With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

America's Most Innovative Companies

Industries included in the sector are automotive retail, general merchandisers, internet retail, and specialty retail.

Fortune Sector Leaders: Retailing

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 300 companies on this list are transforming industries from the inside out.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-451-Ulta Beauty

Pandemic lockdowns and the resulting work-from-home movement made 2020 an extremely tough year for Ulta, with sales falling 17% compared to the year before. Founded by the former president of Osco Drug, the chain of beauty stores carries a wide variety of cosmetics, haircare, and skincare brands. Over the past decade, Ulta's stock produced an average annual return to shareholders of 24%. The company started 2021 strong, reporting that comparable sales were up 65% compared to the same three months last year.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-418-Ulta-Beauty

Bucking wider retail trends, Ulta added a net of 80 stores during the year, while revenue grew by 10%.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

Everybody loves an up-and-comer: 2018's top three-year performers in revenues, profits, and stock returns.

100 Fastest-Growing Companies

This year's Fortune 500 marks the 63rd running of the list.

Everybody loves an up-and-comer: 2017's top three-year performers in revenues, profits, and stock returns.

Fastest-growing Companies

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Current Streak

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Website

Revenue, Net Income

Revenue past four quarters ($M)

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Growth Rates And Ranks

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Ulta has capitalized on the beauty craze, operating a chain of stores where shoppers can peruse the latest brow gels, lash extensions, and serums.The company’s branded and private label beauty products include cosmetics, fragrance, hair care, skin care, bath and body products, professional hair products, and salon styling tools. The company carries over 25,000 products across 600 brands in more than 1,400 stores. Ulta’s CFO told Fortune that Ulta’s loyalty program, with over 44 million members, has helped it develop a following to compete effectively against other mall-based stores and e-commerce competitors.

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Q3 2025

Ulta Beauty (ULTA): Company Profile, Stock Price, News, Rankings

legacy

Ulta Beauty

ulta beauty

Good afternoon, and welcome to Ulta Beauty's Conference Call to discuss results for the Ulta Beauty Third Quarter 20 24 Earnings Results. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ms.

Kiley Rollins, Vice President of Investor Relations. Ms. Rollins, you may proceed.

Thank you, Jillian. Good afternoon, everyone, and thank you for joining us for a discussion of Ulta Beauty's results for the Q3 of fiscal 2024. Hosting our call today are Dave Kimball, Chief Executive Officer and Paula Ojivo, Chief Financial Officer. Keshia Steelman, President and Chief Operating Officer, will join us for the Q and A session. Before we begin, I'd like to remind you of the company's safe harbor language.

Many of our remarks today will contain forward looking statements, which speak only as of today, December 5, 2024. We refer you to our earnings release and SEC filings, where you will find a number of factors, which could cause actual results to differ materially from these forward looking statements. We'll begin this afternoon with prepared remarks from Dave and Paula. Following our prepared comments, we'll open the call for questions. As always, the IR team will be available for any follow-up questions after the call.

Now, I'd like to turn the call over to Dave. Dave?

Thank you, Kiley, and good afternoon, everyone. We appreciate your interest in Ulta Beauty. Our team delivered improved performance for this quarter with better than expected sales and profitability. For the quarter, net sales increased 1.7% to $2,500,000,000 and comparable sales increased 0.6%. Diluted EPS increased 1.4% to $5.14 per share.

As we shared on our last call, we are navigating a number of headwinds including the normalization of the U. S. Beauty category, a dynamic consumer environment and elevated competition, particularly in prestige beauty. We are starting to see benefit from actions we are taking to reinforce our market position and improve our performance. And while the headwinds have not abated, we are making progress.

In the Q3, our prestige market share trends improved, resulting in flat market share this quarter based on Turkana data for the 13 weeks ended November 2, 2024. The trend was driven primarily by improvements in makeup and hair and we continue to see strength in fragrance and skincare. Our share performance in mass beauty was consistent with the Q2. Comp growth improved from the 2nd quarter trend, driven by stronger transaction trends across both stores and e commerce channels. We continue to expand our loyalty program, ending the quarter with 44,400,000 active members, 5% more than last year.

