March 12 (Reuters) - Ulta Beauty forecast annual profit largely below Wall Street estimates on Thursday, as the cosmetics retailer ramps up marketing efforts to boost demand amid choppy consumer spending, sending its shares down 8% in extended trading.
To draw younger and more affluent shoppers, Ulta has leaned on celebrity-owned and premium labels such as Beyonce's Cecred haircare line, Rihanna's Fenty Skin Body, and ran holiday campaigns featuring Khloe Kardashian and Paris Hilton.
While the company
topped holiday-quarter sales expectations, its selling, general and administrative expenses increased 17.4% to $3.30 billion for fiscal year 2025, partly due to higher advertising costs.
Consumers, particularly in the lower- and middle-income categories, have been paring back spending on non-essential purchases as they funnel more of their crimped budgets into everyday essentials such as groceries and pantry staples.
Ulta Beauty was increasingly mindful of rising global conflicts that could impact economic conditions, executives said on a post-earnings call, as sticky inflation and rising geopolitical unrest weigh on consumer sentiment.
It expects comparable sales growth of 2.5% to 3.5% in fiscal 2026, compared with the 5.4% growth it posted in 2025.
Ulta Beauty also faces intense competition from Target and Walmart as they broaden their beauty offerings and ride the surge in demand for K-beauty products.
Last year, the company acquired British high-street chain Space NK to enter the growing UK market and step up its international expansion under its turnaround plan.
Ulta Beauty expects full-year earnings per share to be between $28.05 and $28.55, with the mid-point below analysts' expectations of $28.40, according to data compiled by LSEG.
The company posted fourth-quarter earnings per share of $8.01, compared with the estimate of $8.03.
It expects annual net sales to grow 6% to 7%, while analysts estimate a 5.94% rise.
(Reporting by Sanskriti Shekhar in Bengaluru; Editing by Shilpi Majumdar)
