Ulta Beauty, Inc. (ULTA)

CIK: 0001403568. SIC: 5990 Retail-Retail Stores, NEC. Latest 10-K as of: 2026-03-26.

SIC breadcrumb: Retail Trade > Miscellaneous Retail > SIC 5990 Retail-Retail Stores, NEC

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1403568. Latest filing source: 0001104659-26-035243.

Selected Fundamentals

Metric	Value	Unit	FY	Filed
Revenue	12,392,820,000	USD	2026	2026-03-26
Net income	1,153,479,000	USD	2026	2026-03-26
Assets	6,999,294,000	USD	2026	2026-03-26

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-26. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001403568.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Metric	2017	2018	2019	2020	2021	2022	2023	2024	2025	2026
Revenue	4,854,737,000	5,884,506,000	6,716,615,000	7,398,068,000	6,151,953,000	8,630,889,000	10,208,580,000	11,207,303,000	11,295,654,000	12,392,820,000
Net income	409,760,000	555,234,000	658,559,000	705,945,000	175,835,000	985,837,000	1,242,408,000	1,291,005,000	1,201,118,000	1,153,479,000
Operating income	654,824,000	785,291,000	854,080,000	901,094,000	236,820,000	1,297,492,000	1,638,610,000	1,678,029,000	1,564,972,000	1,532,992,000
Gross profit	1,747,229,000	2,096,809,000	2,409,311,000	2,681,064,000	1,949,159,000	3,368,554,000	4,044,510,000	4,381,100,000	4,387,253,000	4,845,224,000
Diluted EPS	6.52	8.96	10.94	12.15	3.11	17.98	24.01	26.03	25.34	25.64
Assets	2,551,878,000	2,908,687,000	3,191,172,000	4,863,872,000	5,089,969,000	4,764,379,000	5,370,411,000	5,707,011,000	6,001,693,000	6,999,294,000
Liabilities	1,001,660,000	1,134,470,000	1,370,954,000	2,961,778,000	3,090,420,000	3,229,006,000	3,410,600,000	3,427,683,000	3,513,340,000	4,195,843,000
Stockholders' equity	1,550,218,000	1,774,217,000	1,820,218,000	1,902,094,000	1,999,549,000	1,535,373,000	1,959,811,000	2,279,328,000	2,488,353,000	2,803,451,000
Cash and cash equivalents	385,010,000	277,445,000	409,251,000	392,325,000	1,046,051,000	431,560,000	737,877,000	766,594,000	703,201,000	424,243,000
Net margin	8.44%	9.44%	9.80%	9.54%	2.86%	11.42%	12.17%	11.52%	10.63%	9.31%
Operating margin	13.49%	13.35%	12.72%	12.18%	3.85%	15.03%	16.05%	14.97%	13.85%	12.37%

Financial Charts

Macro Cross-References

CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
UNRATE - Unemployment Rate
FEDFUNDS - Federal Funds Effective Rate
CES0500000003 - Average Hourly Earnings of All Employees, Total Private
DFEDTARU - Federal Funds Target Range - Upper Limit
DFEDTARL - Federal Funds Target Range - Lower Limit
DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
PCEPI - Personal Consumption Expenditures: Chain-type Price Index
PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
PPIACO - Producer Price Index by Commodity: All Commodities
T10YIE - 10-Year Breakeven Inflation Rate
U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
PAYEMS - All Employees, Total Nonfarm
CIVPART - Labor Force Participation Rate
EMRATIO - Employment-Population Ratio
UNEMPLOY - Unemployed
CE16OV - Employment Level
ICSA - Initial Claims
JTSJOL - Job Openings: Total Nonfarm
JTSQUR - Quits: Total Nonfarm
GDPC1 - Real Gross Domestic Product
A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
INDPRO - Industrial Production: Total Index
TCU - Capacity Utilization: Total Index
HOUST - New Privately-Owned Housing Units Started: Total Units
PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
RSAFS - Advance Retail Sales: Retail Trade
PCE - Personal Consumption Expenditures
DSPIC96 - Real Disposable Personal Income
PSAVERT - Personal Saving Rate
M2SL - M2
BOPGSTB - U.S. International Trade in Goods and Services: Balance

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-03-26. Report date: 2026-01-31.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

Overview

We were founded in 1990 as a beauty retailer at a time when prestige, mass, and salon products were sold through distinct channels – department stores for prestige products; drug stores and mass merchandisers for mass products; and salons and authorized retail outlets for professional hair care products. We developed a unique specialty retail concept that offers a broad range of brands and price points, select beauty services, and a convenient and welcoming shopping environment. We define our target consumer as a beauty enthusiast, a consumer who is passionate about the beauty category, uses beauty for self-expression, experimentation, and self-investment, and has high expectations for the shopping experience. Based on our consumer insights research, we estimate there are approximately 140 million beauty enthusiasts in the U.S. We believe our strategy provides us with competitive advantages that have contributed to our financial performance.