We continued to convert new members, we reactivated more lapsed members, and we improved existing member retention. Our marketing strategies to support our tentpole events and drive relevance and buzz delivered double digit growth in earned media value and stronger sentiment. And we made progress to optimize our new ERP system and help our teams adapt to new processes, balance inventories across the network and deliver a better guest experience. Our teams are working hard to strengthen our market position and I want to thank all of our associates for continuing to deliver great guest experiences while working collaboratively to drive improved performance in a dynamic operating environment. Turning to performance by category, fragrance was our strongest category, delivering high single digit comp growth driven by men's fragrance, gender neutral fragrances and new products, including new fall and holiday gift sets.

The growth of men's fragrance was fueled primarily by newness from Armani and YSL and the appeal of established franchises from Jean Paul Gaultier and Valentino. Consumer interest in gender neutral scents is increasing in our assortment including Billie Eilish and Noyes, an exclusive fragrance lush launched this summer is driving guest engagement. New women's brands, Kylie Jenner and Orabella, both exclusive to Ulta Beauty and new women's fragrances from Valentino, YSL and NEST are also contributed to overall category growth. The skincare category delivered mid single digit comp growth this quarter as strong growth in body care was partially offset by a decline in prestige skincare. Mass skincare was flat.

The strong performance of body care was driven in large part by newer brand, Soul Vejinairo, which continues to engage guests with exciting innovation and exclusivity and Touchland, which introduced compelling newness. In prestige skincare, newness from brands Ole Henriksen, Shasu, Dine Beauty and others resonated with guests, while engagement from Naturium, Bubble and La Roche Posay delivered growth in the mass skincare category. Comp sales in the makeup category decreased in the low single digit range, driven primarily by softness in mass makeup. Strong growth from recently relaunched Ulta Beauty collection was offset by certain brands lapping space expansion, strong innovation or social media engagement last year. Prestige makeup was flat.

New prestige brands Charlotte Tilbury, ILIAP Beauty and Dibs Beauty resonated with guest and compelling product newness combined with in store investments delivered growth for established brands, MAC and Clinique. Promotional events during the quarter, including 21 Days of Beauty and Fall Hall performed well, driving growth for several makeup brands, while our engaging Wicked collaboration was well received, highlighted by exclusive brand, REM Beauty. Comp sales for the hair category also decreased in the low single digit range. Exciting newness from Matrix, Way, Divvy and Odell delivered growth for the category, while Redken continued to drive healthy guest engagement with their hero product lines. In hair tools, new products from Shark Beauty and Dyson resonated with guests.

This growth was offset by softness in key brands with expanded distribution and limited newness this year. Our services business delivered low single digit comp growth, primarily driven by engagement in core services, including color, styling and hair treatments. Ear piercing and makeup services also performed well. And our salon back bar takeovers, which give stylists an opportunity to introduce brands to guests, continued to drive product attachment and new guest acquisition for participating brands. We are seeing improvements in our business and we are focused on strengthening our market position and performance further.

In October, we shared our refreshed strategic framework designed to lean into our existing strengths, while also driving innovation to meet the evolving needs of beauty enthusiasts. As the beauty destination of a lifetime, we intend to drive profitable growth and market share leadership in beauty and wellness over the longer term through curating the best of all things beauty and wellness for all beauty enthusiasts, fostering authentic empowering human connections that inspire, delight and engage at every touch point, engaging our guests wherever they want to shop by expanding our reach through seamless and immersive omnichannel experiences and building lifelong loyalty and brand love through member growth and personalization. We are confident our focus on these foundational areas will drive stronger revenue and earnings growth over the long term. In the near term, we are addressing key areas to reinforce our competitive position. Let me share some highlights of the progress made this quarter, starting with our efforts to strengthen our assortment.

We are enhancing our brand portfolio to drive category growth. During the Q3, we launched new makeup brands, ILIA Beauty, Dibs Beauty and RMS Beauty, as well as emerging skincare brand, Oak Essentials. Additionally, we expanded our wellness offerings with emerging brands, the Honey Pot and Joylocks. Looking ahead, we have an exciting pipeline of brand launches planned for the Q4, including the recently announced prestige skincare brand Tatcha, celebrated for balancing timeless Japanese botanicals with proven clinical ingredients, XO Chloe, an exclusive fragrance brand created by Khloe Kardashian and Apothecary, an emerging wellness brand. In addition to new brands, we launched 2 exciting exclusive collaborations this quarter.

