What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-27 compared with 2026-06-02 · 80 added, 62 removed, 194 unchanged (42% 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.

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, share repurchases, 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.

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drug stores and mass merchandisers for mass products;

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.

and salons and authorized retail outlets for professional haircare 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 their shopping experience.

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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.

operations (“Ulta U.S.”) make us the largest specialty beauty retailer in the United States and the premier beauty destination for cosmetics, fragrance, skincare, bath and body products, haircare, 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.

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.

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

The continued growth of our business and any future increases in net sales, net income, and cash flows are 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;

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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 market expanded in 2025 and the first half of 2026, supported by ongoing consumer engagement with and resilience in 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 in the U.S.

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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 guest, 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 customer, which is at the time of shipment or

guest pickup.

We provide refunds for merchandise returns within 30 days from the original purchase date.

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Company coupons and other incentives are recorded as a reduction of net sales.

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

Other revenue includes the 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.

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● the location of new stores in existing store markets;

● competition / alternative distribution channels;

● competition and/or alternative distribution channels;

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

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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 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.

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 are structured as asset-based lending instruments.

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

Income tax expense reflects the federal and foreign statutory tax rate 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.

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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.

The Company’s second quarter in fiscal 2026 and 2025 ended on August 1, 2026 and August 2, 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

26 Weeks Ended

(Dollars in thousands)

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Operating income

Interest income, net

Interest expense (income), net

Income before income taxes and equity net loss of affiliate

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Comparable sales

(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

26 Weeks Ended

(Percentage of net sales)

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Operating income

Interest income, net

Interest expense (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 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.

Comparison of 13 weeks ended August 1, 2026 to 13 weeks ended August 2, 2025

Net sales increased $247.2 million, or 8.9%, to $3.0 billion for the 13 weeks ended August 1, 2026, compared to $2.8 billion for the 13 weeks ended August 2, 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.

The comparable sales increase of 3.8% for the 13 weeks ended August 1, 2026 was primarily driven by a 3.9% increase in average ticket.

The total comparable sales increase for the 13 weeks ended August 2, 2025 was 6.7%.

Gross profit increased $95.3 million, or 8.7%, to $1.2 billion for the 13 weeks ended August 1, 2026, compared to $1.1 billion for the 13 weeks ended August 2, 2025.

Gross profit as a percentage of net sales decreased to 39.1% for the 13 weeks ended August 1, 2026, compared to 39.2% for the 13 weeks ended August 2, 2025.

The decrease in gross profit margin was primarily due to the impact of the Space NK business mix.

Selling, general and administrative 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.

Selling, general and administrative (SG&A) expenses increased $61.0 million, or 8.2%, to $802.8 million for the 13 weeks ended August 1, 2026, compared to $741.7 million for the 13 weeks ended August 2, 2025.

SG&A expenses as a percentage of net sales decreased to 26.4% for the 13 weeks ended August 1, 2026, compared to 26.6% for the 13 weeks ended August 2, 2025, primarily due to lower incentive compensation and leverage of corporate overhead due to strategic enterprise investments, partially offset by higher advertising expenses.

Pre-opening expenses

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 $0.7 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.

Pre-opening expenses were $4.5 million for the 13 weeks ended August 1, 2026, compared to $5.1 million for the 13 weeks ended August 2, 2025.

Interest expense (income), net

Interest expense, net was $3.7 million for the 13 weeks ended August 1, 2026, compared to interest income, net of $1.4 million for the 13 weeks ended August 2, 2025.

As of August 1, 2026 and August 2, 2025, we had $339.6 million and $289.1 million, respectively, outstanding under our credit facilities.

Income tax expense

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.

Income tax expense of $91.9 million for the 13 weeks ended August 1, 2026 represents an effective tax rate of 24.6%, compared to $84.8 million of income tax expense representing an effective tax rate of 24.5% for the 13 weeks ended August 2, 2025.

Equity net loss of affiliate

Equity net loss of affiliate was $2.1 million for the 13 weeks ended August 1, 2026 compared to $0.6 million for the 13 weeks ended August 2, 2025, and was related to our joint venture in Mexico in both periods.

Net income increased 8.1% to $282.0 million for the 13 weeks ended August 1, 2026, compared to $260.9 million for the 13 weeks ended August 2, 2025.

The increase in net income is primarily due to the $95.3 million increase in gross profit, partially offset by the $61.0 million increase in SG&A expenses, the $7.1 million increase in income taxes, and the $5.1 million increase in interest expense, net.

Comparison of 26 weeks ended August 1, 2026 to 26 weeks ended August 2, 2025

Net sales increased $562.7 million, or 10.0%, to $6.2 billion for the 26 weeks ended August 1, 2026, compared to $5.6 billion for the 26 weeks ended August 2, 2025.

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

The comparable sales increase of 4.6% for the 26 weeks ended August 1, 2026 was driven by a 3.8% increase in average ticket and a 0.8% increase in transactions.

The total comparable sales increase for the 26 weeks ended August 2, 2025 was 4.7%.