Today, our U.S. operations (“Ulta U.S.”) make us the largest specialty beauty retailer in the United States and the premier beauty destination for cosmetics, fragrance, skin care, bath and body products, hair care, salon styling tools, wellness products, and salon services. In addition to our U.S. operations, we are expanding our presence internationally through our subsidiary, Space NK, a luxury beauty retailer operating in the U.K. and Ireland, our joint venture in Mexico, and our franchise in the Middle East.

Key points of strategic differentiation include: a differentiated assortment of established and emerging brands across a variety of categories and price points; our convenient omnichannel footprint, offering products through our stores, delivering immersive and personalized experiences through our digital platforms, and providing the Ulta Beauty experience internationally through our partnerships; our best-in-class loyalty program that enables members to earn points for products and beauty services and provides us with a deep understanding of our customers and their preferences; and our ability to cultivate human connection with warm and welcoming guest experiences across all of our channels.

The continued growth of our business and any future increases in net sales, net income, and cash flows is dependent on our ability to execute our strategic priorities across three foundational focus areas, as outlined in our Ulta Beauty Unleashed strategy: 1) Drive Core Business Growth through operational excellence and an elevated go-to-market approach; 2) Scale New, Accretive Businesses by capitalizing on key growth opportunities to ensure relevancy in a rapidly changing world; and 3) Align Our Foundation for Future Success by optimizing our ways of working, streamlining our cost structure, and cultivating an engaging, associate-centered culture. Ulta U.S. operates in the large and growing U.S. beauty products and salon services industry, and we believe our strong operating model, competitive advantages, and financial foundation, paired with our investments to drive our growth, position us to capture additional market share in the industry.

Comparable sales is a key metric that is monitored closely within the retail industry. Our comparable sales have fluctuated in the past, and we expect them to continue to fluctuate in the future. A variety of factors affect our comparable sales, including general economic conditions, changes in merchandise strategy or mix, and timing and effectiveness of our marketing activities, among others.

Over the long term, our growth strategy is to drive profitable growth and market share leadership in beauty and wellness through growing our comparable sales, expanding omnichannel capabilities, and opening new stores. Long-term operating profit is expected to increase as a result of our efforts to drive revenue growth, leverage fixed costs, increase

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operating efficiencies, and grow other revenue, partially offset by incremental investments to enhance the guest experience, people, assortment, advertising, and depreciation.

Current Trends

Industry trends

The overall U.S. beauty market expanded in 2024 and 2025, supported by ongoing consumer engagement with and resilience in the beauty category. We remain confident that our differentiated and diverse business model, our commitment to strategic investments, and our highly engaged associates will continue to drive market share gains in the U.S. beauty category over the long term.

Impact of inflation and other macroeconomic trends

Persistent inflationary and macroeconomic pressures have impacted consumer spending habits broadly. The continuation of inflationary and macroeconomic pressures could impact our ability to grow sales and maintain historical profitability levels. In addition, inflation could cause the interest rates on any debt to remain at an elevated level or increase.

Basis of presentation

The Company has one reportable segment, which includes retail stores, salon services, and e-commerce.

We recognize merchandise revenue at the point of sale in our retail stores. E-commerce sales are recognized upon shipment or guest pickup of the merchandise based on meeting the transfer of control criteria. Retail store and e-commerce sales are recorded net of estimated returns. Shipping and handling are treated as costs to fulfill the contract and not a separate performance obligation. Accordingly, we recognize revenue for our single performance obligation related to online sales at the time control of the merchandise passes to the guest, which is at the time of shipment or guest pickup. We provide refunds for merchandise returns within 30 days from the original purchase date. State sales taxes are presented on a net basis as we consider ourselves a pass-through conduit for collecting and remitting state sales tax. Salon service revenue is recognized at the time the service is provided to the guest. Gift card sales revenue is deferred until the guest redeems the gift card. Company coupons and other incentives are recorded as a reduction of net sales. Other revenue includes private label and co-branded credit card programs, deferred revenue related to the loyalty program and gift card breakage, and royalties.