First, as the exclusive beauty retail partner with NBC Universal's pictures for the movie Wicked, we worked with key brands to develop a limited edition collection of products across multiple price points and categories. The Wicked inspired collection features products from leading brands including REM Beauty by Ariana Grande and Beekman 1802, both of which are exclusive to Ulta Beauty as well as OPI and Scunci among others. With immersive in store experiences and engaging displays, Wicked came to life in Ulta Beauty stores through our digital channels and through Ulta Beauty at Target. 2nd, we launched an exclusive and a disruptive beauty offering of the beloved Mini Brands, which offers miniature versions of popular consumer brands. This first ever beauty mini brands collection includes 68 tiny replicas of best selling products from 13 brands, including e.

L. F, NYX, Drybar and Supergroup. Both of these unique collaborations are driving strong sales, awareness, traffic and engagement, especially with Gen Z and millennial members. As we discussed at our recent Investor Day, engaging guest experiences drive differentiation, loyalty and meaningful business value and we are focused on creating authentic personalized experiences across all our channels. In Q3, we hosted more than 13,000 in store events, including unique celebrity and brand founder events, multi branded events and skincare focused events.

We also expanded our salon event, the workshop to more stores and invited guests to learn how to create salon worthy blowouts, while receiving customized coaching and personalized recommendations from our talented in store stylists. We are enhancing our digital experiences to drive traffic and sales. During the quarter, key online activations drove guest engagement and our expanded sampling program delivered double digit sales growth. Our digital merchandising strategies including enhanced search, guided navigation and enriched product pages drove conversion and our site optimization efforts are improving the guest experience and delivering stronger conversion trends. Importantly, we continued to drive increased app adoption.

In the Q3, we saw double digit growth in member engagement with the app, which accounted for about 2 thirds of our e commerce sales in Q3, up about 600 basis points from last year. We continue to introduce new digital experiences and resources to drive discovery and trial. This quarter, we enhanced our suite of virtual try on and AI enabled skin and hair analysis experiences with the launch of Glam Lab 2.0, which includes a new 3 d engine to enhance precision and stability, shoppable makeup looks and a new user interface that includes sharing capabilities. We also launched new digital buying guides that amplify search engine optimization while providing guests with educational content, beauty tips and product recommendations. To deepen the meaningful connection we have with beauty enthusiasts, we launched Yubi Community, a welcoming, inclusive digital forum for guests to connect, learn, empower and engage in the immersive world of beauty to foster authentic connections.

Launched in October, our community amplifies the intersection of beauty, wellness and joy and our user count is already 3 times our initial target confirming the meaningful role Ulta Beauty plays in our members' lives. With more than 44,000,000 active members, Ulta Beauty Rewards is an unmatched strategic asset that provides us with unique consumer insights to drive sales. In Q3, we expanded personalization across digital channels with enhanced product recommendations, replenisher reminders, site experiences and retargeted in social channels. Leading into targeted lifecycle campaigns in both owned and paid channels, we reactivated members with greater efficiency. Additionally, we grew our platinum and diamond member base, leveraging unique incentives like exclusive and early access to key events and brand launches, gifting and personalized offers that drive engagement.

Platinum and Diamond members shop more frequently and spend more each visit and continue to retain at best in class rates. Increasingly, social relevance drives authentic customer connection and brand advocacy, especially in beauty and we're evolving to position social at the center of our marketing strategies to accelerate browse and earned media value growth. During the Q3, we leveraged our marketing and social capabilities to lean into emerging trends, amplify key growth brands and activate new trend focused events. We also engaged talent from our UB Collective, our affiliate program and Ulta Beauties, our new associate ambassador program, as well as key brand founders to support key brand launches, exclusive collaborations and tentpole events in new and innovative ways across social channels to drive guest buzz and engagement. These efforts delivered accelerated EMV growth, increased impression and expanded key brand health metrics.

We continue to enhance our product capabilities to grow our retail media network, UB Media. We recently partnered with e commerce tech company, Rocket, to introduce AI non endemic ads for products and services outside the beauty category. And we are partnering with Roblox, the ultimate virtual universe to create innovative the ultimate virtual universe to create innovative advertising opportunities for our partners. Over the years, our Ultaverse has grown into one of the largest beauty games on Roblox, attracting over 11,000,000 visits. With growing interest from beauty brands to participate in our Ultaverse, we're unlocking new possibilities at the intersection of gaming, innovation and media to bring those brands to life in exciting new ways through our UB media capabilities.

