete effectively in our highly competitive markets;

● the possibility of significant interruptions in the operations of our distribution centers, fast fulfillment center, and market fulfillment centers;

● the possibility that cybersecurity or information security breaches and other disruptions could compromise our information or result in the unauthorized disclosure of confidential information;

● the possibility of material disruptions to our information systems, including our Ulta.com website and mobile applications;

● the possibility that we will not realize the anticipated benefits of the acquisition of Space NK for any reason, including due to challenges with integration and/or achieving anticipated acquisition synergies;

● the failure to maintain satisfactory compliance with applicable privacy and data protection laws and regulations;

● changes in the good relationships we have with our brand partners, our ability to continue to obtain sufficient merchandise from our brand partners, and/or our ability to continue to offer permanent or temporary exclusive products of our brand partners;

● our ability to effectively manage our inventory and protect against inventory shrink;

● changes in the wholesale cost of our products and/or interruptions at our brand partners’ or third-party vendors’ operations;

● epidemics, pandemics or natural disasters, which could negatively impact sales;

● the possibility that new store openings and existing locations may be impacted by developer or co-tenant issues;

● our ability to attract and retain key executive personnel;

● the impact of climate change on our business operations and/or supply chain;

● our ability to successfully execute our common stock repurchase program or implement future common stock repurchase programs;

● a decline in operating results which could lead to asset impairment and store closure charges;

● other risk factors detailed in our public filings with the Securities and Exchange Commission, including risk factors contained in Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended

February 1, 2025, as such may be amended or supplemented in our subsequently filed Quarterly Reports on Form 10-Q (including this report).

Such forward-looking statements are subject to various risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict or quantify.

Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them.

However, there can be no assurance that our expectations, beliefs, and projections will result or be achieved.

Actual results may differ materially from these expectations due to changes in global, regional, or local economic, business, competitive, market, regulatory, and other factors, many of which are beyond our control.

We believe that these factors include but are not limited to those described under Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended January 31, 2026, as such risk factors may be updated from time to time in our periodic filings with the U.S.

Securities and Exchange Commission (“SEC”), and are accessible on the SEC's website at www.sec.gov.

Any forward-looking statements made by us in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report and are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report.

Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them.

We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements.

Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments, or other strategic transactions we may make.

Except to the extent required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

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and salons and authorized retail outlets for professional hair care products.

We developed a unique specialty retail concept that offers a broad range of brands and price points, select beauty services, and a convenient and welcoming shopping environment.

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 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 a leading destination for cosmetics, fragrance, skin care, hair care, wellness 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 1,500 Ulta Beauty 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;

We developed a unique specialty retail concept

that offers a broad range of brands and price points, select beauty services, and a convenient and welcoming shopping environment.

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 and delivering immersive and personalized experiences through our stores and 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.

In addition to our domestic operations, Ulta Beauty is expanding our presence internationally through a joint venture in Mexico, a franchise in the Middle East, and our subsidiary, Space NK, a luxury beauty retailer operating in the U.K.

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 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.

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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, and advertising.

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 2024 and into the third quarter of 2025, 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 2025 and the first quarter of 2026, 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, including existing and potential tariffs, have impacted consumer spending habits broadly, which we believe could contribute to lower sales trends throughout the remainder of fiscal 2025.

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

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.

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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.

We generally 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.

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 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 14th 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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● the location of new stores in existing store markets;

● competition and/or alternative distribution channels;

● competition / alternative distribution channels;

● our ability to respond on a timely basis to changes in consumer preferences;

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This presentation of items included in cost of sales may not be comparable to the way in which our competitors or other retailers compute their cost of sales.

Selling, general and administrative expenses include:

Selling, general and administrative (SG&A) expenses include:

● payroll, bonus, and benefit costs for retail store and corporate employees;

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

Interest on our credit facilities 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 quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31.

The Company’s third quarter in fiscal 2025 and 2024 ended on November 1, 2025 and November 2, 2024, respectively.

Our quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31 each year.

The Company’s first quarters in fiscal 2026 and 2025 ended on May 2, 2026 and May 3, 2025, respectively.

Our quarterly results of operations have varied in the past and are likely to do so again in the future.

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13 Weeks Ended

39 Weeks Ended

(Dollars in thousands)

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Operating income

Interest expense (income), net

Interest income, net

Income before income taxes and equity net loss of affiliate

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Comparable sales

(1) Excludes 84 stores in the U.K.

and Ireland operated by Space NK as of November 1, 2025.