Comparable sales reflect sales for stores and e-commerce platforms beginning on the first day of the 14th month of operation. Therefore, a store is included in our comparable store base on the first day of the period after one year of operations plus the initial one-month grand opening period. Non-comparable store sales include sales from new stores that have not yet completed their 13th month of operation and stores that were closed for part or all of the period in either year. Remodeled stores are included in comparable sales unless the store was closed for a portion of the current or prior period. Comparable sales include retail sales, salon services, and e-commerce. In fiscal years with 53 weeks, the 53rd week of comparable sales is included in the calculation. In the year following a 53-week year, the prior year period is shifted by one week to compare similar calendar weeks. There may be variations in the way in which some of our competitors and other retailers calculate comparable or same store sales.

Measuring comparable sales allows us to evaluate the performance of our store base as well as several other aspects of our overall strategy. Several factors could positively or negatively impact our comparable sales results:

●

the general national, regional, and local economic conditions and corresponding impact on customer spending levels;

●

the introduction of new products or brands;

●

the location of new stores in existing store markets;

●

competition / alternative distribution channels;

●

our ability to respond on a timely basis to changes in consumer preferences;

●

the effectiveness of our various merchandising and marketing activities; and

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●

the number of new stores opened and the impact on the average age of all of our comparable stores.

Cost of sales includes:

●

the cost of merchandise sold, offset by vendor income that is not a reimbursement of specific, incremental, and identifiable costs;

●

distribution costs including labor and related benefits, freight, rent, depreciation and amortization, real estate taxes, utilities, and insurance;

●

shipping and handling costs for e-commerce orders;

●

retail store occupancy costs including rent, depreciation and amortization, real estate taxes, utilities, repairs and maintenance, insurance, and licenses;

●

salon services payroll and benefits; and

●

shrink and inventory valuation reserves.

Our cost of sales may be negatively impacted as we open new stores. Changes in our merchandise or channel mix may also have an impact on cost of sales. This presentation of items included in cost of sales may not be comparable to the way in which our competitors or other retailers compute their cost of sales.

Selling, general and administrative (SG&A) expenses include:

●

payroll, bonus, and benefit costs for retail store and corporate employees;

●

advertising and marketing costs, offset by vendor income that is a reimbursement of specific, incremental, and identifiable costs;

●

occupancy costs related to our corporate office facilities;

●

stock-based compensation expense;

●

depreciation and amortization for all assets, except those related to our retail stores and distribution operations, which are included in cost of sales; and

●

legal, finance, information systems, and other corporate overhead costs.

This presentation of items in selling, general and administrative expenses may not be comparable to the way in which our competitors or other retailers compute their selling, general and administrative expenses.

Pre-opening expenses include non-capital expenditures during the period prior to store opening for new, remodeled, and relocated stores including rent during the construction period for new and relocated stores, store set-up labor, management and employee training, and grand opening advertising.

Interest income represents interest from cash equivalents, which includes highly liquid investments such as money market funds and certificates of deposit with an original maturity of three months or less from the date of purchase. Interest expense includes interest costs and facility fees associated with our credit facilities. Our credit facility interest rates are based on a variable rate structure which can result in increased cost in periods of rising or elevated interest rates.

Income tax expense reflects the federal and foreign statutory tax rates and the weighted average state statutory tax rate for the states in which we operate stores.

Equity net loss of affiliate represents our proportionate share of net loss from equity method investees.

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Results of operations

Our fiscal years are the 52- or 53-week periods ending on the Saturday closest to January 31 each year. The Company’s fiscal years ended January 31, 2026 (fiscal 2025), February 1, 2025 (fiscal 2024), and February 3, 2024 (fiscal 2023) were 52-, 52-, and 53-week years, respectively.

The following tables present the components of our consolidated results of operations for the periods indicated:

Fiscal Year Ended

January 31,

February 1,

February 3,

(Dollars in thousands)

2026

2025

2024

Net sales

12,392,820

11,295,654

11,207,303

Cost of sales

7,547,596

6,908,401

6,826,203

Gross profit

4,845,224

4,387,253

4,381,100

Selling, general and administrative expenses

3,296,411

2,808,592

2,694,561

Pre-opening expenses

15,821

13,689

8,510

Operating income

1,532,992

1,564,972

1,678,029

Interest expense (income), net

1,787

(15,094)

(17,622)

Income before income taxes and equity net loss of affiliate

1,531,205

1,580,066

1,695,651

Income tax expense

373,869

378,948

404,646

Income before equity net loss of affiliate

1,157,336

1,201,118

1,291,005

Equity net loss of affiliate

3,857

—

Net income

1,153,479

1,201,118

1,291,005

Other operating data:

Number of stores end of period (1)

1,591

1,445

1,385

Comparable sales

5.4%

0.7%

5.7%

(1)

Includes 1,505 Ulta Beauty stores located in the U.S. and 86 Space NK stores located in the U.K. and Ireland as of January 31, 2026.