Now leveraging lessons in the second quarter, we continue to evolve and tailor our promotional strategies to reiterate our value offering and drive sales and traffic. We began the quarter with a new hair event showcasing the glossy hair trend. Replacing last year's fall gorgeous hair event, this event featured a strong promo offer, new and exclusive items from Dyson and a spotlight on gloss and shine products. Especially strong in stores, the new event exceeded our expectations and drove strong results for participating brands. At the end of August, we brought back our beloved 21 Days of Beauty event.

New beauty steals, member only events and bonus offers combined with robust marketing and social support, 21 Days of Beauty delivered strong growth versus last year's event. We wrapped up the quarter with a successful fall hall event, which drove mass engagement and new member acquisition with compelling offers that surprised and delighted guests. In addition to strengthening and evolving our merchandising tentpole events, we optimized our loyalty offers, proactively planning the timing, type and target audience of these offers. As a result, our promotional effectiveness improved from the first half trend. Shifting now to our plans and expectations for holiday.

The formal holiday season is in full flight and while we're encouraged by our performance through Cyber Monday, we have several significant holiday sales weeks still ahead. While consumers continue to spend, our insights suggest that economic concerns are driving a greater focus on value. With our diverse assortment of products and price points, compelling offers and convenient omnichannel touch points, we are well positioned to support our guests as they celebrate the season and our teams are excited, engaged and ready to help them deliver a joyful holiday. Our holiday campaign this year is find joy in the present. A reminder of the joy that comes not only from gifts of beauty, but from the big and small moments that drive authentic emotional connection.

With the goal of driving deeper emotional engagement, our campaign is supported with robust integrated activation across media, member marketing, PR and social channels, as well as festive experiences in stores and on our digital platforms. We have strategies in place to fortify our competitive positioning and manage through the compressed holiday selling season. We are transforming our channels into a concierge for all things holiday, providing greater value to consumers with real time beauty solutions, gift guides and tips tailored to our guests' needs and creating fun experiences that drive awareness and make Ulta Beauty the go to destination for the holidays. Our merchandising team has created an exciting holiday assortment with a strong focus on newness and exclusives, balanced with value driven holiday kits and core items that make great gifts. Whether guests wants to gift others or treat themselves, we have thoughtfully curated options across every category and budget.

Our corporate and supply chain teams have been working hard all year to ensure Ulta Beauty is ready to bring our guests to enjoy this holiday season. And our store teams are ready to bring the holiday to life for our guests with new in store events and demonstrations to build guest connection and drive sales and traffic. And with BOPIS, same day delivery options and new for this holiday, our participation in DoorDash and soon to be launched Instacart Marketplaces, it's never been easier or more convenient to shop at Ulta Beauty. With our engaging holiday messaging, incredible holiday assortment, knowledgeable associates ready to provide guidance and recommendations, new innovative digital tools and multiple ways to shop, I'm confident we are well positioned to deliver another successful holiday season. In summary, I am encouraged by the improving trends we are seeing in the business and optimistic about our holiday plans.

We believe the beauty category will remain resilient and we are confident the actions we are taking to deliver stronger performance combined with our outstanding associates who are committed to offering guests authentic inclusive experiences across all of our touch points will enable us to reinforce our market position and drive long term profitable growth. Now before Paula discusses our financial results, I want to share that Monica Arnado, Chief Merchandising Officer has announced her plan to retire from Ulta Beauty in the spring of 2025. Since joining Ulta Beauty in 2017, Monica has built an outstanding team and elevated our assortment in ways that have helped us deliver remarkable sales and market share growth, while furthering our mission to be our guests' most loved beauty destination. I want to thank Monica for everything she has contributed as a member of our executive team and for the impact she has had on our organization. While we work to identify Monica's successor, she is fully committed to supporting her team and Ulta Beauty with a successful transition.

And now, I will turn the call over to Paula for a discussion of the financial results. Paula?

Thanks, Dave, and good afternoon, everyone. I want to echo Dave's sentiments and congratulate Monica. Monica has been a trusted leader and steadfast ambassador of our brand, and we are so grateful for all of her contributions. Now turning to our financials. I'll begin with a discussion of our Q3 financial results and then provide more color on our Q4 and full year expectations.

For the Q3, we delivered better than expected performance across the P and L, reflecting stronger top line growth, continued financial discipline and expense management and favorable shrink trends. Net sales for the quarter increased 1.7%. Sales contribution from new stores and a 0.6% increase in comp sales was partially offset by lower other revenue. During the quarter, we opened 28 new stores, closed 2 stores and remodeled 27 stores. The comp sales increase was driven by a 0.5% increase in transactions and a 0.1% increase in average ticket.