13 Weeks Ended

(1) Includes 1,521 Ulta Beauty stores located in the U.S.

and 87 Space NK stores located in the U.K.

and Ireland as of May 2, 2026.

13 Weeks Ended

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Operating income

Interest expense (income), net

Interest income, net

Income before income taxes and equity net loss of affiliate

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Equity net loss of affiliate

Comparison of 13 weeks ended November 1, 2025 to 13 weeks ended November 2, 2024

Net sales increased $327.5 million, or 12.9%, to $2.9 billion for the 13 weeks ended November 1, 2025, compared to $2.5 billion for the 13 weeks ended November 2, 2024.

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

The comparable sales increase of 6.3% was driven by a 3.8% increase in average ticket and a 2.4% increase in transactions.

Gross profit increased $150.0 million, or 14.9%, to $1.2 billion for the 13 weeks ended November 1, 2025, compared to $1.0 billion for the 13 weeks ended November 2, 2024.

Gross profit as a percentage of net sales increased to 40.4% for the 13 weeks ended November 1, 2025, compared to 39.7% for the 13 weeks ended November 2, 2024.

The increase in gross profit margin was primarily due to lower inventory shrink and higher merchandise margin, partially offset by unfavorable channel mix.

Selling, general and administrative expenses

Selling, general and administrative (SG&A) expenses increased $158.7 million, or 23.3%, to $840.9 million for the 13 weeks ended November 1, 2025, compared to $682.3 million for the 13 weeks ended November 2, 2024.

SG&A expenses as a percentage of net sales increased to 29.4% for the 13 weeks ended November 1, 2025, compared to 27.0% for the 13 weeks ended November 2, 2024, primarily due to higher incentive compensation, store payroll and benefits, higher store expenses, and amortization of cloud-based software investments.

Pre-opening expenses

Pre-opening expenses were $5.3 million for the 13 weeks ended November 1, 2025, compared to $4.9 million for the 13 weeks ended November 2, 2024.

Interest expense (income), net

Interest expense, net was $4.1 million for the 13 weeks ended November 1, 2025, compared to interest income, net of $1.7 million for the 13 weeks ended November 2, 2024.

As of November 1, 2025 and November 2, 2024, we had $551.7 million and $199.7 million, respectively, 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 $73.4 million for the 13 weeks ended November 1, 2025 represents an effective tax rate of 24.1%, compared to $78.0 million of income tax expense representing an effective tax rate of 24.4% for the 13 weeks ended November 2, 2024.

Net income was $230.9 million for the 13 weeks ended November 1, 2025, compared to $242.2 million for the 13 weeks ended November 2, 2024.

The decrease in net income is primarily due to the $158.7 million increase in SG&A expenses, the $5.8 million increase in interest expense, net, and the $0.4 million increase in pre-opening expenses, partially offset by the $150.0 million increase in gross profit and the $4.6 million decrease in income taxes.

Comparison of 39 weeks ended November 1, 2025 to 39 weeks ended November 2, 2024

Net sales increased $686.4 million, or 8.8%, to $8.5 billion for the 39 weeks ended November 1, 2025, compared to $7.8 billion for the 39 weeks ended November 2, 2024.

The net sales increase was primarily due to increased comparable

sales, the acquisition of Space NK, and net new store contribution.

The comparable sales increase of 5.2% was driven by a 3.0% increase in average ticket and a 2.2% increase in transactions.

Gross profit increased $308.0 million, or 10.1%, to $3.4 billion for the 39 weeks ended November 1, 2025, compared to $3.1 billion for the 39 weeks ended November 2, 2024.

Gross profit as a percentage of net sales increased to 39.6% for the 39 weeks ended November 1, 2025, compared to 39.1% for the 39 weeks ended November 2, 2024.

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

Comparison of 13 weeks ended May 2, 2026 to 13 weeks ended May 3, 2025

Net sales increased $315.5 million, or 11.1%, to $3.2 billion for the 13 weeks ended May 2, 2026, compared to $2.8 billion for the 13 weeks ended May 3, 2025.

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 5.3% for the 13 weeks ended

May 2, 2026 was driven by a 3.7% increase in average ticket and a 1.6% increase in transactions.

The total comparable sales increase for the 13 weeks ended May 3, 2025 was 2.9%.

Gross profit increased $153.4 million, or 13.8%, to $1.3 billion for the 13 weeks ended May 2, 2026, compared to $1.1 billion for the 13 weeks ended May 3, 2025.

Gross profit as a percentage of net sales increased to 40.1% for the 13 weeks ended May 2, 2026 compared to 39.1% for the 13 weeks ended May 3, 2025.

