Q2 2026 Ulta Beauty Inc Earnings Call

August 27, 2026

Speaker #1: And that will be your conference operator today. At this time, I'd like to welcome you all to Ulta Beauty's second quarter and fiscal 2026 earnings call.

Operator: I will be your conference operator today. At this time, I would like to welcome you all to Ulta Beauty's Q2 fiscal 2026 earnings call. This conference is being recorded, and all lines have been placed on mute to prevent any background noise. After the speakers' prepared remarks, there will be a question and answer session. At this time, I would like to turn the call over to Ms. Kiley Rawlins, Senior Vice President of Investor Relations. Ms. Rawlins, please proceed.

Operator: I will be your conference operator today. At this time, I would like to welcome you all to Ulta Beauty's Q2 Fiscal 2026 Earnings Call. This conference is being recorded, and all lines have been placed on mute to prevent any background noise. After the speakers' prepared remarks, there will be a question and answer session. At this time, I would like to turn the call over to Ms. Kiley Rawlins, Senior Vice President of Investor Relations. Ms. Rawlins, please proceed.

Speaker #1: This conference is being recorded, and all lines have been placed on mute to prevent any background noise. After the speakers' prepared remarks, there will be a question-and-answer session.

Speaker #1: At this time, I'd like to turn the call over to Ms. Kiley Rawlins, Senior Vice President of Investor Relations. Ms. Rawlins, please proceed.

Speaker #2: Thank you, Ryan. Good afternoon, everyone, and thank you for joining us for a discussion of Ulta Beauty's results for the second quarter of fiscal 2026.

Kiley F. Rawlins: Thank you, Ryan. Good afternoon, everyone, and thank you for joining us for a discussion of Ulta Beauty's results for Q2 of fiscal 2026. Hosting our call today are Kecia Steelman, Chief Executive Officer, and Chris DelOrefice, Chief Financial Officer. During today's webcast, a presentation is being displayed live and has been posted to our website, ulta.com/investor. As a reminder, today's earnings release and the comments made by management during this call include forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, factors identified in this earnings release and in our most recent 10-K. The company undertakes no obligation to revise any forward-looking statements.

Kiley Rawlins: Thank you, Ryan. Good afternoon, everyone, and thank you for joining us for a discussion of Ulta Beauty's results for Q2 of fiscal 2026. Hosting our call today are Kecia Steelman, Chief Executive Officer, and Chris DelOrefice, Chief Financial Officer. During today's webcast, a presentation is being displayed live and has been posted to our website, ulta.com/investor. As a reminder, today's earnings release and the comments made by management during this call include forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, factors identified in this earnings release and in our most recent 10-K. The company undertakes no obligation to revise any forward-looking statements.

Speaker #2: Hosting our call today are Kecia Steelman, Chief Executive Officer, and Chris Lialios, Chief Financial Officer. During today's webcast, a presentation is being displayed live and has been posted to our website, ulta.com/investor.

Speaker #2: As a reminder, today's earnings release and the comments made by management during this call include forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections.

Speaker #2: These risks and uncertainties include, but are not limited to, factors identified in this earnings release and in our most recent 10-K. The company undertakes no obligation to revise any forward-looking statements.

Speaker #2: To allow us to accommodate as many questions as possible during the hour scheduled for this call, we respectfully ask that you limit yourself to one question with no more than one follow-up. As always, our team will be available for any additional questions after the call.

Kiley F. Rawlins: To allow us to accommodate as many questions as possible during the hour scheduled for this call, we respectfully ask that you limit your time to one question with no more than one follow-up question. As always, the IR team will be available for any follow-up questions after the call. Now I would like to turn the call over to Kecia. Kecia?

Kiley Rawlins: To allow us to accommodate as many questions as possible during the hour scheduled for this call, we respectfully ask that you limit your time to one question with no more than one follow-up question. As always, the IR team will be available for any follow-up questions after the call. Now I would like to turn the call over to Kecia. Kecia?

Speaker #2: And now I'd like to turn the call over to Kecia. Kecia?

Speaker #3: Thank you, Kiley, and good afternoon, everyone. The Ulta Beauty team delivered another quarter of impressive results, including 8.9% net sales growth, 10.1% operating profit growth, and 13.3% diluted earnings per share growth.

Kecia Steelman: Thank you, Kiley, and good afternoon, everyone. The Ulta Beauty team delivered another quarter of impressive results, including 8.9% net sales growth, 10.1% operating profit growth, and 13.3% diluted earnings per share growth. Our results reflect consistent operational execution and disciplined financial management. We stay close to our guests, manage the fundamentals with rigor, and continue to invest in capabilities that will drive long-term growth. Our differentiated model continues to resonate with guests. This quarter, we saw strength across a number of key performance metrics. We delivered 3.8% comparable sales growth, expanded the number of active members in our loyalty program by 3%, drove an increase in average spend per member, launched 15 new brands, and increased earned media value and unaided awareness to record levels.

Speaker #3: Our results reflect consistent operational execution and disciplined financial management. We stayed close to our guest, managed the fundamentals with rigor, and continued to invest in capabilities that will drive long-term growth.

Speaker #3: Our differentiated model continues to resonate with guests. This quarter, we saw strength across a number of key performance metrics. We delivered 3.8% comparable sales growth, expanded the number of active members in our loyalty program by 3%, drove an increase in average spend per member, launched 15 new brands, and increased earned media value and unaided awareness to record levels.

Speaker #3: At the same time, we strategically leveraged promotions to drive traffic and sales. We fueled incremental sales through personalization and increased app engagement, with the app now accounting for more than 60% of online sales.

Kecia Steelman: At the same time, we strategically leveraged promotions to drive traffic and sales, fueled incremental sales through personalization, and increased app engagement, with the app now accounting for more than 60% of online sales. Importantly, our sales outpaced the US beauty market in a dynamic environment. We increased our share of prestige beauty while holding mass share flat, according to Circana. Quarter after quarter, we continue to translate strategy into results, delivering on our commitments, strengthening our business, and reinforcing the durability of our model and what our teams can achieve together. As a result of our H1 performance, we have raised our sales and earnings guidance for the year, which Chris will cover more in detail shortly. Let me now share more details on our Q2 performance and the progress we are making across our Ulta Beauty Unleashed pillars.

Speaker #3: Importantly, our sales outpaced the U.S. beauty market in a dynamic environment. We increased our share of prestige beauty, while holding mass share flat according to Circana.

Speaker #3: Quarter after quarter, we continue to translate strategy into results, delivering on our commitments, strengthening our business, and reinforcing the durability of our model and what our teams can achieve together.

Speaker #3: As a result of our first-half performance, we've raised our sales and earnings guidance for the year, which Chris will cover in more detail shortly.

Speaker #3: Let me now share more details on our second quarter performance and the progress we're making across our Ulta Beauty Unleashed pillars. Beginning with our core business growth pillar, our U.S.

Kecia Steelman: Beginning with our core business growth pillar, our US business continues to power the company's overall performance, supported by our focus on delighting guests at every interaction, advancing our go-to-market approach, delivering compelling merchandising innovation, and strengthening our marketing leadership. Starting with the heart of our omni-channel ecosystem, our stores. We fueled growth with the addition of 13 net new Ulta Beauty stores during the quarter and drove modest comp growth in stores as we lapped our strongest quarter from last year. Performance was driven by effective execution of key promotions and events, along with the impact of compelling newness. Our store associates maximized key selling opportunities and drove guest excitement and sales during key events like the Big Summer Beauty Sale, Mother's Day, and Father's Day. During the quarter, we held more than 40,000 in-store events to support significant brand launches and brand activations.

Speaker #3: Business continues to power the company's overall performance, supported by our focus on delighting guests at every interaction, advancing our go-to-market approach, delivering compelling merchandising innovation, and strengthening our marketing leadership.

Speaker #3: Starting with the heart of our omnichannel ecosystem—our stores. We fueled growth with the addition of 13 net new Ulta Beauty stores during the quarter and drove modest comp growth in stores as we lapped our strongest quarter from last year.

Speaker #3: Performance was driven by effective execution of key promotions and events, along with the impact of compelling newness. Our store associates maximized key selling opportunities and drove guest excitement in sales during key events like the Big Center Beauty Sale, Mother's Day, and Father's Day.

Speaker #3: During the quarter, we held more than 40,000 in-store events to support significant brand launches and brand activations. These high-energy events featured brand education and drove in-store traffic, strong guest engagement, and sales.

Kecia Steelman: These high-energy events featured brand education and drove in-store traffic, strong guest engagement, and sales. E-commerce momentum continued in Q2 as we delivered our sixth consecutive quarter of double-digit sales growth, driven by ongoing investments in our guest experience, omni-channel capabilities, and emerging channels. Sales were fueled by planned merchandise and marketing promotions that resonated with guests, along with the enhanced convenience of our buy anywhere, fill anywhere capabilities. During Q2, we fulfilled more than 50% of our e-commerce orders through our vast network of more than 1,500 convenient store locations. Ulta Beauty's TikTok Shop continued to gain traction during the quarter, supported by the official brand opening campaign and the addition of several new brands to the shop, including TikTok's first live celebrity fragrance launch by rapper Ice Spice.

Speaker #3: E-commerce momentum continued in Q2, as we delivered our sixth consecutive quarter of double-digit sales growth, driven by ongoing investment in our guest experience, omnichannel capabilities, and emerging channels.

Speaker #3: Sales were fueled by planned merchandise and marketing promotions that resonated with guests, along with the enhanced convenience of our Buy Anywhere, Fill Anywhere capabilities.

Speaker #3: During Q2, we fulfilled more than 50% of our e-commerce orders through our vast network of more than 1,500 convenient store locations. Ulta Beauty's TikTok Shop continued to gain traction during the quarter, supported by the official brand opening campaign and the addition of several new brands to the Shop, including TikTok's first live celebrity fragrance launch by rapper Ice Spice.

Speaker #3: We also used our new Chelsea, New York store as a TikTok Shop live shopping studio, driving in-store guest excitement and online impressions. Since the launch, our TikTok initiative has driven over 100 million impressions.

Kecia Steelman: We also used our new Chelsea, New York store as a TikTok Shop live shopping studio, driving in-store guest excitement and online impressions. Since the launch, our TikTok initiative has driven over 100 million impressions. Notably, we are attracting significant attention from brand partners who are interested in joining our TikTok Shop assortment and from creators who are interested in collaborating with the Ulta Beauty brand. We are pleased with the ongoing success of TikTok initiative and the competitive differentiation that is enabling for Ulta Beauty. From a merchandising perspective, we are focused on creating a continuous sense of discovery, bringing guests products, brands, trends, and experiences to give them reasons to keep coming back to Ulta Beauty. Our merchants are curating innovation across established brands, emerging brands, exclusive offerings, and fresh beauty trends, effectively translating what is culturally relevant into a guest experience that feels accessible and exciting.

Speaker #3: Notably, we're attracting significant attention from brand partners who are interested in joining our TikTok Shop assortment, and from creators who are interested in collaborating with the Ulta Beauty brand.

Speaker #3: We're pleased with the ongoing success of TikTok's initiative and the competitive differentiation that has enabled Ulta Beauty. From a merchandising perspective, we're focused on creating a continuous sense of discovery, bringing guests products, brands, trends, and experiences to give them reasons to keep coming back to Ulta Beauty.