Other revenue declined $5,000,000 to $48,000,000 primarily due to an increase in deferred revenue related to our loyalty program, driven by the expansion of our member engagement efforts, which were partially offset an increase in income from our credit card program. Looking at the cadence of sales throughout the quarter. Comp sales in August decreased slightly, primarily due to a shift in timing of our semiannual 21 Days of Beauty event, which resulted in stronger comp performance in September. October trends were positive, but softened compared to the previous period. From a channel perspective, our e commerce channel delivered mid single digit sales growth.

The sales trend in C. O. P. Stores improved from the Q2, decreasing modestly compared to last year. For the quarter, gross margin decreased 20 basis points to 39.7% compared to 39.9% last year.

The decline was primarily due to deleverage of fixed costs and lower other revenue, which was partially offset by favorable channel mix due to lower e commerce shipping costs and lower shrink. Lower revenue growth resulted in deleverage of store and supply chain fixed costs. Additionally, more new store openings and the expansion of our supply chain network pressured these areas. As a percentage of sales, inventory shrink was lower than last year. Our investments in Secure Fragrance Fixtures combined with new inventory management processes and enhanced training for our field teams are helping us control inventory shrink.

Year to date, shrink as a percentage of sales is roughly flat with last year, and we continue to expect shrink will be flat for the full year. Merchandise margin was flat with lower inventory reserves primarily related to the relaunch of Ulta Beauty Collection, offset by unfavorable brand mix. Moving to expenses. SG and A increased 3.2 percent to $682,000,000 Overall, SG and A spend was better than planned again this quarter, primarily due to focused expense management. As a percentage of sales, SG and A increased 40 basis points to 27% compared to 26.6% last year.

Reflecting lower top line growth, most expenses deleveraged this quarter. In addition, SG and A deleveraged primarily due to higher store payroll and benefits, primarily due to higher average wage rates and higher corporate overhead, primarily due to strategic investments. These pressures were partially offset by lower incentive compensation, reflecting operational performance that was below our internal target. Depreciation was $67,000,000 for the quarter compared to $61,000,000 last year, primarily due to new store and supply chain investments. Operating profit decreased 2.7 percent to $318,500,000 As a percentage of sales, operating margin was 12.6% of sales compared to 13.1% of sales last year.

And diluted GAAP earnings per share increased 1.4% to $5.14 compared to $5.07 last year. Moving to the balance sheet and our capital allocation priorities. We ended the quarter with $178,000,000 in cash and cash equivalents and $200,000,000 in short term debt. Similar to Q3 last year, we drew on our revolving credit facility during the quarter to support working capital needs and ongoing capital allocation priorities, including share repurchases and capital expenditures. Total inventory increased 1.9 percent to $2,400,000,000 compared to $2,300,000,000 last year.

The increase was primarily due to the impact of 63 net new stores. Year to date, through the Q3, we generated $302,000,000 in operating cash flow. Capital expenditures were $114,000,000 for the quarter, primarily reflecting investments in new and existing stores, IT investments and merchandise fixtures. In the Q3, we returned $267,000,000 of capital to our shareholders through the repurchase of 731,000 shares. At the end of the quarter, we had $2,900,000,000 remaining under our $3,000,000,000 share repurchase program we announced at our investor meeting in October.

Now turning to our outlook. We have refined our sales and EPS guidance for the fiscal for fiscal 2024 to reflect our Q3 results, while continuing to take a cautious view of the consumer and operating environment. We expect net sales for the year will be between $11,100,000,000 $11,200,000,000 with comp sales growth between negative 1% and flat. For the year, we continue to plan to open approximately 60 to 60 5 net new stores and remodel or relocate 40 to 45 stores. We expect operating margin will be between 12.9% 13.1% of net sales with deleverage to come from both gross margin and SG and A, reflecting our top line expectations.

Reflecting these assumptions, we now expect diluted EPS for the year will be between $23.20 $23.75 With 1 quarter left in the year, I want to share how we are thinking about Q4. While we are encouraged by our 3rd quarter results and our performance quarter to date, we also acknowledge that the 4th quarter will likely be impacted by a compressed holiday season, a dynamic operating environment and continued uncertainty around underlying consumer demand. For Q4 modeling purposes, we expect comp sales will decline in the low single digit range and operating margin will be between 11.6% 12.4%. One final update. We have updated our capital expenditures expectations for the full year and now expect to spend between 400,000,000 $425,000,000 in CapEx in fiscal 2024, including approximately $230,000,000 for new stores, remodels and merchandise fixtures $130,000,000 for supply chain and IT and about $50,000,000 for store maintenance and others.