Fiscal Year Ended

January 31,

February 1,

February 3,

(Percentage of net sales)

2026

2025

2024

Net sales

100.0%

Cost of sales

60.9%

61.2%

60.9%

Gross profit

39.1%

38.8%

39.1%

Selling, general and administrative expenses

26.6%

24.9%

24.0%

Pre-opening expenses

0.1%

Operating income

12.4%

13.9%

15.0%

Interest expense (income), net

0.0%

(0.1%)

(0.2%)

Income before income taxes and equity net loss of affiliate

12.4%

14.0%

15.1%

Income tax expense

3.0%

3.4%

3.6%

Income before equity net loss of affiliate

9.3%

10.6%

11.5%

Equity net loss of affiliate

0.0%

Net income

9.3%

10.6%

11.5%

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Fiscal year 2025 versus fiscal year 2024

Net sales

Net sales increased $1.1 billion, or 9.7%, to $12.4 billion in fiscal 2025 compared to $11.3 billion in fiscal 2024. The net sales increase was primarily due to increased comparable sales, the acquisition of Space NK, and sales from new stores. The total comparable sales increase of 5.4% in fiscal 2025 was driven by a 3.3% increase in average ticket and a 2.0% increase in transactions. The total comparable sales increase in fiscal 2024 was 0.7%.

Gross profit

Gross profit increased $458.0 million, or 10.4%, to $4.8 billion in fiscal 2025 compared to $4.4 billion in fiscal 2024. Gross profit as a percentage of net sales increased to 39.1% in fiscal 2025 compared to 38.8% in fiscal 2024. The increase in gross profit margin was primarily due to lower inventory shrink and higher merchandise margin, partially offset by adverse channel mix, deleverage of other revenue, and deleverage of store fixed expenses.

Selling, general and administrative expenses

SG&A expenses increased $487.8 million, or 17.4%, to $3.3 billion in fiscal 2025 compared to $2.8 billion in fiscal 2024. As a percentage of net sales, SG&A expenses increased to 26.6% in fiscal 2025 compared to 24.9% in fiscal 2024. The deleverage of SG&A expenses was primarily due to higher incentive compensation, higher store payroll and benefits, higher corporate overhead primarily due to strategic investments, and higher store expenses.

Pre-opening expenses

Pre-opening expenses increased $2.1 million, or 15.6%, to $15.8 million in fiscal 2025 compared to $13.7 million in fiscal 2024.

Interest expense (income), net

Net interest expense was $1.8 million in fiscal 2025 compared to $15.1 million of net interest income in fiscal 2024. The increase in interest expense was primarily due to increased borrowings on our credit facilities in fiscal 2025. As of January 31, 2026, we had $62.3 million outstanding under our credit facilities. We did not have any outstanding borrowings on the credit facilities as of February 1, 2025.

Income tax expense

Income tax expense of $373.9 million in fiscal 2025 represented an effective tax rate of 24.5%, compared to fiscal 2024 income tax expense of $378.9 million and an effective tax rate of 24.0%.

Equity net loss of affiliate

Equity net loss of affiliate was $3.9 million in fiscal 2025 related to our joint venture in Mexico.

Net income

Net income decreased $47.6 million to $1.15 billion in fiscal 2025 compared to $1.20 billion in fiscal 2024. The decrease in net income was primarily due to a $487.8 million increase in SG&A expenses, a $16.9 million increase in net interest expense, a $3.9 million increase in equity net loss of affiliate, and a $2.1 million increase in pre-opening expenses, partially offset by a $458.0 million increase in gross profit and a $5.1 million decrease in income taxes.

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Fiscal year 2024 versus fiscal year 2023

Net sales

Net sales increased $88.4 million, or 0.8%, to $11.3 billion in fiscal 2024 compared to $11.2 billion in fiscal 2023. The net sales increase was primarily due to new store performance, increased comparable sales, and an increase of $3.7 million in other revenue, partially offset by the benefit of an extra week of sales in fiscal 2023. Net sales for the 53rd week of fiscal 2023 were approximately $181.9 million. The total comparable sales increase of 0.7% in fiscal 2024 was driven by a 1.1% increase in average ticket and a 0.4% decrease in transactions. The total comparable sales increase in fiscal 2023 was 5.7%.

Gross profit

Gross profit increased $6.2 million, or 0.1%, to $4.39 billion in fiscal 2024, compared to $4.38 billion in fiscal 2023. Gross profit as a percentage of net sales decreased to 38.8% in fiscal 2024 compared to 39.1% in fiscal 2023. The decrease in gross profit margin was primarily due to lower merchandise margin, deleverage of store fixed costs, and higher supply chain costs, partially offset by lower inventory shrink and favorable channel mix.