Speaker #3: Our merchants are curating innovation across established brands, emerging brands, exclusive offerings, and fresh beauty trends, effectively translating what is culturally relevant into a guest experience that feels accessible and exciting.

Speaker #3: This starts with our focus on brand building. First, let me highlight some of the exciting go-to-market and brand-building efforts underway to advance our ambition to win in fragrance.

Kecia Steelman: This starts with our focus on brand building. First, let me highlight some of the exciting go-to-market and brand building efforts underway to advance our ambition to win in fragrance. Fragrance continues to be an important growth driver for Ulta Beauty, supported by a strong pipeline of newness and culturally relevant brand launches that are bringing excitement and discovery to the category. During Q2, we launched several new and exclusive fragrances, including Cloudar by Drake's Better World Fragrance House, XO Khloé by Khloé Kardashian, Hot Girl Summer by Megan Thee Stallion, and Viktor&Rolf's Bonbon collection, among several others. Bringing compelling newness to our assortment, our marketing team reinforced Ulta Beauty as a destination for fragrance through a number of high impact campaigns. Our store and e-commerce teams brought these launches to life through prominent, engaging experiences, both in store and online.

Speaker #3: Fragrance continues to be an important growth driver for Ulta Beauty, supported by a strong pipeline of newness and culturally relevant brand launches that are bringing excitement and discovery to the category.

Speaker #3: During the second quarter, we launched several new and exclusive fragrances, including Cloud R by Drake’s Better World Fragrance, XO Blue by Khloé Kardashian, Paco Summer by Megan Thee Stallion, and Viktor & Rolf’s Bonbon Collection, among several others.

Speaker #3: Bringing compelling newness to our assortment, our marketing team reinforced Ulta Beauty as a destination for fragrance through a number of high-impact campaigns, while our store and e-commerce teams brought these launches to life through prominent, engaging experiences both in-store and online.

Speaker #3: Together, these efforts helped drive meaningful market share expansion in fragrance. Beyond fragrance, K-beauty momentum continued. We expanded our leading assortment with the addition of five new K-beauty brands, including Dr. Melaxin, Namoozin, Dr. Rio, Theordia, and Centillion 24. A robust double-digit growth in K-beauty sales compared to the same period last year gives us confidence in our K-beauty assortment.

Kecia Steelman: Together, these efforts help drive meaningful market share expansion in fragrance. Beyond fragrance, K-beauty momentum continued. We expanded our leading assortment with the addition of five new K-beauty brands, including Dr. Althea, ma:nyo, Dr. Oracle, Banila Co, and Centellian24. A robust double-digit growth in K-beauty sales compared to the same period last year gives us confidence in our K-beauty assortment. Importantly, nearly half of our K-beauty sales during the quarter came from exclusive brands or products. Our efforts contributed to continued shared gains and reinforced our optimism in the longevity of the K-beauty brands over time. From a broader newness perspective, newly launched brands like Rare Beauty, amika, and Moroccanoil contributed nicely to performance. During the quarter, we launched 15 new brands, including Bath & Body Works, Frenchie, Juno & Co., and others.

Speaker #3: Importantly, nearly half of our K-beauty sales during the quarter came from exclusive brands or products. Our efforts contributed to continued share gains and reinforced our optimism in the longevity of the K-beauty brands over time.

Speaker #3: From a broader newness perspective, newly launched brands like Rare Beauty, Anika, and Moroccanoil contributed nicely to performance. During the quarter, we launched 15 new brands, including Bath & Body Works, Frenchy, JUNO & Co., and others. In addition to new brand launches, our merchants are collaborating in close partnership with existing brands to fuel the innovation pipeline and address key white-space opportunities.

Kecia Steelman: In addition to new brand launches, our merchants are collaborating in close partnership with existing brands to fuel the innovation pipeline and address key white space opportunities. During the quarter, we launched exclusive newness from our existing brand partners, including L'Oréal's Infallible Cushion Foundation, Charlotte Tilbury's Exagger-Eyes waterproof eyeshadow sticks, and Saltair's shimmering body oil. We continue to advance our marketing strategy, strengthening Ulta Beauty's position at the intersection of beauty, culture, and community. Our Rewrite the Rules summer campaign champions self-expression, amplified through our partnership with Supergirl and Milly Alcock across high impact theater, store, and social experiences that invited every beauty lover to rock your look and find your power. We showed up at the center of culture with activations at BottleRock and Lollapalooza, bringing beauty and music together with Ulta Beauty at the center.

Speaker #3: During the quarter, we launched exclusive newness from our existing brand partners, including L'Oréal's Infallible Cushion Foundation, Charlotte Tilbury's Exagger-Eyes Waterproof Eyeshadow Sticks, and Soltaire's Shimmering Body Oil.

Speaker #3: We continue to advance our marketing strategy, strengthening Ulta Beauty's position at the intersection of beauty, culture, and community. Our Rewrite the Rules summer campaign championed self-expression, amplified through our partnership with Supergirl and Millie Alcock, across high-impact theater, store, and social experiences that invited every beauty lover to rock your look and find your power.

Speaker #3: We showed up at the center of culture with activations at BottleRock and Lollapalooza, bringing beauty and music together with Ulta Beauty at the center.

Speaker #3: We amplified our reach through a powerful creator ecosystem spanning influential voices across social platforms, the YubiQ Collective, our own Ulta Beauty brand partners, and celebrity founders.

Kecia Steelman: We amplified our reach through a powerful creator ecosystem, spanning influential voices across social platforms, the Ulta Beauty Collective, our own Ulta Beauty's brand partners, and celebrity founders. We also expanded social commerce through TikTok Shop and TikTok LIVE, creating new pathways from inspiration and discovery to engagement and purchase. Together, these efforts drove strong growth in brand awareness and consideration, with earned media value and impressions reaching record levels. Our robust loyalty program, which now encompasses about 47 million active members, remains central to inspiring members through personalized experiences, meaningful rewards, and exclusive benefits that deepen engagement and build lasting relationships with Ulta Beauty. We are advancing our personalization capabilities, turning the strength of our first-party data and technology investments into even more relevant and impactful guest experiences.

Speaker #3: We also expanded social commerce through TikTok Shop and TikTok Live, creating new pathways from inspiration and discovery to engagement and purchase. Together, these efforts drove strong growth in brand awareness and consideration.

Speaker #3: With earned media value and impressions reaching record levels, our robust loyalty program—which now encompasses about 47 million active members—remains central to inspiring members through personalized experiences, meaningful rewards, and exclusive benefits that deepen engagement and build lasting relationships with Ulta Beauty.

Speaker #3: We are advancing our personalization capabilities, turning the strength of our first-party data and technology investments into even more relevant and impactful guest experiences. Our teams are increasingly focused on anticipating guest needs across key moments in their journey. Using customer insights to identify behaviors and intent—from predicting replenishment needs to improving cart conversion—we're creating more opportunities to drive engagement and incremental sales, while delivering greater relevance for every guest.

Kecia Steelman: Our teams are increasingly focused on anticipating guest needs across key moments in their journey, using customer insights to identify behaviors and intent. From predicting replenishment needs to improving cart conversion, we are creating more opportunities to drive engagement and incremental sales while delivering greater relevance for every guest. Moving to our second pillar, scaling new businesses. Our international operations continue to scale. We recently celebrated the one-year anniversary of our acquisition of Space NK, which operates stores in the UK and Ireland. Performance continues to be strong, and during the quarter, the Space NK team drove robust sales growth and continued market share expansion. In Mexico, we continue to expand our footprint with the opening of a new store in Chiapas, bringing total stores to 12 at the end of the quarter.

Speaker #3: Moving to our second pillar: scaling new businesses. Our international operations continue to scale. We recently celebrated the one-year anniversary of our acquisition of Space NK, which operates stores in the UK and Ireland.

Speaker #3: Performance continues to be strong, and during the quarter, the Space MK team drove robust sales growth and continued market share expansion. In Mexico, we continue to expand our footprint with the opening of a new store in Chiapas, bringing total stores to 12 at the end of the quarter.

Speaker #3: The team leaned into the excitement of the World Cup as a sponsor of Campo Marte's international soccer fan festival, where they held an experiential beauty activation, driving awareness and guest excitement.

Kecia Steelman: The team leaned into the excitement of the World Cup as a sponsor of Campo Marte's international soccer fan festival, where they held an experiential beauty activation, driving awareness and guest excitement. In addition, our franchise partner in the Middle East, Alshaya, is making progress on several new store openings planned for later this year. We are navigating the ongoing geopolitical environment in partnership with Alshaya and remain optimistic about the expansion opportunities in the region over the long term. We are expanding our assortment and giving guests even more choice through Ulta Beauty's marketplace initiative. During the quarter, we continued to add new brands and SKUs across each of the seven marketplace assortment focus areas, closing the quarter with more than 450 brands and over 12,000 SKUs in our marketplace assortment. Our marketplace is an excellent example of how each element of our model makes the next better.

Speaker #3: In addition, our franchise partner in the Middle East, Alshaya, is making progress on several new store openings planned for later this year. We are navigating the ongoing geopolitical environment and partnership with Alshaya and remain optimistic about the expansion opportunities in the region over the long term.

Speaker #3: We are expanding our assortment and giving guests even more choice through Ulta Beauty's Marketplace initiative. During the quarter, we continued to add new brands and SKUs across each of the seven Marketplace assortment focus areas.

Speaker #3: Closing the quarter with more than 450 brands and over 12,000 SKUs in our marketplace assortment. Our marketplace is an excellent example of how each element of our model makes the next better.

Speaker #3: Marketplace is attracting new and reactivating lapsed loyalty members, serving as a source of newness that elevates our assortment with high-potential brands, and fueling incremental UB Media growth as more marketplace brands leverage our media network to drive awareness and sales.

Kecia Steelman: Marketplace is attracting new and reactivating lapsed loyalty members, serving as a source of newness that elevates our assortment with high-potential brands, and fueling incremental UB Media growth as more marketplace brands leverage our media network to drive awareness and sales. Moving to overall UB Media performance. We are seeing solid momentum as the team drove double-digit growth compared to the second quarter in 2025. The strength of new products, including connected TV, along with new brand investment from both core and marketplace brands, fueled growth and profitability. We continue to test and expand new product offerings to round out our suite of tools to support brand partner advertising effectiveness and sales growth. In wellness, our assortment continues to resonate with guests, and we are fueling incremental growth through this important element of our business. We held our inaugural Find Your Feelgood wellness event, which sparked meaningful guest engagement and awareness.

Speaker #3: Moving to overall UB Media performance. We're seeing solid momentum as the team drove double-digit growth compared to the second quarter in 2025. The strength of new products, including connected TV, along with new brand investment from both core and marketplace brands, is driving growth and profitability.

Speaker #3: We continue to test and expand new product offerings to round out our suite of tools to support brand partner advertising effectiveness and sales growth.

Speaker #3: In wellness, our assortment continues to resonate with guests, and we're fueling incremental growth through this important element of our business. We held our inaugural Find Your Feel Good Wellness Event, which sparked meaningful guest engagement and awareness.