In closing, we know it will take time to see the full benefits from our efforts, but we remain confident that our go to market strategies and investments, along with continued operational and financial discipline, will enable us to drive stronger sales and value creation over the long term. And now, I'll turn the call back over to our operator to moderate the Q and A session.

Thank you. We will now be conducting a question and answer session. Our first question comes from Simeon Siegel, BMO Capital Markets.

Thanks. Hey, everyone. Nice job. And if I forget later, hope you and your families all have a nice holiday season. Dave, any further color you can share on how you're thinking about the broader competitive and promotional landscape over holiday?

And then just, Paula, could you quantify any of those gross margin pressure points this quarter? How you're thinking about them next quarter and beyond? And then just does any of today's progress and the full year guide lift impact your initial margin views you had given us in October? Thank you.

Great. Thanks, Simeon, and happy holidays to you as well. I'll start with just the broader competitive and promotional landscape, and Paula, you can pick up on some of the margin specific areas. So for the Q3, what as I mentioned in the remarks, we continue to see this is intensely competitive timeframe and we've been managing and discussing that throughout the year. We feel like our actions, the adjustments we made in the Q3 helped us improve our performance, strengthen our performance, but we also recognize we have more work ahead of us.

The challenge the dynamics in the marketplace continue particularly in this prestige base, but we're seeing progress And our unique proposition, the aspects that only Ulta delivers through our assortment, our loyalty program, our points of presence, the experience we deliver, have always been key to our business and continue to be core drivers. Promotionally, what we experienced in the Q3 was continued normalization after some reduced promotion coming right out of COVID. So we anticipated that coming into Q3. It was coming into this year, we saw that in Q3. Our promotional rates in Q3 were lower than Q2, but still somewhat higher than last year.

But as I mentioned in the remarks, our efforts to adjust our promotional strategy to lean in and amplify our tentpole events made our overall efforts more effective, leveraging our CRM program and our personalization efforts are driving the business. As we look into the holiday, it is obviously very promotional timeframe, the most promotional timeframe. That's certainly true this year. And as we navigate through and share our 4th quarter results, we'll have reflections on the overall dynamics, but we're anticipating continued promotional intensity, but not significantly outside of what we would expect so far this holiday. Paula, do you want to talk about that?

Sure. Hi. Good afternoon, Danielle. Yes, so we raised our full year operating margin and EPS reflecting Q3 performance and also ongoing expense discipline. What I would say as we think about kind of Q4, generally for the full year, we continue to expect gross margin deleverage.

And when we think about Q4, reflecting the top line expectations and competitive environment, gross margin will continue to deleverage and really the trends we've seen all year will continue. So headwinds are the deleverage we expect to see from a fixed cost perspective. Merchandise margin pressure will continue, given promotions and category mix. And then our trail wins, lower transportation costs, which we've been speaking about all year, we'll continue to provide some offsets to that. I would say from an SG and A perspective, we are expecting growth from a full year in the mid single digit range.

But Q4 expecting that to be in the low single digit growth range. And we still expect our most of our expenses to deleverage on the lower sales, But we'll continue to maintain financial discipline as we have in Q3.

Thank you. Our next question comes from Kelly Crago, Citi.

Hi, thanks for taking my question. I just wanted to see if you could provide a little bit more context on the prestige makeup. I believe it was flat in the quarter. How was it for the industry overall? If you could just talk about the innovation pipeline in Prestige make I'm sorry if I said Prestige Beauty before, I'm talking about Prestige Makeup.

If you could talk about the innovation pipeline there? And then just secondly, any way to quantify the drag you've seen from the competitive pressures specifically with those new points of distribution and where we're at in the timeline for when you expect those headwinds to abate further? Thanks.

Great. Well, thanks, Kelly. Yes, let's see. Starting with prestige makeup, obviously, an important category, our largest category. And I'd start with saying overall, we're pleased in the Q3 that prestige makeup was flat for the quarter for us, which was improvement from some of the trends.