Selling, general and administrative expenses

SG&A expenses increased $114.0 million, or 4.2%, to $2.8 billion in fiscal 2024 compared to $2.7 billion in fiscal 2023. As a percentage of net sales, SG&A expenses increased to 24.9% in fiscal 2024 compared to 24.0% in fiscal 2023. The deleverage of SG&A expenses was primarily due to deleverage of store payroll and benefits, corporate overhead due to strategic investments, and store expenses, partially offset by lower incentive compensation.

Pre-opening expenses

Pre-opening expenses increased $5.2 million, or 60.9%, to $13.7 million in fiscal 2024 compared to $8.5 million in fiscal 2023.

Interest income, net

Net interest income was $15.1 million in fiscal 2024 compared to $17.6 million in fiscal 2023, due to lower average cash balances. We did not have any outstanding borrowings on our credit facilities as of February 1, 2025 and February 3, 2024.

Income tax expense

Income tax expense of $378.9 million in fiscal 2024 represented an effective tax rate of 24.0%, compared to fiscal 2023 income tax expense of $404.6 million and an effective tax rate of 23.9%.

Net income

Net income decreased $89.9 million to $1.2 billion in fiscal 2024 compared to $1.3 billion in fiscal 2023. The decrease in net income was primarily due to a $114.0 million increase in SG&A expenses and a $5.2 million increase in pre-opening expenses, partially offset by a $25.7 million decrease in income taxes and a $6.2 million increase in gross profit.

Liquidity and capital resources

Our primary sources of liquidity are cash and cash equivalents, cash flows from operations, and borrowings under our credit facilities. The most significant components of our working capital are merchandise inventories, cash and cash equivalents, and receivables, reduced by accounts payable, deferred revenue, and accrued liabilities. As of January 31, 2026 and February 1, 2025, we had cash and cash equivalents of $424.2 million and $703.2 million, respectively.

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Our primary cash needs are for rent, capital expenditures for new, remodeled, and relocated stores, increased merchandise inventories related to store expansion and new brand additions, supply chain improvements, share repurchases, and continued investment in our information technology systems.

Our most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for lease expenses, inventory, labor, distribution, advertising and marketing, and tax liabilities) as well as periodic spend for capital expenditures, investments, and share repurchases. Our working capital needs are greatest from August through November each year as a result of our inventory build-up during this period for the approaching holiday season.

Long-term cash requirements primarily relate to funding lease expenses and other purchase commitments.

We generally fund short-term and long-term cash requirements with cash from operating activities. We believe our primary sources of liquidity will satisfy our cash requirements over both the short term (the next twelve months) and long term.

The following table summarizes contractual cash requirements as of January 31, 2026:

Less Than

1 to 3

3 to 5

More than 5

(In thousands)

Total

1 Year

Years

Operating lease obligations (1)

2,634,677

400,875

806,417

590,053

837,332

Purchase obligations

12,000

—

Total (2)

2,646,677

412,875

806,417

590,053

837,332

(1)

These amounts are for our undiscounted lease obligations recorded in our consolidated balance sheets as operating lease liabilities. Also included are legally binding minimum lease payments for leases signed but not yet commenced of $128.4 million, which are excluded from operating lease liabilities shown on our consolidated balance sheets.

(2)

The unrecognized tax benefit of $9.0 million as of January 31, 2026 is excluded due to uncertainty regarding the realization and timing of the related future cash flows, if any.

Purchase obligations reflect legally binding agreements entered into by the Company to purchase goods or services. The amount of purchase obligations relates to commitments for products and services and other goods and service contracts entered into as of January 31, 2026. Excluded from purchase obligations are normal purchases and contracts entered into in the ordinary course of business.

Cash flows

We believe our ability to generate substantial cash from operating activities and readily secure financing at competitive rates are key strengths that give us significant flexibility to meet our short and long-term financial commitments.

The following table presents a summary of our cash flows during the last three years:

Fiscal Year Ended

January 31,

February 1,

February 3,

(In thousands)

2026

2025

2024

Net cash provided by operating activities

1,502,780

1,338,605

1,476,266

Net cash used in investing activities

(931,346)

(383,089)

(441,425)

Net cash used in financing activities

(850,666)

(1,018,909)

(1,006,124)

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Operating activities

Operating activities consist of net income adjusted for certain non-cash items, including depreciation and amortization, non-cash lease expense, deferred income taxes, stock-based compensation expense, realized gains or losses on disposal of property and equipment, and the effect of working capital changes.