Speaker #3: We built on our first quarter success, incorporating wellness into our strategic tempo events like the Big Summer Beauty Sale, and continued to elevate our assortment with the addition of four new brands, including exclusive Only at Ulta brand Good Day by Patchology and Higher Dose, a wellness tools brand designed to ignite vitality from the inside out.

Kecia Steelman: We built on our first-quarter success, incorporating wellness into our strategic temporal events like Big Summer Beauty Sale, and continued to elevate our assortment with the addition of four new brands, including the exclusive only at Ulta brand, good day by patchology, and HigherDOSE, a wellness tools brand designed to ignite vitality from the inside out. I am proud of how our teams are thoughtfully building our position in wellness, continuously applying what we learned to strengthen our approach and better serve the evolving needs of our guests. And finally, our third strategic pillar, aligning our foundation for the future. Within supply chain, we are effectively leveraging prior investments in technology, automation, and network optimization to improve speed to guest, improve efficiency, and help offset the impact of rising fuel costs.

Speaker #3: I'm proud of how our teams are thoughtfully building our position in wellness, continuously applying what we learn to strengthen our approach and better serve the evolving needs of our guests.

Speaker #3: And finally, our third strategic pillar: aligning our foundation for the future. Within supply chain, we are effectively leveraging prior investments in technology, automation, and network optimization to improve speed to guests, improve efficiency, and help offset the impact of rising fuel costs.

Speaker #3: In addition, our AI-powered sourcing capabilities continue to optimize omnichannel inventory across all nodes, allowing us to meet greater guest and customer demand more efficiently and reduce markdowns.

Kecia Steelman: In addition, our AI-powered sourcing capabilities continue to optimize omnichannel inventory across all nodes, allowing us to meet greater guest and customer demand more efficiently and reduce markdowns. Beyond just supply chain, we are advancing our AI capabilities across the business to elevate the guest experience and unlock meaningful operational efficiencies. As consumers increasingly turn to AI for search and discovery, we have scaled content creation and enrich product information across AI platforms like OpenAI's ChatGPT, positioning Ulta Beauty as an authoritative source for beauty discovery, inspiration, and expertise. We also leveraged our partnership with Google Gemini to launch first-to-market capabilities, including multi-SKU purchases. At the same time, we enhanced our on-site shopping agent, Ulta AI, with new features and broader placement as a high-performing discovery experience. These efforts are delivering encouraging results, driving meaningful increases in site traffic and improved conversion.

Speaker #3: Beyond just supply chain, we are advancing our AI capabilities across the business to elevate the guest experience and unlock meaningful operational efficiencies. As consumers increasingly turn to AI for search and discovery, we have scaled content creation and enriched product information across AI platforms like OpenAI's ChatGPT, positioning Ulta Beauty as an authoritative source for beauty discovery, inspiration, and expertise.

Speaker #3: We also leveraged our partnership with Google Gemini to launch first-to-market capabilities, including multi-SKU purchases. At the same time, we enhanced our on-site shopping agent, Ulta AI, with new features and broader placement as a high-performing discovery experience.

Speaker #3: These efforts are delivering encouraging results, driving meaningful increases in site traffic and improved conversion. At the same time, we're in the early stages of applying AI across key corporate uses to enhance how we work, improve productivity, and drive greater efficiency.

Kecia Steelman: At the same time, we're in the early stages of applying AI across key corporate uses to enhance how we work, improve productivity, and drive greater efficiency. As these capabilities mature, we see opportunities to scale AI thoughtfully across the organization and deliver incremental value over time. Turning to the operating landscape, we see continued beauty and wellness resilience and strong consumer interest and engagement. At the same time, perceived value continues to influence purchase decisions, and consumers are being choiceful as they navigate macro uncertainty and higher everyday expenses, including elevated fuel costs. Against this backdrop, we are uniquely positioned to meet our guests wherever they are.

Speaker #3: As these capabilities mature, we see opportunities to scale AI thoughtfully across the organization and deliver incremental value over time. Turning to the operating landscape.

Speaker #3: We see continued beauty and wellness resilience and strong consumer interest and engagement. At the same time, perceived value continues to influence purchase decisions, and consumers are being choiceful as they navigate macro uncertainty and higher everyday expenses, including elevated fuel costs.

Speaker #3: Against this backdrop, we are uniquely positioned to meet our guests wherever they are. We are focused on emphasizing the multiple ways we deliver meaningful value while continuing to deepen engagement with our brand.

Kecia Steelman: We are focused on emphasizing the multiple ways we deliver meaningful value while continuing to deepen engagement with our brand, including an assortment that spans all price points, giving guests choice and flexibility to shop on any budget, a seamless omnichannel experience for convenient shopping and fulfillment options, and a powerful, value-rich loyalty program that rewards members with personalized promotions, relevant offers, and exclusive perks. Looking ahead, we will remain disciplined and responsive as we manage the evolving operating landscape with a focus on serving our guests, driving sales growth, and positioning Ulta Beauty to consistently capture market share. As we move into the H2 of the year, we're excited about our ability to execute on our key strategic priorities within our Ulta Beauty Unleashed strategy to further fuel core business growth and scale new growth vectors while aligning our foundation for sustained, profitable growth.

Speaker #3: Including an assortment that spans all price points, giving guests choice and flexibility to shop on any budget, and a seamless omnichannel experience for convenient shopping and fulfillment options.

Speaker #3: And a powerful, value-rich loyalty program that rewards members with personalized promotions, relevant offers, and exclusive perks. Looking ahead, we will remain disciplined and responsive as we manage the evolving operating landscape, with a focus on serving our guests, driving sales growth, and positioning Ulta Beauty to consistently capture market share.

Speaker #3: As we move into the second half of the year, we're excited about our ability to execute on our key strategic priorities within our Ulta Beauty-only strategy, to further fuel core business growth and scale new growth vectors, while aligning our foundation for sustained, profitable growth.

Speaker #3: In closing, our year-to-date performance—including strong sales and earnings growth, as well as continued share gains—is a compelling demonstration that Ulta Beauty’s differentiated model is more relevant than ever.

Kecia Steelman: In closing, our year-to-date performance, including strong sales and earnings growth, as well as continued share gains, is a compelling demonstration that Ulta Beauty's differentiated model is more relevant than ever and that our Ulta Beauty Unleashed strategy is working. What sets our differentiated model apart is the power of our entire ecosystem, leading assortment, services, loyalty, omnichannel convenience, beauty expertise, and shopping experience all working together. This combination creates a flywheel that attracts more guests, more loyalty, more data and some insights, and more brand partnerships, which in turn makes Ulta Beauty the ultimate beauty discovery destination and represents a strategic advantage that is very difficult to replicate. By leveraging our unique understanding of our guests and the beauty landscape, we are strengthening trust and deepening loyalty to ensure Ulta Beauty is the beauty destination our growing number of guests choose again and again.

Speaker #3: And that our Ulta Beauty-only strategy is working. What sets our differentiated model apart is the power of our entire ecosystem: leading assortment, services, loyalty, omnichannel convenience, beauty expertise, and shopping experience all working together.

Speaker #3: This combination creates a flywheel that attracts more guests, more loyalty, more data and insights, and more brand partnerships, which in turn makes Ulta Beauty the ultimate beauty discovery destination and represents a strategic advantage that is very difficult to replicate.

Speaker #3: By leveraging our unique understanding of our guests and the beauty landscape, we are strengthening trust and deepening loyalty to ensure Ulta Beauty is the beauty destination our growing number of guests choose again and again.

Speaker #3: I want to thank all of our associates for delivering these strong results and advancing our long-term strategic priorities amidst a dynamic operating environment. We are energized by our continued progress and confident in the enduring relevance of beauty, that powerful connection our guests and associates have with Ulta Beauty, and the significant growth opportunities ahead.

Kecia Steelman: I want to thank all of our associates for delivering these strong results and advancing our long-term strategic priorities amidst a dynamic operating environment. We are energized by our continued progress and confident in the enduring relevance of beauty, the powerful connection our guests and associates have with Ulta Beauty, and the significant growth opportunities ahead. I am confident that we have the right team, strategy, and model to continue to win in beauty and drive profitable growth and meaningful long-term value for all of our stakeholders. With that, I will turn it over to Chris to cover the financials.

Speaker #3: I am confident that we have the right team, strategy, and model to continue to win in beauty and drive profitable growth and meaningful long-term value for all of our stakeholders.

Speaker #3: And with that, I'll turn it over to Chris to cover the financials.

Speaker #1: Thanks, Kecia. And good afternoon, everyone. I'll begin with a discussion of our second quarter results, and then share our updated expectations for the year.

Chris DelOrefice: Thanks, Kecia, and good afternoon, everyone. I will begin with a discussion of our Q2 results and then share our updated expectations for the year. The Ulta Beauty team delivered strong, profitable growth again this quarter. Our performance reflects the power of our Ulta Beauty Unleashed strategy, which drove healthy revenue, operating profit, and earnings growth. This performance was enabled by effective management of gross margin in a competitive environment and a balanced approach to SG&A, including investing to support growth, complemented by a focus on expense discipline and delivering productivity. I want to express my sincere appreciation to all our teams for their continued focus and thoughtful execution in driving these strong results. Highlighting our performance in the quarter, beginning with sales. Net sales for the quarter increased 8.9% to $3 billion, compared to $2.8 billion last year.

Speaker #1: The Ulta Beauty team delivered strong, profitable growth again this quarter. Our performance reflects the power of our Ulta Beauty-only strategy, which drove healthy revenue, operating profit, and earnings growth.

Speaker #1: This performance was enabled by effective management of gross margin in a competitive environment, and a balanced approach to SG&A—including investing to support growth—complemented by a focus on expense discipline and delivering productivity.

Speaker #1: I want to express my sincere appreciation to all our teams for their continued focus and thoughtful execution in driving these strong results. Highlighting our performance in the quarter, beginning with sales: net sales for the quarter increased 8.9% to $3.0 billion, compared to $2.8 billion last year.

Speaker #1: Importantly, excluding the impact of Space NK, total sales increased in the strong mid-single-digit range during the quarter. We opened 13 net new Ulta Beauty stores and one new Space NK store.

Chris DelOrefice: Importantly, excluding the impact of Space NK, total sales increased in the strong mid-single-digit range. During the quarter, we opened 13 net new Ulta Beauty stores and one new Space NK store. Other revenue grew approximately 2% to $54 million. Comparable sales for the period increased 3.8%, driven by average ticket, primarily reflecting the impact of category mix shifts, with transactions roughly flat to last year. From a channel perspective, both store and digital channels contributed to comp growth, with e-commerce delivering high teen sales growth and comp stores delivering modest growth. Turning now to sales by category. Fragrance continued to be our strongest category this quarter, delivering high teen comp growth, driven by successful Mother's Day and Father's Day activations and compelling newness. Incremental marketing support for key fragrance moments and a thoughtfully curated assortment of both breakthrough exclusive newness and beloved luxury fragrance icons continue to drive momentum.

Speaker #1: Other revenue grew approximately 2% to $54 million. Comparable sales for the period increased 3.8%, driven by average ticket, primarily reflecting the impact of category mix shifts, with transactions roughly flat to last year.

Speaker #1: From a channel perspective, both store and digital channels contributed to comp growth, with e-commerce delivering high-teens sales growth and comp stores delivering modest growth.