Gross profit increased $248.7 million, or 11.3%, to $2.5 billion for the 26 weeks ended August 1, 2026, compared to $2.2 billion for the 26 weeks ended August 2, 2025.

Gross profit as a percentage of net sales increased to 39.6% for the 26 weeks ended August 1, 2026, compared to 39.1% for the 26 weeks ended August 2, 2025.

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

Selling, general and administrative expenses

SG&A expenses increased $165.1 million, or 11.4%, to $1.6 billion for the 26 weeks ended August 1, 2026, compared to $1.5 billion for the 26 weeks ended August 2, 2025.

SG&A expenses as a percentage of net sales increased to 26.1% for the 26 weeks ended August 1, 2026, compared to 25.8% for the 26 weeks ended August 2, 2025, primarily due to higher corporate overhead due to strategic enterprise investments and higher store expenses, partially offset by lower incentive compensation.

Pre-opening expenses

Pre-opening expenses were $9.2 million for the 26 weeks ended August 1, 2026, compared to $6.9 million for the 26 weeks ended August 2, 2025.

Interest expense (income), net

Interest expense, net was $3.0 million for the 26 weeks ended August 1, 2026, compared to interest income, net of $5.0 million for the 26 weeks ended August 2, 2025.

As of August 1, 2026 and August 2, 2025, we had $339.6 million and $289.1 million, respectively, outstanding under our credit facilities.

Income tax expense

Income tax expense of $198.7 million for the 26 weeks ended August 1, 2026 represents an effective tax rate of 24.2%, compared to $184.4 million of income tax expense representing an effective tax rate of 24.5% for the 26 weeks ended August 2, 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.

These federal tax credits were purchased at a negotiated discount, resulting in an income tax benefit recorded during the 26 weeks ended August 1, 2026.

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.

Equity net loss of affiliate was $3.7 million for the 26 weeks ended August 1, 2026 compared to $1.2 million for the 26 weeks ended August 2, 2025, and was related to our joint venture in Mexico in both periods.

Net income increased 10.0% to $622.5 million for the 26 weeks ended August 1, 2026, compared to $565.9 million for the 26 weeks ended August 2, 2025.

The increase in net income is primarily due to the $248.7 million increase in gross profit, partially offset by the $165.1 million increase in SG&A expenses, the $14.3 million increase in income taxes, the $8.0 million increase in interest expense, net, and the $2.4 million increase in equity net loss of affiliate.

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 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.

As of August 1, 2026, January 31, 2026, and August 2, 2025, we had cash and cash equivalents and short-term investments of $213.5 million, $494.2 million, and $242.7 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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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 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.

The increase in net cash provided by operating activities in the first 26 weeks of fiscal 2026 compared to the first 26 weeks of fiscal 2025 was mainly due to the increase in net income, a smaller increase in merchandise inventories in the first 26 weeks of fiscal 2026, and the timing of accounts receivable, prepaid expenses, accounts payable, and accrued liabilities.

Merchandise inventories, net were $2.4 billion at August 1, 2026, remaining flat as compared to $2.4 billion at August 2, 2025, primarily due improved inventory management, partially offset by inventory to support new brand launches and the addition of new stores.

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 $58.3 million during the 13 weeks ended May 2, 2026 compared to $79.0 million during the 13 weeks ended May 3, 2025.

Investing activities for capital expenditures were $139.5 million during the 26 weeks ended August 1, 2026, compared to $156.0 million during the 26 weeks ended August 2, 2025.

The following table presents a summary of consolidated store activities:

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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.

The decrease in net cash used in investing activities in the first 26 weeks of fiscal 2026 compared to the first 26 weeks of fiscal 2025 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.

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 revolving credit facilities, and capital stock transactions.

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

The increase in net cash used in financing activities in the first 26 weeks of fiscal 2026 compared to the first 26 weeks of fiscal 2025 was primarily due to an increase in share repurchases, partially offset by borrowings from short-term debt.

As of August 1, 2026, January 31, 2026, and August 2, 2025, we had $339.6 million, $62.3 million, and $289.1 million, respectively, outstanding under our credit facilities.

Short-term debt at the end of the second quarter of fiscal 2026 was primarily to support working capital needs and ongoing capital allocation priorities, including share repurchases.

Share repurchase program

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 share repurchase program that was authorized in March 2024.

The October 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts under the share repurchase program 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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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 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.

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.

As of August 1, 2026 and August 2, 2025, the Company had $287.0 million and $237.7 million, respectively, of borrowings outstanding under this credit facility.

The weighted average interest rate was 6.05% and 6.89% for the 26 weeks ended August 1, 2026 and August 2, 2025, respectively.

As of January 31, 2026, there were no borrowings outstanding under this credit facility.

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.

The facility is secured by the assets of Space NK and contains a requirement to maintain an interest coverage ratio of 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 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.

As of August 1, 2026 and August 2, 2025, there was $52.6 million and $51.4 million, respectively, outstanding under this credit facility.

As of August 1, 2026, we were in compliance with all terms and covenants of the Loan Agreement and Facility Agreement.

Our business is subject to seasonal fluctuation.

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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-Q

Item 2. Management’s Discussion and Analysis