Ulta Beauty, Inc.’s ULTA shares have plunged 24.5% in the past six months, underperforming the Zacks industry’s decline of 18.1%. The stock has also underperformed the broader sector’s 3.3% decline and the S&P 500 Index’s 7.7% increase in the same period.
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During the same period, Ulta Beauty has trailed the performance of Sally Beauty Holdings, Inc. SBH, The Estee Lauder Companies Inc. EL and Interparfums, Inc. IPAR. Shares of EL and SBH have plunged 22% and 12.1%, respectively, in the past six months, while shares of IPAR have risen 16.6%.
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ULTA Stock Falls on Macro Threats & Moderating Growth
Ulta Beauty faces several near-term headwinds stemming from a challenging macroeconomic environment, rising competitive intensity and increasingly difficult year-over-year comparisons. At its first-quarter fiscal 2026 earnings call, management noted that the operating environment remains pressured by economic uncertainty, persistent inflation and higher fuel prices. These factors are making value a more important consideration for consumers when making purchasing decisions. At the same time, elevated fuel costs have pushed transportation expenses higher, highlighting the impact of broader economic conditions on the business.
SG&A expenses rose 14.6% year over year to $815 million in the first quarter, adding further strain to the company’s cost structure. The increase was largely due to the ongoing investments supporting the Ulta Beauty Unleashed strategy and spending initiatives implemented during the second half of fiscal 2025 that have not yet completed one year. As a result, the company continues to face elevated operating costs and challenging expense comparisons.
In addition, Ulta Beauty operates in a highly competitive market where rivals are expected to intensify efforts to capture market share. This dynamic is likely to increase execution pressure and require the company to perform at a higher level to protect its competitive position and sustain performance throughout the remainder of the year.
Per the last earnings call, management expects growth trends to moderate in the back half of the year as the company laps a period of stronger prior-year performance. This tougher comparison base is likely to create a more challenging growth environment and could slow the pace of expansion relative to earlier periods.
ULTA Drives Growth Through Loyalty, AI and Global Expansion
Despite these near-term challenges, Ulta Beauty continues to benefit from several long-term growth drivers that support customer engagement, market share gains and profitable growth. The company’s growth is supported by its differentiated beauty ecosystem, which combines a broad mass-to-luxury assortment, omnichannel convenience, strong brand partnerships and a large loyalty base. These strengths help the company attract a wide range of beauty consumers, support market share gains in prestige beauty and reinforce its position in mass beauty.
A major driver is the Ulta Beauty Rewards program, which has expanded to nearly 47 million members. This large first-party database enables more personalized marketing, better product recommendations and improved customer engagement across stores, digital channels and the app. As personalization becomes more important in beauty retail, Ulta Beauty’s loyalty platform remains a key competitive advantage.
Ulta Beauty is also strengthening growth through digital and social commerce. Investments in e-commerce, same-day delivery, buy-online-pickup-in-store and emerging platforms such as TikTok Shop allow the company to meet customers where they discover and purchase beauty products. Events like Ulta Beauty World further support brand awareness, social engagement and customer acquisition, particularly among younger consumers.
International expansion provides another long-term growth avenue. Space NK continues to build momentum in the U.K. and Ireland, while Ulta Beauty is expanding in Mexico and the Middle East through new stores and partnerships. These markets offer opportunities to extend brand reach and diversify growth beyond the United States.
Artificial intelligence is also becoming an important enabler. Ulta AI is designed to improve discovery, personalization and the online shopping journey, while broader AI and automation initiatives can enhance operational efficiency over time.
How Have Estimates Shaped Up for ULTA?
The Zacks Consensus Estimate for ULTA’s current quarter earnings per share has remained unchanged at $6.16, and the current year earnings per share have improved by 1 cent to $28.67 per share in the past seven days. This reflects steady analyst confidence in Ulta Beauty's earnings outlook.
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Ulta Beauty’s Valuation Picture
Ulta Beauty is currently trading at a forward 12-month P/E multiple of 15.31, slightly above the industry average of 14.71 but well below the S&P 500 multiple of 21.32. The stock is also trading below its 12-month median P/E of 20.25.
ULTA’s current valuation suggests investors remain cautious about near-term growth prospects, while still assigning the stock a modest premium for its market position and long-term growth potential.
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How to Play ULTA Stock?
Ulta Beauty is navigating a period of heightened macroeconomic uncertainty and competitive pressure, which may temper near-term performance. However, the company continues to benefit from a differentiated business model built around a strong loyalty ecosystem, omnichannel capabilities, exclusive brand partnerships and expanding digital engagement. Ongoing investments in personalization, artificial intelligence and international expansion provide additional avenues for long-term growth. Given the balance between near-term headwinds and long-term growth opportunities, investors may prefer to remain on the sidelines until there is greater visibility into the pace of growth and margin trends.
At present, ULTA carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The Estee Lauder Companies Inc. (EL): Free Stock Analysis Report
Ulta Beauty Inc. (ULTA): Free Stock Analysis Report
Sally Beauty Holdings, Inc. (SBH): Free Stock Analysis Report
Interparfums, Inc. (IPAR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).