Speaker #1: Turning to our sales by category, fragrance continued to be our strongest category this quarter, delivering high teen comp growth driven by successful Mother's Day and Father's Day activations and compelling newness.

Speaker #1: Incremental marketing support for key fragrance moments, and a thoughtfully curated assortment of both breakthrough, exclusive newness and beloved luxury fragrance icons, continue to drive momentum.

Speaker #1: Guests responded to the excitement of discovering what's new, while continuing to turn to Ulta Beauty for key gifting occasions. This performance was supported by strength in our core luxury brands—Prada, Carolina Herrera, and YSL—as well as the exclusive new brand launch of Megami. Stallion exclusive brand noise through its innovative milk scent format and standout newness in collaboration with award-winning singer-songwriter Ella Langley drove virality and strong guest engagement.

Chris DelOrefice: Guests responded to the excitement of discovering what is new while continuing to turn to Ulta Beauty for key gifting occasions. This performance was supported by strength in our core luxury brands, Prada, Carolina Herrera, and YSL, as well as the exclusive new brand launch of Megan Thee Stallion. Exclusive brand NOYZ, through its innovative milk scent format and standout newness in collaboration with award-winning singer-songwriter Ella Langley, drove virality and strong guest engagement. The haircare category delivered high single-digit comp growth again this quarter, driven primarily by strong performance in prestige haircare and hair tools. Newer brands amika and Moroccanoil, as well as exclusive brand Cécred, continue to drive healthy growth in prestige haircare as hair treatments such as scalp regimens continue to resonate with consumers. Innovative offerings from Shark and T3 contributed to growth within hair tools.

Speaker #1: The hair care category delivered high single-digit comp growth again this quarter, driven primarily by strong performance in prestige hair care and hair tools.

Speaker #1: Newer brands Amika and Moroccanoil, as well as exclusive brand Sacred, continue to drive healthy growth in prestige hair care as hair treatments such as scalp regimens continue to resonate with consumers.

Speaker #1: Innovative offerings from Shark and T3 contributed to growth within hair tools. Comparable sales in the makeup category were approximately flat, with growth in prestige makeup offset by a decrease in mass makeup.

Chris DelOrefice: Comp sales in the makeup category were approximately flat, with growth in prestige makeup offset by a decrease in mass makeup. Compelling newness, including an early lead from Charlotte Tilbury and an exclusive launch with Hanz de Fuko, as well as ongoing performance of new brand Rare Beauty, drove guest excitement and low double-digit growth for prestige makeup. Mass makeup declined in the low single-digit range, with exclusive newness from L'Oréal, strength from Milani, and sustained growth from Morphe, which was more than offset by select mass brands, which lacked meaningful newness from last year. Comp sales in the total skincare and wellness category declined modestly this quarter. Wellness delivered another quarter of double-digit growth with nutrition and supplements, including Lemme, MaryRuth's, and Cymbiotika, as well as self-care brands, including Therabody and Saje, driving category performance.

Speaker #1: Compelling newness, including an early lead from Charlotte Tilbury and an exclusive launch with Head Magic, as well as ongoing performance of new brand Rare Beauty, drove guest excitement and low single-digit growth for prestige makeup.

Speaker #1: Mask makeup declined in the low single-digit range, with exclusive newness from L'Oréal, strength from Milani, and sustained growth from Morphe, which was more than offset by select mask brands that lacked meaningful newness from last year.

Speaker #1: Comp sales in the total skincare and wellness category declined modestly this quarter. Wellness delivered another quarter of double digit growth with nutrition and supplements including Lemon, Mary Ruth's, and Symbiotica as well as self-care brands including Therabody and Sage driving category performance.

Speaker #1: Prestige and mask skincare continue to contribute to growth, as K-beauty brands including Medicube, Anua, and exclusive brand Peach & Lily, along with newness from existing brands including Tatcha and La Roche-Posay, drove category performance and strong guest engagement.

Chris DelOrefice: Prestige and mass skincare continue to contribute to growth as K-beauty brands, including Medicube, Anua, and exclusive brand Peach & Lily, and newness from existing brands, including Tatcha and La Roche-Posay, drove category performance and strong guest engagement. This growth was more than offset by lower sales in body care as we lacked meaningful expansions of key brands last year. Finally, services delivered mid-single-digit comp growth driven by strong member engagement in salon and specialty services, including ear piercing and makeup services. Gross margin decreased modestly to 39.1% of sales compared to 39.2% of sales last year, primarily due to the impact of the Space NK business mix. Regarding the Ulta Beauty business, we continue to effectively manage gross margin, delivering modest improvement in the quarter through shrink reductions, increased supply chain productivity, and preservation of merchandise margin, while absorbing the impact of channel mix and slower other revenue growth.

Speaker #1: This growth is more than offset by lower sales in body care, as we lacked meaningful expansions of key brands last year. Finally, services delivered mid-single-digit comp growth, driven by strong member engagement in salon and specialty services, including ear piercing and makeup services.

Speaker #1: Gross margin decreased modestly to 39.1% of sales compared to 39.2% of sales last year, primarily due to the impact of the Space NK business mix.

Speaker #1: Regarding the Ulta Beauty business, we continue to effectively manage gross margin, delivering modest improvement in the quarter through shrink reductions, increased supply chain productivity, and preservation of merchandise margin, while absorbing the impact of channel mix and slower other revenue growth.

Speaker #1: Moving to SG&A, we continue to execute against our expense optimization plan, maintaining financial discipline and driving efficiencies while prioritizing targeted investments. For the quarter, SG&A increased 8.2% to $803 million, primarily due to the acquisition of Space NK.

Chris DelOrefice: Moving to SG&A, we continue to execute against our expense optimization plan, maintaining financial discipline and driving efficiencies while prioritizing targeted investments. For the quarter, SG&A increased 8.2% to $803 million, primarily due to the acquisition of Space NK. As a percent of sales, SG&A decreased 20 basis points to 26.4% compared to 26.6% last year, largely due to lower incentive compensation and leverage of corporate overhead, partially offset by the impact of Space NK and increased investments in advertising to support growth and market share gains. Operating profit grew double digits at 10.1% to $380 million. As a percent of sales, operating margin was 12.5% of sales compared to 12.4% last year, reflecting strong execution across the P&L. Interest expense was $4 million, primarily reflecting the continued utilization of our revolver to support our previously communicated increase in share buybacks.

Speaker #1: As a percent of sales, SG&A decreased 20 basis points to 26.4%, compared to 26.6% last year, largely due to lower incentive compensation and leverage of corporate overhead, partially offset by the impact of Space NK and increased investments in advertising to support growth and market share gains.

Speaker #1: Operating profit grew double digits at 10.1% to $380 million. As a percent of sales, operating margin was 12.5% of sales compared to 12.4% last year, reflecting strong execution across the P&L.

Speaker #1: Interest expense was $4 million, primarily reflecting the continued utilization of our revolver to support our previously communicated increase in share buybacks. Wrapping up the second quarter P&L, net income increased 8.1% to $282 million, and diluted earnings per share increased double digits at 13.3% to $6.55 per share.

Chris DelOrefice: Wrapping up the Q2 P&L, net income increased 8.1% to $282 million, and diluted earnings per share increased double digits at 13.3% to $6.55 per share. Turning to the balance sheet and our capital deployment strategies, we continue to maintain a disciplined approach to cash and capital expenditures, driving improved near-term cash efficiency while investing against our long-term growth priorities. We ended the quarter with $213 million in cash and short-term investments and $340 million in short-term debt. Total inventory was flat at $2.4 billion, reflecting improved inventory management offset by inventory to support new brand launches and the addition of new stores. On a per store basis, inventory decreased 4.1%. Capital expenditures were $81 million for the quarter, primarily driven by investments in new and existing stores and technology.

Speaker #1: Turning to the balance sheet and our capital deployment strategies, we continue to maintain a disciplined approach to cash and capital expenditures, driving improved near-term cash efficiency while investing against our long-term growth priorities.

Speaker #1: We ended the quarter with $213 million in cash and short-term investments and $340 million in short-term debt. Total inventory was flat at $2.4 billion, reflecting improved inventory management offset by inventory to support new brand launches and the addition of new stores.

Speaker #1: On a per-store basis, inventory decreased 4.1%. Capital expenditures were $81 million for the quarter, primarily driven by investments in new and existing stores and technology.

Speaker #1: In the quarter, we continued to return excess capital to shareholders, deploying cash and leveraging our revolver to support $236 million of stock repurchases, bringing the year-to-date total to $791 million.

Chris DelOrefice: In the quarter, we continued to return excess capital to shareholders, deploying cash and leveraging our revolver to support $236 million of stock repurchases, bringing the year-to-date total to $791 million. At the end of Q2, $1 billion remained available under our current share repurchase program, and we now expect to complete the current board authorization in fiscal 2026, increasing our stock buyback target to $1.8 billion for the year. We expect stock repurchases to remain a core part of our capital allocation strategy in the future as we work with our board to define the next iteration of our buyback program. Turning now to our updated outlook for fiscal 2026. We intend to expand market share and drive compelling profitable growth this year, and our teams delivered against these goals with strong execution across the P&L through the H1 of fiscal 2026.

Speaker #1: At the end of the second quarter, $1 billion remained available under our current share repurchase program, and we now expect to complete the current board authorization in fiscal 2026, increasing our stock buyback target to $1.8 billion for the year.

Speaker #1: We expect stock repurchases to remain an important part of our capital allocation strategy in the future as we work with our board to define the next iteration of our buyback program.

Speaker #1: Turning now to our updated outlook for fiscal 2026, we intend to expand market share and drive compelling, profitable growth this year. Our teams delivered against these goals with strong execution across the P&L through the first half of fiscal 2026.

Speaker #1: Reflecting this strong performance, we have raised our full year expectations for both sales and earnings. We now expect fiscal 2026 net sales growth to be between 6.7% and 7.2%, with comp sales growth between 3.2% and 3.7%.

Chris DelOrefice: Reflecting this strong performance, we have raised our full year expectations for both sales and earnings. We now expect fiscal 2026 net sales growth to be between 6.7% and 7.2%, with comp sales growth between 3.2% and 3.7%. We expect operating profit growth to be between 8.3% and 9.3% for the year. We continue to expect to generate strong operating cash flow, which will enable reinvestment to support future growth and also support our increased plan to return $1.8 billion in capital to shareholders through our stock repurchase program in fiscal 2026. We also now expect diluted EPS to be between $28.70 and $29 per share, representing growth between 11.9% and 13.1% respectively, compared to previously announced growth expectations of 10.6% to 12.3%. Note, our estimates assume a weighted average share count of approximately 43 million shares and a tax rate of approximately 24.5%.

Speaker #1: We expect operating profit growth to be between 8.3% and 9.3% for the year. We continue to expect to generate strong operating cash flow, which will enable reinvestment to support future growth and also support our increased plan to return $1.8 billion in capital to shareholders through our stock repurchase program in fiscal 2026.

Speaker #1: We also now expect diluted EPS to be between $28.70 and $29.00 per share, representing growth between 11.9% and 13.1%, respectively, compared to previously announced growth expectations of 10.6% to 12.3%.