The increase in net cash provided by operating activities in fiscal 2025 compared to fiscal 2024 is mainly due to a lower increase in merchandise inventories in fiscal 2025 and timing of accrued liabilities and deferred revenue.

Merchandise inventories, net were $2.2 billion at January 31, 2026, compared to $2.0 billion at February 1, 2025, representing an increase of $212.9 million or 10.8%. The increase in total inventory is primarily due to new brand launches, the acquisition of Space NK, and the addition of new Ulta Beauty stores in the U.S.

The decrease in net cash provided by operating activities in fiscal 2024 compared to fiscal 2023 is mainly due to the decrease in net income, a larger increase in merchandise inventories in fiscal 2024, and timing of deferred income taxes, prepaid expenses and other current assets, accrued liabilities, accounts payable, and deferred revenue.

Investing activities

We have historically used cash primarily for new, remodeled, relocated, and refreshed stores, supply chain investments, short-term investments, and investments in information technology systems. Investment activities for capital expenditures were $434.8 million during fiscal 2025, compared to $374.5 million during fiscal 2024. Purchases of short-term investments were $70.0 million during fiscal 2025 and consisted of certificates of deposit with maturities of three to twelve months from the date of purchase.

The increase in net cash used in investing activities in fiscal 2025 relative to fiscal 2024 was primarily due to the acquisition of Space NK in the second quarter of fiscal 2025.

The decrease in net cash used in investing activities in fiscal 2024 relative to fiscal 2023 was primarily due to less capital expenditures for information technology systems and supply chain, partially offset by more capital expenditures for new, remodeled, and relocated stores compared to fiscal 2023.

Capital expenditures

The following table presents a summary of our consolidated store activities during the last three years:

Fiscal Year Ended

January 31,

February 1,

February 3,

2026

2025

2024

Stores opened

Stores remodeled

Stores relocated

During fiscal 2025, the average investment required to open a new Ulta Beauty store in the U.S. was approximately $2.4 million, which included capital investment net of landlord contributions, pre-opening expenses, and initial inventory net of payables.

Capital expenditures were $434.8 million, $374.5 million, and $435.3 million in fiscal 2025, fiscal 2024, and fiscal 2023, respectively.

Our future investments will depend primarily on the number of new, remodeled, and relocated stores, information technology systems investments, and supply chain investments that we undertake and the timing of these expenditures. Based on past performance and current expectations, we believe our sources of liquidity will be sufficient to fund future capital expenditures. We expect capital expenditures will not be greater than $450 million in fiscal 2026 and will

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primarily be used to fund our new, remodeled, and relocated stores and strategic priorities, including investments in information technology systems and supply chain optimization.

Financing activities

Financing activities include share repurchases, borrowings and repayments under our revolving credit facilities, and capital stock transactions. Purchases of treasury shares represent the fair value of common shares repurchased from plan participants in connection with shares withheld to satisfy minimum statutory tax obligations upon the vesting of restricted stock.

The decrease in net cash used in financing activities in fiscal 2025 relative to fiscal 2024 was primarily due to a decrease in share repurchases.

The increase in net cash used in financing activities in fiscal 2024 relative to fiscal 2023 was primarily due to an increase in share repurchases.

As of January 31, 2026, we had $62.3 million outstanding under our credit facilities. We did not have any outstanding borrowings on the credit facilities as of February 1, 2025 or February 3, 2024.

Share repurchase program

In March 2022, the Board of Directors authorized a share repurchase program (the 2022 Share Repurchase Program) pursuant to which the Company could repurchase up to $2.0 billion of the Company’s common stock. The 2022 Share Repurchase Program revoked the previously authorized but unused amounts from an earlier share repurchase program. The 2022 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

In March 2024, the Board of Directors authorized a share repurchase program (the March 2024 Share Repurchase Program) pursuant to which the Company could repurchase up to $2.0 billion of the Company’s common stock. The March 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts under the 2022 Share Repurchase Program. The March 2024 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

In October 2024, the Board of Directors authorized a share repurchase program (the October 2024 Share Repurchase Program) pursuant to which the Company may repurchase up to $3.0 billion of the Company’s common stock. The October 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts under the March 2024 Share Repurchase Program. The October 2024 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time.