The drivers behind that are our innovation that we continue to launch brands like ILIA coming into our portfolio, strong execution across our key programs like 21 Days of Beauty, which is focused on prestige and makeup of course is a highlight of that. And real emphasis on some of our core brands like Clinique and MAC and other strong performing brands that we've been working closely with to ensure we're delivering for our guests and our guests respond well to them. And so we're really we've been focused on this category for a long time to strengthen its performance and we're really pleased that it was able that we were able to do that. Overall in the category, we saw the category, the total prestige makeup category up a bit more than us in low single digit. So we saw pressure in share, although our share performance while still pressured improved from the Q2.

So we're making headway and we're pleased with that. Overall, on the competitive environment, you asked about competitive openings. As we've been talking about throughout the year, that's certainly a meaningful dynamic as there's been more than a 1,000 new points of distribution in prestige beauty that over the last couple of years. And that has been a pressure. I shared in previous discussions that 80% of our stores have been experienced at least one competitive opening and more than half have had multiple competitive openings.

And that's continues to be a dynamic that's going on in the marketplace. Having said that, we're confident in the actions that we're taking. We know we've seen historically new store openings. We're able to absorb the shorter term hit, but then turn our stores back into positive contributors to our business over the long term. This is a different dynamic given the scale, just the sheer number of new stores opening in a short period of time.

But we're confident in our ability to do that. We did see improvements in Q3 that contributed to the stronger performance we had in Q3 in total versus Q2. So we feel like we saw some headway in that, But we're not but it's we're still in the midst of it. And so by no means are we claiming that we're through it. We've got more work to do.

We're working through the dynamics. And our focus there is continue to do what we do best, lean into our strengths in our stores and online and all of our experiences. That activity, those things that I highlighted on earlier are what helped us make progress this quarter and other things that are going to drive us, into 2025 as we continue to strengthen our business.

Thank you. Our next question comes from Corrine Wolfmeyer, Piper Sandler.

the question and congrats on the quarter. I'd like to touch a little bit on the competitiveness on the mass piece of business. I feel like we talk a lot about prestige, but I do want to understand mass. A lot of the broader mass larger mass retailers have been talking a little bit more positively about beauty. You've got dollar stores expanding more in beauty.

So how is this impacting the competitive landscape, would you say, for that piece of the business? And how are you thinking about the mass piece going forward and heading into 2025? Thank you.

Well, yes. Thanks, Sherwin. I'll start with saying that beauty is a very attractive category. And so we've talked many times about the fact that anybody in beauty, whether in the mass side, prestige side, luxury, is emphasizing the category, investing in the category and that's been going on across all of our competitors. In the mass specific business, that the total mass business continues to perform in that mid single digit range for the quarter in total mass.

And it's important category for us. As you know, one of the key differentiators of our business is strength in mass and prestige and luxury. And so we continue to be focused on our mass business and the important role that it plays. And so that we're well aware of the dynamics. We have seen mass makeup as a category across the category decelerate.

Certainly, there's brands that are stronger, but the total category has been more pressured, but we're seeing strength continued strength in mass skin, which is an important business for us. So we're focused on continuing to drive our mass business and make sure we're delivering the assortment that we know our guests loves, the ability to engage with us across all price points and continue to be confident in our ability to excite them and engage them in our mass business.

Okay. Thank you. And our next question comes from Anthony Chukumba Loop Capital Market.

Thank you so much for taking my question. Hopefully, you can hear me okay. And I'll just keep it to one question. Obviously, you had a very impressive sequential improvement in your performance. And you've touched on a few different things.

But if you had to sort of almost like kind of stack rank what you thought drove the better performance, Would it be the more effective promotions? Would it be some of the merchandising changes? Would it be some of the partnerships you talked about like with Wicked and I guess the mini brands or whatever? Like, yes, if you could just give us help us to understand what from a sequential perspective, led to the improvement performance? Thank you.

Great. Thanks, Anthony. Yes, I mean, I wouldn't point to one thing. There was not one thing that ever really drives our business. And we talked about coming out of the Q2.

While we were pleased with some aspects of our business, we were clear on areas that we needed to address. And we leaned into several of the key factors. Assortment is always critical, bringing in newness, some of the brands I highlighted like ILIA into the quarter played an important role. The collaborations that you mentioned also drove excitement and enthusiasm assortment is always a key driver and certainly was in the Q3. Our promotional effectiveness, we had some learnings in the Q2 as we were faced with more pressure sales, how we adapted our promotional environment.