Speaker #1: Note our estimates assume a weighted average share count of approximately 43 million shares and a tax rate of approximately 24.5%. For modeling purposes, we now expect modest improvement in operating margin for the year, with opportunity to increase margin up to 20 basis points.

Chris DelOrefice: For modeling purposes, we now expect modest improvement in operating margin for the year, with opportunity to increase margin up to 20 basis points. We intend to continue to balance investments across cost of sales and SG&A to support market share expansion and strong profitable growth. We continue to expect gross margin for the year will be roughly flat as we leverage growth and productivity to balance channel mix, fuel costs, and the need to compete in an evolving environment. We continue to expect SG&A expenses will increase less than revenue growth for the year as we lap Ulta Beauty Unleashed investments made last year, including the acquisition of Space NK, and drive efficiencies while continuing to invest with discipline to support market share gains and maximize profitable growth.

Speaker #1: We intend to continue to balance investments across cost of sales and SG&A to support market share expansion and strong, profitable growth. We continue to expect gross margin for the year will be roughly flat, as we leverage growth and productivity to balance channel mix, fuel costs, and the need to compete in an evolving environment.

Speaker #1: We continue to expect SG&A expenses will increase less than revenue growth for the year as we lap Ulta Beauty Unleash investments made last year, including the acquisition of Space NK, and drive efficiencies while continuing to invest with discipline to support market share gains and maximize profitable growth.

Speaker #1: Reflecting our intent to continue to leverage our revolver to support our stock buyback program, we expect interest expense will be between $14 and $16 million for the year.

Chris DelOrefice: Reflecting our intent to continue to leverage our revolver to support our stock buyback program, we expect interest expense will be between $14 million and $16 million for the year. In addition to reflecting a strong H1 performance, our updated guidance reflects appropriate prudence for the H2 given the evolving macro landscape. For the H2, we now expect net sales to increase 4% to 5%, inclusive of comp sales growth of between 2% and 3%, as we lap stronger performance during the same period last year. Based on this expectation, we anticipate our two-year stacked comp for the H2 will be greater than 8%. Consistent with our prior guidance, we expect operating profit will increase between 6% and 8% for the H2. We continue to plan SG&A growth in the low single-digit range, which will more than offset planned pressure from gross margin.

Speaker #1: In addition to reflecting a strong first-half performance, our updated guidance reflects appropriate improvements for the second half, given the evolving macro landscape. For the second half, we now expect net sales to increase 4% to 5%, inclusive of comp sales growth of between 2% and 3%, as we lap stronger performance during the same period last year. Based on this expectation, we anticipate our two-year stacked comp for the second half will be greater than 8%.

Speaker #1: Consistent with our prior guidance, we expect operating profit will increase between 6% and 8% for the second half. We continue to plan SG&A growth in the low single-digit range, which will more than offset planned pressure from gross margin.

Speaker #1: Recall that gross margin in Q3 last year benefited from the timing of market-wide price actions from select brands, which are not expected to repeat this year.

Chris DelOrefice: Recall that gross margin in Q3 last year benefited from the timing of market-wide price actions from select brands, which are not expected to repeat this year. Reflecting these expectations, we expect to deliver diluted EPS growth between 9% and 12% for the H2 of the year versus the same period last year. One final comment as you review your models, we expect normal seasonality between Q3 and Q4 as we invest in Q3 to prepare for the holiday season, and therefore, would expect less EPS growth in Q3 versus Q4. In closing, Ulta Beauty continues to be well-positioned to deliver compelling long-term value creation for shareholders. We remain focused on executing with discipline against our plans, including focused investments to increase market share and deliver strong, profitable sales growth and double-digit annual earnings growth for shareholders.

Speaker #1: Reflecting these expectations, we expect to deliver diluted EPS growth between 9% and 12% for the second half of the year versus the same period last year.

Speaker #1: One final comment as you review your models. We expect normal seasonality between Q3 and Q4, as we invest in Q3 to prepare for the holiday season, and therefore would expect less EPS growth in Q3 versus Q4.

Speaker #1: In closing, Ulta Beauty continues to be well positioned to deliver compelling, long-term value creation for shareholders. We remain focused on executing with discipline against our plans, including targeted investments to increase market share and deliver strong, profitable sales growth and double-digit annual earnings growth for shareholders.

Speaker #1: And now I'll turn the call over to our operator to moderate the Q&A session.

Chris DelOrefice: I will turn the call over to our operator to moderate the Q&A session.

Speaker #2: We will now begin Q&A. To join the queue to ask a question, please press star five on your telephone. Again, that's star five on your telephone to ask a question.

Operator: We will now begin Q&A. To join the queue to ask a question, please press star five on your telephone. Again, that is star five on your telephone to ask a question. Please limit to one question before jumping back in the queue. Thank you. We will now pause a moment to assemble the queue. Our first question will come from Rupesh Parikh with Oppenheimer. Please unmute your line. You are now unmuted. Please ask your question.

Speaker #2: Please limit yourself to one question before jumping back in the queue. Thank you. We will now pause for a moment to assemble the queue. Our first question will come from Rupesh Parikh with Oppenheimer.

Speaker #2: Please unmute yourself. You are now unmuted. Please ask your question.

Speaker #3: Good afternoon. Thanks for taking my question, and also congrats on a nice quarter. So I wanted to kick it off with the makeup category.

Rupesh Parikh: Good afternoon. Thanks for taking my question, and also congrats on a nice quarter. I wanted to kick it off with the makeup category. So comps were flat during the quarter. I was just curious from an industry perspective, what you are seeing in the category, and then, how you are thinking about the back half, and just curious if you expect any green shoots as we enter the back half of the fiscal year. Thank you.

Speaker #3: So, comps were flat during the quarter. I was just curious, from an industry perspective, what you're seeing in the category, and then how you're thinking about the back half. I'm also curious if you expect any green shoots as we enter the back half of the fiscal year.

Speaker #3: Thank you.

Speaker #4: Thanks, Rupesh, for the question. Mass makeup performance was mostly a reflection of a lack of newness from some of the major brands, as they lapped some strength from last year.

Chris DelOrefice: Thanks, Roopesh, for the question. Mass makeup performance was mostly a reflection of lack of newness from some of the major brands as they lapped some strength from last year. We are seeing some encouraging activity in the category. When you are looking at what we are seeing going into the H2, this fuller face look, more expressive eye, et cetera, and then we are also very optimistic of some of the newness that we are seeing that is coming into the category in the back half. I would say between what we are seeing with trends, with a little bit more of a heavier use makeup case going into the back half of the year, along with some newness that we are seeing in both mass and prestige, it gives us what we see, you mentioned about green shoots.

Speaker #4: But we are seeing some encouraging activity in the category. When you're looking at what we're seeing going into the second half—the solar face look, more expressive eye, etc.

Speaker #4: And then we're also very optimistic about some of the newness that we're seeing that's coming into the category in the back half. So I'd say between what we're seeing with trends, with a little bit more of a heavier-use makeup case going into the back half of the year, along with some newness that we're seeing in both mass and prestige.

Speaker #4: It gives us what—we see, you mentioned about green shoots. We see that potentially there are some green shoots for us in the back half of this year.

Chris DelOrefice: We see that potentially there is some green shoots for us in the back half of this year in regards to makeup.

Speaker #4: In regards to makeup.

Speaker #3: Great. Thank you. Apostille.

Rupesh Parikh: Great. Thank you. I will pass the call on.

Speaker #2: Our next question will come from Lorraine Hutchinson with Bank of America. Your line is unmuted.

Operator: Our next question will come from Lorraine Hutchinson with Bank of America. Your line is unmuted.

Speaker #5: Thank you. Good afternoon. The competitive environment continues to intensify. Can you comment on how the promotional cadence has been for both Ulta Beauty and the competition, and then what's included in your outlook for the second half?

Lorraine Hutchinson: Thank you. Good afternoon. The competitive environment continues to intensify. Can you comment on how the promotional cadence has been for both Ulta Beauty and the competition? What is included in your outlook for the H2?

Speaker #4: Yeah, thanks, Lorraine, for the question. As we shared in the remarks, value is an increasingly important consideration for the guest as they are facing some heightened economic uncertainty, and everybody's watching their pocketbook.

Chris DelOrefice: Yeah. Thanks, Lorraine, for the question. As we shared in the remarks, value is an increasingly important consideration for the guest as they are facing some heightened economic uncertainty and everybody is watching their pocketbook. The overall promotional environment did tick up a little bit in both the market, and we were a little bit more promotional year-over-year. What I would say is that we were really strategic in our promotional plan, and we were very thoughtful in how we participated. The Big Summer Beauty Sale, Mother's Day and Father's Day, and we did also target some promotions to protect market share. A good example of that is Prime Day. We did participate in that, and we had planned in doing that in this quarter.

Kecia Steelman: Yeah. Thanks, Lorraine, for the question. As we shared in the remarks, value is an increasingly important consideration for the guest as they are facing some heightened economic uncertainty and everybody is watching their pocketbook. The overall promotional environment did tick up a little bit in both the market, and we were a little bit more promotional year-over-year. What I would say is that we were really strategic in our promotional plan, and we were very thoughtful in how we participated. The Big Summer Beauty Sale, Mother's Day and Father's Day, and we did also target some promotions to protect market share. A good example of that is Prime Day. We did participate in that, and we had planned in doing that in this quarter.

Speaker #4: The overall promotional environment did tick up a little bit in both the market, and we were a little bit more, a little bit more promotional year over year.

Speaker #4: But what I would say is that we were really strategic in our promotional plan, and we were very thoughtful in how we participated—the big Summer Beauty Sale, Mother's Day and Father's Day—and then we also targeted some promotions to protect market share.

Speaker #4: And a good example of that is Prime Days. We did participate in that, and we had planned on doing that in this quarter.

Chris DelOrefice: There are three focus areas that we are really looking at with value, because for me, it is not just about the promotionality, but it is also about value and the value you are bringing to the guest. We are utilizing our investments that we have made to really power our personalization capabilities and maximize our promo efficiency. We are also leveraging our marketing to really highlight and reinforce that value message, both in stores and online. We are continuing to balance promotionality with profitability as that environment continues to evolve.

Kecia Steelman: There are three focus areas that we are really looking at with value, because for me, it is not just about the promotionality, but it is also about value and the value you are bringing to the guest. We are utilizing our investments that we have made to really power our personalization capabilities and maximize our promo efficiency. We are also leveraging our marketing to really highlight and reinforce that value message, both in stores and online. We are continuing to balance promotionality with profitability as that environment continues to evolve.

Speaker #4: There are three focus areas that we're really looking at with value, because to me, it's not just about the promotionality, but it's also about value and the value you're bringing to the guest.

Speaker #4: We're utilizing the investments that we've made to really power our personalization capabilities and maximize our promo efficiency. We're also leveraging our marketing to really highlight and reinforce that value message, both in stores and online.

Speaker #4: And then we're continuing to balance promotionality with profitability as that environment continues to evolve. One of the things that we've been talking about here internally is that we want to evolve our promotional strategies to really drive profitable growth.