The increase in gross profit margin was primarily due to lower inventory shrink and higher merchandise margin.

Selling, general and administrative expenses

SG&A expenses increased $300.3 million, or 15.1%, to $2.3 billion for the 39 weeks ended November 1, 2025, compared to $2.0 billion for the 39 weeks ended November 2, 2024.

SG&A expenses as a percentage of net sales increased to 27.0% for the 39 weeks ended November 1, 2025, compared to 25.5% for the 39 weeks ended November 2, 2024, primarily due to deleverage of store payroll and benefits, higher incentive compensation, and higher store expenses.

Selling, general and administrative (SG&A) expenses increased $104.1 million, or 14.6%, to $814.7 million for the 13 weeks ended May 2, 2026, compared to $710.6 million for the 13 weeks ended May 3, 2025, primarily due to the acquisition of Space NK.

SG&A expenses as a percentage of net sales increased to 25.8% for the 13 weeks ended May 2, 2026 compared to 24.9% for the 13 weeks ended May 3, 2025, primarily due to deleverage of corporate overhead due to strategic enterprise investments and store expenses, partially offset by leverage of advertising expenses.

Pre-opening expenses

Pre-opening expenses were $12.3 million for the 39 weeks ended November 1, 2025, compared to $12.0 million for the 39 weeks ended November 2, 2024.

Pre-opening expenses were $4.7 million for the 13 weeks ended May 2, 2026 compared to $1.8 million for the 13 weeks ended May 3, 2025.

Interest income, net

Interest income, net was $0.8 million for the 39 weeks ended November 1, 2025, compared to interest income, net of $13.1 million for the 39 weeks ended November 2, 2024.

As of November 1, 2025 and November 2, 2024, we had $551.7 million and $199.7 million, respectively, outstanding under our credit facilities.

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

Interest income, net was $0.7 million for the 13 weeks ended May 2, 2026 compared to $3.5 million for the 13 weeks ended May 3, 2025.

As of May 2, 2026, we had $144.9 million outstanding under our credit facilities.

We did not have any outstanding borrowings on the credit facilities as of May 3, 2025.

Income tax expense

Income tax expense of $257.9 million for the 39 weeks ended November 1, 2025 represents an effective tax rate of 24.4%, compared to $253.9 million of income tax expense representing an effective tax rate of 23.9% for the 39 weeks ended November 2, 2024.

Net income was $796.8 million for the 39 weeks ended November 1, 2025, compared to $807.8 million for the 39 weeks ended November 2, 2024.

The decrease in net income is primarily due to the $300.3 million increase in SG&A expenses, the $12.3 million decrease in interest income, net, and the $4.0 million increase in income taxes, partially offset by the $308.0 million increase in gross profit.

Income tax expense of $106.9 million for the 13 weeks ended May 2, 2026 represents an effective tax rate of 23.9%, compared to $99.6 million of income tax expense representing an effective tax rate of 24.6% for the 13 weeks ended May 3, 2025.

The lower income tax rate is primarily due to the purchase of transferable federal tax credits.

These federal tax credits were purchased at a negotiated discount, resulting in an income tax benefit recorded during the quarter.

Equity net loss of affiliate

Equity net loss of affiliate was $1.6 million for the 13 weeks ended May 2, 2026 compared to $0.6 million for the 13 weeks ended May 3, 2025, related to our joint venture in Mexico.

Net income was $340.5 million for the 13 weeks ended May 2, 2026, compared to $305.1 million for the 13 weeks ended May 3, 2025.

The increase in net income is primarily related to the $153.4 million increase in gross profit, partially offset by the $104.1 million increase in SG&A expenses, the $7.2 million increase in income tax expense, and the $2.9 million decrease in interest income, net.

Liquidity and capital resources

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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 November 1, 2025, February 1, 2025, and November 2, 2024, we had cash and cash equivalents of $204.9 million, $703.2 million, and $177.8 million, respectively.

As of May 2, 2026, January 31, 2026, and May 3, 2025, we had cash and cash equivalents of $166.3 million, $424.2 million, and $454.6 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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Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents

Operating activities

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 the first 39 weeks of fiscal 2025 compared to the first 39 weeks of fiscal 2024 was mainly due to the timing of accounts payable and accrued liabilities, partially offset by a larger increase in merchandise inventories in the first 39 weeks of fiscal 2025, the net increase in other assets and liabilities, and the decrease in net income.

Merchandise inventories, net were $2.7 billion at November 1, 2025 compared to $2.4 billion at November 2, 2024, representing an increase of $378.5 million or 16.0%.