A summary of common stock repurchase activity is presented in the following table:

Fiscal Year Ended

January 31,

February 1,

February 3,

(Dollars in millions)

2026

2025

2024

Shares repurchased

1,999,633

2,489,367

2,173,431

Total cost of shares repurchased

898.5

1,023.5

1,009.3

Credit facilities

On August 27, 2025, we entered into Amendment No. 4 to the Second Amended and Restated Loan Agreement (as so amended, the “Loan Agreement”) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent, and a Lender thereunder; Wells Fargo Bank, National Association and JPMorgan Chase Bank, N.A., as Lead Arrangers and Bookrunners; JPMorgan Chase Bank, N.A., as Syndication Agent and a Lender; and the other lenders party thereto. The Loan Agreement matures on March 13, 2029, provides maximum revolving loans equal to the lesser

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of $1.0 billion or a percentage of eligible owned inventory and eligible owned receivables (which borrowing base may, at the election of the Company and satisfaction of certain conditions, include a percentage of qualified cash), and contains a $50.0 million subfacility for letters of credit. The Loan Agreement requires the Company to maintain a minimum fixed charge coverage ratio of 1.0 to 1.0 whenever availability under the Loan Agreement falls below the specified threshold. Substantially all of the Company’s assets are pledged as collateral for outstanding borrowings under the Loan Agreement. Outstanding borrowings bear interest, at the Company’s election, at either a base rate plus a margin of 0.5% to 1.0% or the Term Secured Overnight Financing Rate plus a margin of 1.5% to 2.0%, and a credit spread adjustment of 0.10%, with such margins based on the Company’s borrowing availability. The unused line fee is 0.25% to 0.375% per annum. As of January 31, 2026 and February 1, 2025, there were no borrowings outstanding under the Loan Agreement.

Ulta Beauty’s wholly owned subsidiary, Space NK, maintains a multi-currency revolving credit facility (the “Facility Agreement”) with National Westminster Bank plc, providing up to £40.0 million for working capital requirements. The Facility Agreement, maturing on April 17, 2028, allows Space NK to increase the revolving facility by an additional £10.0 million with lender consent. The facility is secured by the assets of Space NK and contains a requirement to maintain an interest coverage ratio not less than 4.0 to 1.0 and a leverage ratio not to exceed 2.0 to 1.0 for any relevant period. Borrowings bear interest at either the compound or term Sterling Overnight Index Average plus a margin of 1.75%, and an unused line fee of 0.60% per annum. As of January 31, 2026, there was $62.3 million outstanding under the Facility Agreement.

As of January 31, 2026, we were in compliance with all terms and covenants of the Loan Agreement and Facility Agreement.

Seasonality

Our business is subject to seasonal fluctuation. Significant portions of our net sales and profits are realized during the fourth quarter of the fiscal year due to the holiday selling season. To a lesser extent, our business is also affected by Mother’s Day and Valentine’s Day. Any decrease in sales during these higher sales volume periods could have an adverse effect on our business, financial condition, or operating results for the entire fiscal year. Our quarterly results of operations have varied in the past and are likely to do so again in the future. As such, we believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of our future performance.

Critical accounting policies and estimates

Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements required the use of estimates and judgments that affect the reported amounts of our assets, liabilities, revenues, and expenses. Management bases estimates on historical experience and other assumptions it believes to be reasonable under the circumstances and evaluates these estimates on an ongoing basis. Actual results may differ from these estimates. A discussion of our more significant estimates follows. Management has discussed the development, selection, and disclosure of these estimates and assumptions with the Audit Committee.

Inventory valuation

Merchandise inventories are carried at the lower of cost or net realizable value. Cost is determined using the moving average cost method and includes costs incurred to purchase and distribute goods as well as related vendor allowances including co-op advertising, markdowns, and volume discounts. We record valuation adjustments to our inventories if the cost of a specific product on hand exceeds the amount we expect to realize from the ultimate sale or disposal of the inventory as well as for any excess or discontinued inventory. These estimates are based on management’s judgment regarding future demand, age of inventory, and analysis of historical experience. If actual demand or market conditions are different than those projected by management, future merchandise margin rates may be affected by adjustments to these estimates.

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Inventories are adjusted for the results of periodic physical inventory counts at each of our locations. We record a shrink reserve representing management’s estimate of inventory losses by location that have occurred since the date of the last physical count. This estimate is based on management’s analysis of historical results, including consideration of current loss rates.

We do not believe that there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to calculate our inventory reserves. Adjustments to earnings resulting from revisions to management’s estimates of the inventory reserves have been insignificant during fiscal 2025, 2024, and 2023. An increase or decrease in the lower of cost or net realizable value reserve of 10% would not have a material impact on our operating income for fiscal 2025. An increase or decrease in the shrink rate included in the shrink reserve calculation of 10% would not have a material impact on our operating income for fiscal 2025.