Kecia Steelman: One of the things that we have been talking about here internally is that we want to evolve our promotional strategies to really drive profitable growth. What that really means is that we are looking at a promo holistically. We are not just looking at that specific moment in time. We are also looking at how does this promo potentially drive AOV, member engagement, a core assortment lift. So it is not just a standalone, one-time period that we are looking at when we are investing in promotional activity. It is really more holistic and it is a little bit more strategic in nature. So, what I would say is for the back half, we have got built into our forecast the ability to be flexible and really respond in a dynamic environment. We are focused on continuing to take share and to drive profitable growth.

Speaker #4: And what that really means is that we're looking at a promo holistically. We're not just looking at that specific moment in time; we're also looking at how does this promo potentially drive AOV, member engagement, and core assortment lift.

Speaker #4: So it's not just a standalone, one-time period that we're looking at. We're investing in promotional activity. It's really more holistic, and it's a little bit more strategic in nature.

Speaker #4: So what I would say is, for the back half, we've got built into our forecast the ability to be flexible and really respond to a dynamic environment.

Speaker #4: And we're focused on continuing to take share and to drive profitable growth.

Speaker #5: Thank you.

Lorraine Hutchinson: Thank you.

Speaker #2: Our next question will come from Christopher Horvers with J.P. Morgan. Your line is now unmuted.

Operator: Our next question will come from Christopher Horvers with JPMorgan. Your line is now unmuted.

Speaker #6: Thanks. Good evening, everybody. So your sales came in better than the two-year stack math for the second quarter. That would seem to imply some sort of acceleration from the time of the first quarter call.

Christopher Horvers: Thanks. Good evening, everybody. Your sales came in better than the 2-year stack math for Q2. That would seem to imply some sort of acceleration from the time of the Q1 call. Is that fair? What came in just overall better than expected, whether that was the newness or was it the engagement around some of these planned promotional events? Then as you look at that back half, that 2% to 3% same store sales, is the message that there was something unique in Q2 that doesn't persist? To what extent? Or is it just, "Hey, we don't know. The world is very uncertain, and you've got back to school and holiday ahead of us, so let's not get ahead of ourselves." Thanks very much.

Speaker #6: Is that fair? And what came in just overall better than expected, whether that was the newness or was it the engagement around some of these planned promotional events?

Speaker #6: And then as you look at that back half, that 2% to 3% same store sales, is the message that there was something unique in the second quarter that doesn't persist, or to what extent is it just, hey, we don't know?

Speaker #6: The world is very uncertain, and you've got back-to-school and the holiday ahead of us, so let's not get ahead of ourselves. Thanks very much.

Speaker #4: Thanks, Chris, for the question. I'll take the first part, and then I'll kick it over to Chris. What I will say is that when we gave guidance, we gave guidance based on the information that we had at the time when we had our last call.

Kecia Steelman: Thanks, Chris, for the question. I will take the first part and then I will kick it over to Chris. What I will say is that, when we gave guidance, we gave guidance based on the information that we had at the time when we had our last call. We did see sales continue to pick up as the quarter went through. What I would say is that I am pleased. I was just answering the question earlier with Lorraine around our review of how we are attacking promotionality and how it is playing out and how the consumer is responding, and really the levers that we are pulling on in more of a 360 approach. It is not just about a promo, it is about how are we activating it in store with experience and being really thoughtful in how we are bringing the brands to life.

Speaker #4: And we did see sales continue to pick up as the quarter went through. So what I would say is that I'm pleased. I was just answering the question earlier with Lorraine.

Speaker #4: Around our review of how we're attacking promotionality and how it's playing out, and how the consumer is responding. And really, the levers that we're pulling on in more of a 360 approach.

Speaker #4: So it's not just about a promo. It's about how we are activating it in store with experience and being really thoughtful in how we're bringing the brands to life.

Speaker #4: We were pleased with how that continued to play out throughout the quarter. Maybe you can talk a little bit about the numbers in the stack.

Kecia Steelman: We were pleased with how that continued to play out throughout the quarter. Maybe you can talk a little bit about the numbers and the stack, Chris.

Speaker #6: Yes. Yeah. Thanks for the question. Look for first so overall our sales guidance we did increase it meaningfully for the full year now six, seven to seven two percent and a total comp three two to three seven.

Chris DelOrefice: Yes. Yeah, thanks for the question. First, overall, our sales guidance, we did increase it meaningfully for the full year, now at 6.7% to 7.2% and a total comp 3.2% to 3.7%. As you think of the H2 of the year, we continue to make an assumption on growing share as we move into the H2 of the year. The implied kind of H2 growth in total is 4% to 5%, comp growth of 2% to 3%. I think it's probably easier to look at maybe a H1, H2, two-year stack. We did say that the H2 we expect to be above 8%. When you look at the H1 of the year versus the H2 of the year, there's a meaningful step up in the comp from 2025.

Speaker #6: As you think of the second half of the year, we continue to make the assumption of growing share as we move into the second half of the year.

Speaker #6: The implied kind of second half growth in total is 4% to 5% comp growth of 2% to 3%. I think it's probably easier to look at maybe a first half, second year, two-year stack.

Speaker #6: We did say that the second half we expect to be above eight percent. When you look at the first half of the year versus the second half of the year, there's a meaningful step up in the comp from 2025, right?

Speaker #6: We're a little over six percent in the back half of 2025 versus a little over four and a half percent in the first half of 2025.

Chris DelOrefice: We're a little over 6% in the back half of 2025 versus a little over 4.5% in the H1 of 2025. So there's a meaningful step up there. I would say there's not a significant difference between H1, H2. I do think to your point, we want to remain prudent in a dynamic macro environment. We want to provide a forecast we have conviction in. Overall, we just see the guidance as very strong and we see how that's also flowing through from strong profit and a really nice double-digit EPS portfolio. We think it sets up the balance of the year nicely, and we're pleased with the execution to date.

Speaker #6: So, there's a meaningful step up there. And so, I would say there's not a significant difference between first half and second half. I do think, to your point, we want to remain prudent in the dynamic macro environment.

Speaker #6: We want to provide a forecast we have conviction in. And overall, we just see the guidance as very strong, and we see how that's also flowing through from strong profit and a really nice double-digit EPS portfolio.

Speaker #6: We think it sets up the balance of the year nicely, and we're pleased with the execution to date. Thank you so much.

Christopher Horvers: Thank you so much.

Speaker #2: Your next question will come from Anthony Chikumba with Loop Capital Markets. Your line is now unmuted.

Operator: Your next question will come from Anthony Chukumba with Loop Capital Markets. Your line is now unmuted.

Anthony Chukumba: Thank you so much for taking my question. Congrats on another really strong quarter. Going back just a little bit to the competitive landscape. Obviously, your former partner is now opening some beauty shop and shops. I know you've always said this is a very competitive category and a very attractive category. But as you think about the back half of this year and the upcoming holiday selling season, what is your appetite for, if necessary, getting more promotional to continue to gain market share? Thank you.

Speaker #7: Thank you so much for taking my question. Congrats on another really strong quarter. Going back just a little bit to the competitive landscape—obviously, you have a former partner now opening some beauty shopping shops.

Speaker #7: I know you’ve always said this: it’s a very competitive category and a very attractive category. But as you think about the back half of this year and the upcoming holiday selling season, what is your appetite for, if necessary, getting more promotional to continue to gain market share?

Speaker #7: Thank you.

Speaker #4: Well, Anthony, what I would say is that beauty has always been a competitive category. We expect the battle for share to remain intense. Our job isn't to chase competitors.

Kecia Steelman: Well, Anthony, what I would say is that beauty has always been a competitive category. We expect the battle for share to remain intense. Our job isn't to chase competitors, it's to really lean into what differentiates Ulta Beauty and execute it even better. We're the ultimate beauty discovery destination, and we really own that beauty journey end to end. Our competitive mode is really self-reinforcing. Unmatched choices attract guests, our guests attract the best brands, and those brands bring greater newness and exclusivity. That differentiation really deepens the loyalty and brings guests more into our ecosystem and makes Ulta Beauty even more valuable to those brands. I was talking in my prepared comments about brand building and how important that is and how we're leaning into fragrance and K-beauty.

Speaker #4: It's to really lean into what differentiates Ulta Beauty and execute it even better. We're the ultimate beauty discovery destination, and we really own that beauty journey end to end.

Speaker #4: And our competitive moat is really self-reinforcing. Unmatched choices attract guests, our guests attract the best brands, and those brands bring greater newness and exclusivity.

Speaker #4: And that differentiation really deepens the loyalty and brings guests more into our ecosystem, making Ulta Beauty even more valuable to those brands. So, I was talking in my prepared comments about brand building and how important that is.

Speaker #4: And how we're leaning into fragrance and K-beauty. Exclusives are very, very important, and when you think about even K-beauty and our double-digit growth there, 50% of that was exclusive to us and our assortment.

Kecia Steelman: Exclusives are very, very important, and when you think about even K-beauty and our double-digit growth there, 50% of that was exclusive to us and our assortment. We're just going to continue to lean into what it is that we do well. We will respond to any kind of dynamic environment that's out there, but we feel like we've got all of the levers that are playing to our advantage, and our guidance has built in the ability for us to remain promotional as needed.

Speaker #4: So we're just going to continue to lean into what it is that we do well. We will respond to any kind of dynamic environment that's out there.

Speaker #4: But we feel like we've got all of the levers that are playing to our advantage, and our guidance has built in the ability for us to remain promotional as needed.

Speaker #6: Yeah, I would just add that the team’s done a really nice job of driving productivity, both in gross margin and in SG&A. That’s enabled us to make sure we’re investing for strong returns.

Chris DelOrefice: Yeah. I would just add that the team's done a really nice job of driving productivity, both in gross margin and in SG&A. That's enabled us to make sure that we're investing for strong returns. Again, both as you think of go-to-market plans that may be in COGS, but also you saw an increase in marketing advertising, which has helped fuel growth as well. So really pleased with how we're managing the P&L, getting productivity efficiency out of the areas we should, putting investment back in the business to fuel growth while preserving that flexibility to deliver on our increased guidance.

Speaker #6: Again, both as you think of go-to-market plans, maybe in comms, but also, you saw an increase in marketing and advertising, which has helped fuel growth as well.

Speaker #6: So, really pleased with how we're managing the P&L, getting productivity and efficiency out of the areas we should, putting investment back in the business to fuel growth, while preserving that flexibility to deliver on our increased guidance.

Speaker #7: Helpful. Thank you so much.

Anthony Chukumba: Helpful. Thank you so much.

Speaker #2: Our next question will come from Christina Katai with Deutsche Bank. Please unmute your line. Your line is now unmuted.

Operator: Our next question will come from Cristina Cattai with Deutsche Bank. Please unmute your line. Your line is now unmuted.

Speaker #8: Hi, good afternoon, Kecia and Chris. And congrats on a nice set of results here. I had a question on K-beauty. Kecia, you said it delivered double-digit growth.

Cristina Cattai: Hi, good afternoon, Kecia and Chris, and congrats on a nice set of results here. I had a question on K-beauty, right? Kecia, you said it delivered double-digit growth. I think nearly half of the sales are coming from exclusive brands or products. As K-beauty becomes more widely available, just how are you thinking about maintaining Ulta's competitive advantage and authority within the space? Then if you could help quantify or maybe contextualize for us just the contribution that that category has had on your comp growth. Thank you.