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

● $158 million for new brand launches;

● $106 million for the acquisition of Space NK;

● $80 million for the addition of 63 net new Ulta Beauty stores opened since November 2, 2024.

The increase in net cash provided by operating activities in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 was mainly due to the increase in net income and the timing of accounts payable, accounts receivable, and prepaid expenses and other current assets, partially offset by a larger increase in merchandise inventories in the first quarter of fiscal 2026.

Merchandise inventories, net were $2.4 billion at May 2, 2026, compared to $2.1 billion at May 3, 2025, representing an increase of $264.9 million or 12.5%.

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.

Investing activities

We have historically used cash primarily for new, remodeled, relocated, and refreshed stores, supply chain investments, short-term investments, and investments in information technology systems.

Investing activities for capital expenditures were $243.3 million during the 39 weeks ended November 1, 2025, compared to $300.5 million during the 39 weeks ended November 2, 2024.

During the 39 weeks ended November 1, 2025, we opened 58 new stores, closed three stores, relocated four stores, and remodeled 24 stores, compared to the 39 weeks ended November 2, 2024, when we opened 57 new stores, closed five stores, relocated two stores, and remodeled 36 stores.

The increase in net cash used in investing activities in the first 39 weeks of fiscal 2025 compared to the first 39 weeks of fiscal 2024 was primarily due to the acquisition of Space NK in the second quarter of fiscal 2025.

Our future investments will depend primarily on the number of new, remodeled, and relocated stores, information technology systems, and supply chain investments we undertake and the timing of these expenditures.

Investing activities for capital expenditures were $58.3 million during the 13 weeks ended May 2, 2026 compared to $79.0 million during the 13 weeks ended May 3, 2025.

The following table presents a summary of consolidated store activities:

13 Weeks Ended

Stores opened

Stores remodeled

Stores relocated

The decrease in net cash used in investing activities in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 was primarily due to lower capital expenditures for supply chain and merchandising fixtures and proceeds from short-term investments.

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.

Financing activities

Financing activities include share repurchases, borrowing and repayment of our short-term debt, and capital stock transactions.

Financing activities include share repurchases, borrowing and repayment of 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 the first 39 weeks of fiscal 2025 compared to the first 39 weeks of fiscal 2024 was primarily due to borrowings from short-term debt and a decrease in the dollar amount of share repurchases.

As of November 1, 2025 and November 2, 2024, we had $551.7 million and $199.7 million, respectively, outstanding under our credit facilities.

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

The increase in net cash used in financing activities in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 was primarily due to an increase in share repurchases.

As of May 2, 2026 and January 31, 2026, we had $144.9 million and $62.3 million, respectively, outstanding under our credit facilities.

We did not have any outstanding borrowings on the credit facilities as of May 3, 2025.

Share repurchase program

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 earlier 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 from the share repurchase program that was authorized in March 2024.

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, including excise tax

Credit facility

Credit facilities

On August 27, 2025, we entered into Amendment No.

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and the other lenders party thereto.

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

Substantially all of the Company’s assets are pledged as collateral for outstanding borrowings under the Loan Agreement.

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 November 1, 2025 and November 2, 2024, the Company had $488.3 million and $199.7 million, respectively, of borrowings outstanding under this credit facility.

The weighted average interest rate was 6.42% and 7.15% for the 39 weeks ended November 1, 2025 and November 2, 2024, respectively.

As of February 1, 2025, there were no borrowings outstanding under the credit facility.

As of November 1, 2025, we were in compliance with all terms and covenants of 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.

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

As of May 2, 2026, there was $102.0 million outstanding under the Loan Agreement.

As of January 31, 2026 and May 3, 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.

2 unchanged sentences

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 November 1, 2025, there was $63.4 million outstanding under this credit facility.

As of November 1, 2025, Space NK was in compliance with all terms and covenants of the Facility Agreement.

As of May 2, 2026 and January 31, 2026, there was $42.9 million and $62.3 million, respectively, outstanding under the Facility Agreement.

As of May 2, 2026, we were in compliance with all terms and covenants of the Loan Agreement and Facility Agreement.

Our business is subject to seasonal fluctuation.

10 unchanged sentences

Actual results may differ from these estimates.

There have been no significant changes to the critical accounting policies and estimates included in our Annual Report on Form 10-K for the fiscal year ended February 1, 2025.

There have been no significant changes to the critical accounting policies and estimates included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

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-Q

Item 2. Management’s Discussion and Analysis