Vendor allowances

The majority of cash consideration received from a vendor is considered to be a reduction of the cost of the related products and is reflected in cost of sales in our consolidated statements of income as the related products are sold unless it is in exchange for an asset or service or a reimbursement of a specific, incremental, identifiable cost incurred by the Company in selling the vendors’ products. We estimate the amount recorded as a reduction of inventory at the end of each period based on a detailed analysis of inventory turns and management’s analysis of the facts and circumstances of the various contractual agreements with vendors. We record cash consideration expected to be received from vendors in receivables. We do not believe there is a reasonable likelihood there will be a material change in the future estimates or assumptions we use to calculate our reduction of inventory. An increase or decrease in inventory turns of five basis points would not have a material impact on our operating income for fiscal 2025.

Impairment of long-lived tangible assets

We review long-lived tangible assets for impairment quarterly or more frequently if events or circumstances indicate these assets might be impaired. Assets are primarily reviewed at the store level, which is the lowest level for which cash flows can be identified. Significant estimates are used in determining future operating results of each store over its remaining lease term. An impairment loss would be recorded if the carrying amount of the long-lived asset exceeds its fair value. We do not believe there is a reasonable likelihood there will be a material change in the future estimates or assumptions we use to calculate our impairment charges. No impairment charges were recognized in fiscal 2025, 2024, or 2023.

Impairment of goodwill and other intangible assets

We review goodwill and other intangible assets for impairment annually or more frequently if events or circumstances indicate these assets might be impaired. An impairment loss would be recorded if the carrying amount of goodwill or other intangible assets exceeds their respective fair value. We do not believe there is a reasonable likelihood there will be a material change in the future estimates or assumptions we use to calculate our impairment charges. No impairment charges were recognized in fiscal 2025, 2024, or 2023.

Loyalty program

We maintain a customer loyalty program, Ulta Beauty Rewards®, which allows members to earn points based on purchases of merchandise or services. Points earned are valid for at least one year. The loyalty program represents a material right to the customer and points may be redeemed on future products and services. Revenue from the loyalty program is recognized when the members redeem points or points expire. We defer revenue related to points earned that have not yet been redeemed. The amount of deferred revenue includes estimates for the standalone selling price of points earned by members and the percentage of points expected to be redeemed. The expected redemption percentage is based on historical redemption patterns and considers current information or trends. The standalone selling price of points earned and the estimated redemption rate is evaluated each reporting period. We do not believe there is a reasonable likelihood there will be a material change in the future estimates or assumptions used to calculate the estimated redemption rate.

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Adjustments to earnings resulting from revisions to management’s estimates of the redemption rates have been insignificant during fiscal 2025, 2024, and 2023. An increase or decrease in the estimated redemption rate of 5% would not have a material impact on our operating income in fiscal 2025.

Income taxes

Judgment is required in determining our provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.

We recognize deferred income taxes for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are anticipated to be recovered or settled. The effect on deferred taxes of a change in income tax rates is recognized in the consolidated statements of income in the period of enactment. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets to the amount expected to be realized unless it is more-likely-than-not that such assets will be realized in full. The estimated tax benefit of an uncertain tax position is recorded in our consolidated financial statements only after determining a more-likely-than-not probability that the uncertain tax position will withstand challenge, if any, from applicable taxing authorities.

Judgment is required in assessing the future tax consequences of events that have been recognized on our consolidated financial statements or tax returns. Variations in the actual outcome of these future tax consequences could materially impact our consolidated financial statements.

Business combinations

Business combinations are accounted for using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired and liabilities assumed are recorded at their respective fair values at the date of acquisition. The determination of the acquisition date fair values of identifiable assets acquired and liabilities assumed requires estimates and the use of valuation techniques when fair value is not readily available and requires judgment. For the valuation of indefinite-lived intangible assets acquired in a business combination, the Company typically uses the relief from royalty method, which utilizes the present value of the after-tax royalty savings attributable to owning the intangible assets as opposed to paying a third party for its use. The significant assumptions used to estimate the fair values of intangible assets include projected revenues, discount rate, remaining useful life, and estimated royalty rate. Although the Company believes its estimates of acquisition date fair values are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates. Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on the determination of the fair values of the intangible assets acquired.

If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges. In addition, we have estimated the economic lives of certain acquired tangible and intangible assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could increase or decrease, or the acquired asset could be impaired.

Recently adopted accounting pronouncements

See Note 2 to our consolidated financial statements, “Summary of significant accounting policies – Recently adopted accounting pronouncements.”

Recent accounting pronouncements not yet adopted

See Note 2 to our consolidated financial statements, “Summary of significant accounting policies – Recent accounting pronouncements not yet adopted.”

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