Ulta Beauty Stock Surges 25% in 2025 on Strong Sales Growth and Margin Expansion
Ulta Beauty's stock has surged by approximately 25% so far this year, as investors show growing confidence in the specialty beauty retailer's improving trends. The company's comparable-sales growth, gross margin, store expansion, and omnichannel initiatives are key factors driving its stock performance.
In the second quarter of 2025, Ulta Beauty's net sales increased by 9.3% to around $2.8 billion, with comparable sales rising by 6.7%. The company's gross margin also expanded to 39.2% during this period, boosted by lower shrink and stronger merchandise margin. Ulta Beauty operates about 1,500 U.S. stores and offers e-commerce and salon services, aiming to be a one-stop destination for various beauty products.
Despite some SG&A deleverage, Ulta Beauty's earnings per share (EPS) grew by 9% to $5.78 in the second quarter of 2025. The company expects its fiscal 2025 net sales to range between $12 billion and $12.1 billion, with comparable-sales growth of 2.5% to 3.5%, operating margin of 11.9% to 12%, and EPS of $23.85 to $24.30.
Ulta Beauty faces competition from retailers such as Sephora (owned by LVMH), Walmart, Gap, and Kohl's, as well as the loss of partners like Target. These competitors have influenced Ulta Beauty's stock performance, with a 1% drop following Target's partnership end and a subsequent 65% gain after strategic adjustments.
Ulta Beauty's stock trades around 23 times its full-year EPS guidance midpoint, reflecting investors' confidence in the company's growth prospects. However, the stock's valuation does not leave much room for error if growth slows or margins stagnate. The company's ability to maintain its comparable-sales growth, gross margin, and store expansion will be crucial in determining its future stock performance. Ulta Beauty has also been active in repurchasing its stock, with approximately $110 million bought in the second quarter of 2025 and around $468 million year to date, with about $2.2 billion still authorized under its program.