We had learnings there that we built from into the Q3, leaning in, strengthening our core tenfold events that our guest value from Ulta Beauty, 21 Days of Beauty, our hair event and fall hall as well as smart, purposeful, targeted and effective complementary promotions throughout the quarter in a very personalized. So that drove a strong effectiveness. We worked hard throughout the quarter. Our teams across the organization, store teams, for sure, supply chain, our IT teams, our digital teams to make sure we were delivering a great experience to improve conversion and we're pleased that we were able to do that both in store and its strong performance online. And that took a holistic effort with making sure we had strong in stock, strong engagement from our store associates and strong execution online.

And we also last thing I'd mention is, we highlighted in the second quarter some disruption from some of the system changes and we made improvements in that space to make sure our products were where they needed to be. So multiple elements contributed. It was a really holistic effort across the organization and we're pleased. Having said that, we know we've got more work to do. We're while we're pleased with the sequential improvement, we are focused on stronger improvement over time as we move both through the holiday period and into 2025 beyond.

So we'll continue to lean into all of those things and the broader strategies that we went through in a lot of detail at our Investor Day in October.

Thank you. Our next question comes from Christopher Horvers, JPMorgan Chase and Company.

Thanks. Good evening. So I'll throw a quick 2 parter in there as well. So the first part is, are you positive quarter to date? You mentioned encouraging.

How are you thinking about the balance between the 5 fewer days, but at the same time, the very substantial gift card business and 5 fewer days would suggest a strong January follow through. And then following up on an earlier question, any further thoughts on how you think about 25%. You talked about a floor of 11% long term 12% plus. How did this quarter change that point of view if at all? Thanks.

Hi, Chris. Thanks for the question. What I would say is we won't necessarily get into the details of specifically comp quarter to date. But what I will say is that holiday our holiday season is off to a solid start and our teams are executing well. We are encouraged by what we're seeing, but we also recognize that we have several important weeks ahead of us in the holiday season, and operating environment is dynamic.

And so that is why we shared that we're expecting Q4 comp sales to decline in the low single digit range. So that's what we're thinking from a quarter perspective. And I would say, yes, there is a component of the dynamic environment that is related to how consumers spend the fewer shopping days and things of that sort that we are obviously contemplating as we think about our expectations for Q4. As we think about 2025, again, still several important weeks left ahead of us, and we're focused on closing getting through holiday strong and closing out the fiscal year strong. And we will provide additional color on 2025 when we provide our guidance in March consistent with what we typically do.

Now that being said, I would say the directional color that we provided at our Investor Day remains the same. We expect 2024 and 2025 to be transitional periods as we invest to we accelerate our growth, and we continue to expect to make investments in 2025 that will position us for a stronger long term. But we will make decisions to enable to ensure that we're delivering operating margin at least above 11%.

Thank you. Our next question comes from Kate McShane, Goldman Sachs.

Hi. This is Emily Gauche on for Kate. We were wondering on UB Media, how big of a competitive moat do you think it could be, especially considering what it does to help your relationship with vendor partners? And how much is UB Media contributing to the long term operating margin outlook that you provided at the Investor Day?

Great. Thanks, Emily. Yes, we think we're very optimistic and excited about the role that UB Media both is and will play on our business going forward. As you suggest, we have a real competitive opportunity because of the scale and the breadth of our business, the data that we have, the understanding of beauty engagement and transactions across really all beauty enthusiasts of all ages and all geographies is really unmatched. And so we've worked hard to deliver an experience for our brand partners that adds value and most importantly adds strong ROI in their media investments.

And the growth that we've seen in that business reinforces that we're able to do that. We're as we did talk about at our Investor Day, continued investment in capabilities. I highlighted couple of those capabilities on the call earlier today related to roadblocks and other ways that we can further give our brands opportunities. But because of the brand relationships that we have and the role that we play in the category, we're confident that our opportunity to grow this business, continue to grow this business over time will be a positive impact on the business. Paula, do you want to talk about the financial impact?

Sure. What I would say is, UB Media, Emily, is contributing positively to gross margin in a way. So think about it over time is that it plays an important role for us and it will help offset some of the merchandising margin pressure. We currently see and we have shared as we make certain investments in brand building and other things in 2025 and beyond that would serve to help offset some of those pressures.

And our next question comes from Oliver Chen, TD Cowen.

Ulta Beauty (ULTA) Q3 2025 Earnings Call Transcript

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