Krisztina Katai: Hi, good afternoon, Kecia and Chris, and congrats on a nice set of results here. I had a question on K-beauty, right? Kecia, you said it delivered double-digit growth. I think nearly half of the sales are coming from exclusive brands or products. As K-beauty becomes more widely available, just how are you thinking about maintaining Ulta's competitive advantage and authority within the space? Then if you could help quantify or maybe contextualize for us just the contribution that that category has had on your comp growth. Thank you.

Speaker #8: I think nearly half of the sales are coming from exclusive brands or products. But as K-beauty becomes more widely available, how are you thinking about maintaining Ulta's competitive advantage and authority within the space?

Speaker #8: And then, if you could help quantify or maybe contextualize for us just the contribution that that category has had on your comp growth. Thank you.

Speaker #4: Well, Christina, as the US leader in K-beauty for the last 18 months, we've been continuing to accelerate. We continue to lean into this assortment innovation of bringing the best global beauty to the US market and our international markets around the world.

Kecia Steelman: Well, Cristina, as the US leader in K-beauty for the last 18 months, and we have been continuing to accelerate, we continue to lead into this assortment innovation of bringing the best of global beauty to the US market and our international markets around the world. This also announced the launch of PROYA, the number one skincare brand in China. It is not just about K-beauty anymore. I think C-beauty is also very important to us. One of the things that we are going to really hold true here at Ulta Beauty is, I think you can get really caught up into this K-beauty hoopla about it being very fast fashion.

Speaker #4: This also announced the launch of Proya, the number one skincare brand in China. So it's not just about K-beauty anymore. I think C-beauty is also very, very important to us.

Speaker #4: And one of the things that we're going to really hold true here at Ulta Beauty is, I think you can get really caught up in this K-beauty hoopla about it being very fast fashion.

Speaker #4: Our merchants are very responsible and very thoughtful about curating the best brands that have great formulations and putting our guests first, making sure that they have strong efficiency and efficacy, and are high-quality products that we're putting in front of our consumers.

Kecia Steelman: Our merchants are very responsible and very thoughtful of curating the best brands that have great formulations and putting our guests first and making sure that they have strong efficiency and efficacy and are high-quality products that we are putting in front of our consumers. We are not going to get caught up into this fast fashion of K-beauty, because there is a lot of noise out there. We want to put the very best of the assortment and have that trusted experience from our guests that are coming into the store. Going forward, I mentioned the K-beauty, it is C-beauty, and there are other global trends that we are staying really close to. We feel good about the global innovation pipeline.

Speaker #4: So we're not going to get caught up in this fast fashion of K-beauty, because there's a lot of noise out there. We want to put the very best of the assortment and have that trusted experience from our guests that are coming into the store.

Speaker #4: So, going forward, as I mentioned, there's K-beauty, there's C-beauty, and there are other global trends that we're staying really close to. We feel good about the global innovation pipeline.

Speaker #4: We've got a lot of new products and categories that are merchandising, and we're really good at the storytelling and bringing those brands to life.

Kecia Steelman: We have got a lot of new products and categories that are coming across the broader assortment in merchandising, and we are really good at the storytelling and bringing those brands to life. It can be a little confusing on how do you shop this category specifically, and we are going to do a really nice job of continuing to simplify and be able to help that consumer shop a category that is still relatively new in the US. We are just going to continue to leverage our scale and our differentiated model and introduce brands. We are learning quickly from the guest response, and we are just going to continue to scale the strongest concepts across our ecosystem in a broad-based way. It is not just about skincare, there is also makeup, and there is also haircare. We are really leaning in it across the broader Ulta Beauty portfolio.

Speaker #4: It can be a little confusing on how you shop this category specifically. And we're going to do a really nice job of continuing to simplify and be able to help that consumer shop a category that's still relatively new in the U.S.

Speaker #4: And then we're just going to continue to leverage our scale and our differentiated model and introduce brands. We're learning quickly from the guest response, and we're just going to continue to scale the strongest concepts across our ecosystem in a broad-based way.

Speaker #4: So it's not just about skincare. There's also makeup, and there's also hair care. So we're really leaning in across the broader Ulta Beauty portfolio.

Cristina Cattai: Great. Thank you. Best of luck.

Krisztina Katai: Great. Thank you. Best of luck.

Speaker #8: Great. Thank you. Best of luck.

Speaker #4: Thank you.

Kecia Steelman: Thank you.

Speaker #2: Our next question will come from Sydney Wagner with Jefferies. Your line is now unmuted.

Operator: Our next question will come from Sydney Wagner with Jefferies. Your line is now unmuted.

Sydney Wagner: Hi. Thanks for taking our question. As store fulfillment climbs past 50% of e-commerce orders and digital channel growth remains strong, can you just update us on the progress of closing the profitability gap between digital and store sales? Are there any other levers beyond fulfillment that are meaningfully contributing there? Thank you.

Speaker #8: Hi. Thanks for taking our question. So, as store fulfillment climbs past 50% of e-commerce orders and digital channel growth remains strong, can you just update us on the progress of closing the profitability gap between digital and store sales?

Speaker #8: And then, are there any other levers beyond fulfillment that are meaningfully contributing there? Thank you.

Speaker #6: Yeah, thanks for the question. One, I mean, look, you see us this year as channel shifts continue to play out, for us to nicely manage gross margin.

Chris DelOrefice: Yeah. Thanks for the question. Look, you see us this year as channel shifts continue to play out for us to nicely manage gross margin. We have a really strong supply chain productivity agenda. We actually got some leverage this quarter on strong growth from our store fixed costs. This is inclusive of absorbing headwinds like increased fuel costs as well. The team across the board has done an outstanding job. To your point, the leverage of our store footprint becomes an effective mechanism to manage the delta between the transportation costs, and we are going to continue to drive that lever in addition to additional productivity. We feel confident using this year as sort of a proxy for productivity agenda, and just continuing to drive strong growth and get leverage across gross margin to continue to be able to balance this. We are treating things as omni-channel.

Speaker #6: We have a really strong supply chain productivity agenda. We actually got some leverage this quarter on strong growth from our store fixed costs, and this is inclusive of absorbing headwinds like increased fuel costs as well.

Speaker #6: So, the team across the board has done an outstanding job. To your point, the leverage of our store footprint becomes an effective mechanism to manage the delta between the transportation costs, and we're going to continue to drive that lever in addition to additional productivity.

Speaker #6: We feel confident using this year as a sort of proxy for the productivity agenda, and just continuing to drive strong growth and get leverage across gross margin to continue to be able to balance this.

Speaker #6: We're treating things as omnichannel. Obviously, with strong growth too, we're getting leverage from our broader fixed costs in our overall overhead structure within corporate.

Chris DelOrefice: Obviously, with strong growth too, we are getting leverage from our broader fixed costs in our overall overhead structure within corporate. As you think of going forward, we will continue to benefit from accretive growth from new value vectors like Marketplace and UB Media that will also be enhancing to gross margin. So we feel good about how we are managing things this year. I think it sets up nicely for the future as well.

Speaker #6: And then, as you think of going forward, we'll continue to benefit from accretive growth from new value vectors like marketplace and UB Media, that will also be enhancing to gross margin.

Speaker #6: So, we feel good about how we're managing things this year, and I think it sets up nicely for the future as well.

Speaker #8: Great. Thank you. Congrats on the quarter.

Sydney Wagner: Great. Thank you, and congrats on the quarter.

Speaker #4: Thank you.

Kecia Steelman: Thank you.

Speaker #2: Our next question will come from Susan Anderson with Canaccord Genuity. Your line is now unmuted.

Operator: Our next question will come from Susan Anderson with Canaccord Genuity. Your line is now unmuted.

Susan Anderson: Hi. Good evening. Thanks for taking my questions. I guess maybe just looking at the newness, I do not know if you could talk about what you see coming for the H2, and I guess just the strengths of newness you see coming versus what we saw in the H1. Are there any certain categories that you think will be stronger than others, such as fragrance or skincare? Also, I guess just when you look at mass versus prestige, I guess, how do you balance the investment between the two categories? It definitely seems like prestige has been stronger maybe for years now. I guess, just curious if you feel like the competition has increased at all in the mass area, particularly as Walmart starts to kind of refocus back on their beauty space.

Speaker #7: Hi, good evening. Thanks for taking my questions. I guess, maybe just looking at the newness, I don't know if you could talk about what you see coming for the back half, and I guess just the strength of newness you see coming versus what we saw in the first half. Are there any certain categories that you think will be stronger than others, such as fragrance or skincare?

Speaker #7: And then also, I guess, just when you look at mass versus prestige, how do you balance the investment between the two categories?

Speaker #7: It definitely seems like prestige has been stronger, maybe, now. So, I guess I'm just curious if you feel like the competition has increased at all in the mass area, particularly as Walmart and others start to kind of refocus back on their beauty.

Speaker #7: Thanks.

Kecia Steelman: Susan, yeah, it is kind of a two-part question here. The first part would be around how I feel about the newness coming through, in the H2. We feel great about the newness, and we feel like it is very balanced. It is one of the things that Lauren and the merchant team have done a fantastic job with, is really forecasting what newness we had in the pipeline last year, what do we have in the plan this year, and how are we looking at making sure that we are bridging potentially any gaps that could be out there. We feel really good about the H2, and that is built into the guidance and to the plan. In regards to mass, in mass, it is different than in prestige. In mass, we participate in a largely highly distributed market where the opportunity is continuing to gain relevance and share.

Speaker #4: Susan, yeah, it's kind of a two-part question here. So, the first part would be around, how do I feel about the newness coming through in the back half?

Speaker #4: We feel great about the newness, and we feel like it's very balanced. Just one of the things that Lauren and the merchant team have done a fantastic job with is really forecasting what newness we had in the pipeline last year.

Speaker #4: What do we have in the plan this year, and how are we looking at making sure that we're bridging potentially any gaps that could be out there?

Speaker #4: We feel really good about the back half, and that's built into the guidance, into the plan. In regards to mass—in mass, it's different than in prestige.

Speaker #4: In mass, we participate in a largely highly distributed market, where the opportunity continues to gain relevance and share. But when you look at the mix of our business, about 30% of it is coming from mass and 70% is coming from prestige.

Kecia Steelman: When you look at the mix of our business, about roughly 30% of it is coming from mass and 70% is coming from prestige. So, we are a much smaller player in the beauty space in mass than where we are in prestige. So while we held share roughly flat in mass, especially with there not being a lot of newness in some of that mass category, I feel like that was a pretty good representation of the strength of our business in this last quarter. In regards to prestige, we have gained share in prestige in the quarter in both brick and mortar and e-commerce, which, that is really where the majority of our business is coming from. When you look at where our focus is, we really want to lean into being where you find discovery in mass.

Speaker #4: So, we are a much smaller player in the beauty space in mass than we are in prestige. So, while we held share roughly flat in mass—especially with there not being a lot of newness in some of that mass category—I feel like that was a pretty good representation of the strength of our business in this last quarter.

Speaker #4: In regard to prestige, we gained share in prestige in the quarter in both brick-and-mortar and e-commerce, which is really where the majority of our business is coming from.

Speaker #4: But when you look at where our focus is, we really want to lean into being where we find discovery in mass. A great example of that is this Christian Foundation, where we were the launch lead and exclusive for L'Oréal, bringing that brand to life in our stores and giving it credibility before it expands into other modes of distribution.

