Ulta Beauty reported strong third-quarter results, with digital engagement rising, eCommerce up in the mid-teen range and loyalty membership growing 4% to a new high.
AI-driven personalization, social-led discovery and expanded app capabilities contributed to stronger conversion across channels. Early holiday results were positive, supported by consistent traffic and faster fulfillment.
Ulta said digital performance was a central driver of Q3 growth, supported by a faster app, new checkout features and broader ship-from-store coverage. CEO Kecia Steelman noted that the digital business continues to gain momentum. “We have had three consecutive quarters of double-digit e-commerce comp,” she said, adding that “our investments to elevate the digital experience and accelerate personalization are really driving both channels up.”
App penetration reached 65% of online member sales, compared with 63% in the prior quarter, after the introduction of Replenish and Save, Wishlist and Venmo integration. Ulta also doubled its ship-from-store network to more than 1,000 sites. Steelman emphasized the importance of speed and ongoing advancements. “There is no finish line in our technology and our investments,” she said. “It is great to see our Ulta Beauty Unleashed plan and what we are investing in start to show on the top-line sales.”
Social discovery continued to lift traffic and demand, with viral prestige fragrance, K-beauty and skincare brands drawing more guests into the app and stores. Loyalty membership increased 4% year over year to 46.3 million members. Steelman said Q3 reflected improvement across several engagement metrics, including brand engagement, earned media value and app interaction. “It is the game plan working together collectively that is driving the momentum,” she said.
As reported by PYMNTS, Ulta’s proof-of-concept for a virtual beauty adviser delivered strong early results, with guests using the artificial intelligence (AI) tool not only for beauty guidance but also for store details, inventory questions, return policies and loyalty information. Ulta is now assessing whether to expand the system as a single unified AI assistant or a set of more specialized agents.
Ulta expanded its digital assortment through UB Marketplace, adding more than 120 brands and over 3,500 SKUs. Interim CFO Chris Lialios said the technology behind Marketplace, personalization and digital enhancements is part of a longer-term plan to support scalable growth. “While these investments create near-term pressure,” he said, “we expect they will support long-term revenue and market share growth.”
Holiday shopping began on solid footing, with strong Black Friday and Cyber Monday performance. Steelman described demand across Q3 as steady. “Comp growth during the quarter was really consistent across all periods,” she said. “Beauty remains a very important category and Ulta is very important to the consumer. I do not see that momentum changing anytime soon.”
Ulta also highlighted international progress, including new stores in Mexico and Kuwait and continued strength at Space NK in the UK. Cross-market earnings are informing plans for assortment strategy, newness pipelines and digital capabilities as the company prepares for 2026.
What Else Stood Out on the Call:
- AI-driven personalization shaped recommendations, promotions and search behavior across digital channels.
- Viral trends in fragrance, K-beauty and skincare helped drive mid-teen eCommerce growth.
- BOPUS and ship-from-store continued to strengthen conversion and improve delivery speed.
- Loyalty membership rose 4% to 46.3 million, increasing the impact of targeted offers.
- UB Marketplace broadened the online assortment with limited inventory risk.
- In-store activations such as 21 Days of Beauty and Fall Haul helped drive consistent traffic across both channels.
Financial Information
Net sales increased 12.9% to 2.9 billion dollars. Comparable sales rose 6.3%, driven by 3.8% ticket growth and 2.4% transaction growth. Gross margin improved to 40.4%, supported by lower shrink and higher merchandise margin. SG&A increased 23.3% to 841 million dollars, reflecting incentive compensation, store payroll and cloud-based technology investments. Inventory increased 16% to 2.7 billion dollars, tied to brand launches, Space NK and new stores.
Ulta operated 1,500 Ulta Beauty stores and 84 Space NK stores at quarter end.
Source: https://www.pymnts.com/