Kecia Steelman: A great example of that is this Cushion Foundation, where we were the launch lead and exclusive for L'Oréal, where we are bringing that brand to life in our stores, giving it credibility before it expands in other modes of distribution. I think you will see us playing in mass more in that way, and then we will go on to the next new launch that could be playing. I think when you look at the competitive environment for mass as a whole, I feel that we are going to continue to lean into exclusives, first to market, that really differentiate us versus the other mass players, because if it is just purely about price and total assortment, it is less than 30% of our business right now today. So, it is not really where we are totally leaning in.

Speaker #4: And I think you'll see us playing in mass more in that way. And then we'll go on to the next new launch that could be playing.

Speaker #4: But I think when you look at the competitive environment for mass as a whole, I feel that we're going to continue to lean into exclusives.

Speaker #4: First-to-market really differentiates us versus the other mass players, because if it's just purely about price and total assortment, that's less than 30% of our business right now.

Speaker #4: So, it's not really where we're totally leaning in.

Speaker #7: Yeah, that makes sense. Thanks so much. Good luck with the rest of the year.

Susan Anderson: Yeah, that makes sense. Thanks so much. Good luck the rest of the year.

Speaker #4: Thank you.

Kecia Steelman: Thank you.

Speaker #2: Our next question will come from Olivia Tong with Raymond James. Your line is now unmuted.

Operator: Our next question will come from Olivia Tong with Raymond James. Your line is now unmuted.

Speaker #4: Great, thanks. Two questions. One on the overall environment—whether you're seeing any noticeable or observable trade-down or affordability behavior? We obviously talked about the challenges in mass makeup, although it clearly sounds like it's more about newness and competition.

Olivia Tong: Great. Thanks. Two questions. One on the overall environment, whether you are seeing any noticeable or observable trade down or affordability behavior. We obviously talked about the challenges in mass makeup, although it clearly sounds like it is more newness and competition. But just seeing if you are seeing anything there. Then on the overall portfolio, you have now had Space NK for a year, international rollout marketplace. Would just love to hear a little bit more about your learnings from these endeavors. Thanks.

Speaker #4: But just seeing if you're seeing anything there. And then, on the overall portfolio, you've now had space in K for a year—international rollout, marketplace.

Speaker #4: We'd just love to hear a little bit more about your learnings from these endeavors. Thanks. Sure. Thanks, Olivia, for the question. What I will say is that we're mainly pleased with how our teams are executing in a dynamic environment.

Kecia Steelman: Sure. Thanks, Olivia, for the question. What I will say is that, we remain pleased with how our teams are executing in a dynamic environment. We've not seen any notable changes in consumer behavior in the quarter, and that means, both the demographics from an age perspective and also from an income perspective, is that we're seeing increases in spend across the broader segmentation. So, we've not seen trade down behavior happening. Again, us raising our guidance for the H2 of the year does share that we're confident in what we've got out there, that we will be able to continue to drive the business. In regards to what we've learned from the portfolio enhancements of Space NK, we've just now cycled on a year of having Space NK. It's gone really fast. We're really pleased with what we're seeing.

Speaker #4: We've not seen any notable changes in consumer behavior in the quarter, and that means both the demographics from an age perspective and also from an income perspective, we're seeing increases in spend across the broader segmentation.

Speaker #4: So we've not seen trade-down behavior happening. And again, us raising our guidance for the back half of the year does share that we're confident in what we've got out there—that we will be able to continue to drive the business.

Speaker #4: In regards to what we've learned from the portfolio enhancements of space in K, we've just now cycled on a year of having space in K.

Speaker #4: It's gone really fast. We're really pleased with what we're seeing. There's been a lot of learnings for us in regards to clienteling, loyalty, and second purchase.

Kecia Steelman: There's been a lot of learnings for us in regards to clienteling, loyalty, second purchase. We're taking some of those learnings, and we're really applying them into our Ulta Beauty ecosystem. On the flip side, I think some of the things that we've been able to bring to them is a little bit more around the scale, the size that we have, our operational efficiencies and effectiveness. Again, when we made that acquisition, it was, to me, a 1 plus 1 equals 3, where I felt like we could be much stronger and better together than we would be as operating as independent companies. So, I like what I'm seeing.

Speaker #4: We're taking some of those learnings and we're really applying them into our Ulta Beauty ecosystem. And on the flip side, I think some of the things that we've been able to bring to them is a little bit more around our the scale, the size that we have, our operational efficiencies and effectiveness.

Speaker #4: So again, when we made that acquisition, it was to me a one-plus-one-equals-three, where I felt like we could be much stronger and better together.

Speaker #4: Then we would be operating as independent companies. So I like what I'm seeing. I think we're learning a lot about their private label and their private branding there.

Kecia Steelman: I think we're learning a lot about their private label and their private branding there, the way that they're bringing their storytelling to life even more in stores, and I think that we're still in the early innings, but, I'm really pleased with what I'm seeing also from their comp growth and how they're really performing and taking share still in the UK, which is great. There's been no big surprises, and we've been really pleased with the overall performance.

Speaker #4: They're bringing their storytelling to life even more in stores. And I think that we're still in the early innings, but I'm really pleased with what I'm seeing also from their comp growth.

Speaker #4: And how they're really performing and taking share still in the UK, which is great. There have been no big surprises, and we've been really pleased with the overall performance.

Speaker #2: Our next question will come from Adrian Yi with Barclays. Your line is now unmuted.

Operator: Our next question will come from Adrienne Yih with Barclays. Your line is now unmuted.

Speaker #4: Great. Thank you very much. And I'll add my congratulations—well done, and in a pretty darn tough environment. Kecia, I wanted to talk a little bit more about the growth opportunities over the longer-term horizon.

Adrienne Yih: Great. Thank you very much, and I will add my congratulations. Well done in a pretty darn tough environment. Kecia, I wanted to talk a little bit more about the growth opportunities over the longer-term horizon. Health and wellness, that is obviously, and then K-beauty, those being sort of the new categories. They are very small today. How do you define wellness? It is very broad. How do you kind of curate an assortment that is trustworthy, as you said earlier, to grow that at an accelerated pace? Secondarily, another area that seems like an opportunity is also your services business. It drives them into the stores. Is there anything that you are contemplating or strategically thinking about that might grow beyond the haircare, primarily haircare? Thank you.

Speaker #4: Health and wellness, that’s obviously—and then K-beauty—those being sort of the new categories. They’re very small today. How do you define wellness? I mean, it’s very, very broad.

Speaker #4: And how do you kind of curate an assortment that's trustworthy, as you said earlier, to grow that at an accelerated pace? And then, secondarily, another area that seems like an opportunity is also your services business.

Speaker #4: It drives them into the stores. Is there anything that you are contemplating or strategically thinking about that might grow beyond primarily hair care?

Speaker #4: Thank you. Yeah, thanks, Adrian, for the question. I'll start with wellness first. What we've done is, over the course of our introduction of wellness, we've really focused on four strategic pillars.

Kecia Steelman: Yeah. Thanks, Adrienne, for the question. I will start with wellness first. What we have done is, over the course of our introduction of wellness, we have really focused on four strategic pillars. The first one is around nutrition and supplements, the second one is intimate care, third is rest and relax, and the fourth is essential routine. So we are trying to not be everything to everyone. We are really focused on these four primary categories and bringing the best of these categories to life for our consumer. We are learning very quickly from the insights that we have gained from the stores that we have expanded in right now, and also our expanded assortment in our marketplace online. I do believe that this could be one of our next big pillar categories of continued growth.

Speaker #4: The first one is around nutrition and supplements. The second one is intimate care. The third is rest and relax. And the fourth is essential routine.

Speaker #4: So we're trying not to be everything to everyone. We're really focused on these four primary categories and bringing the best of these categories to life for our consumer.

Speaker #4: And we're learning very quickly from the insights that we've gained from the stores that we've expanded in right now, and then also our expanded assortment in our marketplace.

Speaker #4: Online, I do believe that this could be one of our next big pillar categories of continued growth. It doesn't cannibalize the existing sales.

Kecia Steelman: It does not cannibalize on the existing sales, and it also could help the trip frequency purchase, very similar to how our services does in our stores, too. In regards to the services and any type of new services that we are looking at, we are continuing to always lean in in how the guest is continuing to evolve, what needs they have. We have added the ear piercing in stores in the last few years. That was due to the guest asking for it. While we backed away from skin, I think there is still something there that we have not maybe cracked the code with in skin that we could maybe in the future. But in regards to anything that is big and new in regards to services, we do not have anything to share at this point in time. I would just say that we are proud of how our salon business has been performing.

Speaker #4: And it also could help the trip frequency purchase, very similar to how our services do and our stores too. In regards to the services and any type of new services that we're looking at, we're continuing to always lean in on how the guest is continuing to evolve and what needs they have.

Speaker #4: We've added ear piercing in stores in the last few years. That was due to guests asking for it. While we backed away from skin, I think there's still something there that we've not maybe cracked the code with in skin, that we could maybe do in the future.

Speaker #4: But in regards to anything that's big and new in regards to services, we don't have anything to share at this point in time. I would just say that we are proud of how our salon business has been performing.

Speaker #4: We're very proud of how we've actually started to make it a little bit—even more profitable—within the walls that we're working in right now.

Kecia Steelman: We are very proud of how we have actually started to make it a little bit even more profitable within the walls that we are working in right now. So I would say it is more to come. We are always continuing to evolve and change and meeting the guests where they are at and staying very close to them and making sure that we are offering all the services that they are looking for.

Speaker #4: So I would say more to come. We're always continuing to evolve and change, meeting the guests where they're at, staying very close to them, and making sure that we're offering all the services that they're looking for.

Speaker #4: Fantastic. Thank you very much. Thank you.

Adrienne Yih: Fantastic. Thank you very much.

Kecia Steelman: Thank you.

Speaker #2: Ryan, I think we have one I think that we're out of time. So Keisha, do you want to take us?

Kiley F. Rawlins: Ryan, I think that we are out of time. So Kecia, do you want to take us home?

Kiley Rawlins: Ryan, I think that we are out of time. So Kecia, do you want to take us home?

Kecia Steelman: Yeah, absolutely. I would just like to thank you for joining us today. To wrap up, I want to thank our guests, our trusted brand partners, and our dedicated associates for their continued engagement and support. We are proud of the consistency of our results and the progress we continue to make. Our increased guidance underscores our confidence in the path ahead and our ability to drive sustainable long-term growth and value creation for all of our stakeholders. We look forward to updating you on our progress on our next earnings call on 3 December. Thank you, and have a great evening. Thanks, everyone.

Speaker #4: Yeah, absolutely. I would just like to thank you for joining us today, and to wrap up, I want to thank our guests, our trusted brand partners, and our dedicated associates for their continued engagement and support.

Speaker #4: We're proud of the consistency of our results and the progress we continue to make. Our increased guidance underscores our confidence in the path ahead and our ability to drive sustainable, long-term growth and value creation for all of our stakeholders.

Speaker #4: We look forward to updating you on our progress on our next earnings call on December 3rd. Thank you, and have a great evening.

Speaker #4: Thanks, everyone.

Operator: Thank you for joining. This concludes today's call. You may now disconnect.