Ulta Beauty (NASDAQ: ULTA) remains a favorite among its shoppers, as sales at the cosmetics and fragrances retailer rose during the third quarter, especially from purchases made online.
The company increased its fiscal year guidance to sales of $12.3 billion for 2025, compared with $12 billion to $12.1 billion previously.
While consumers have cut back on some of their spending, especially for home improvement, other retailers have seen their sales rise as shoppers have become more particular about their discretionary spending.
Ulta reported its revenue increased to $2.53 billion from the year-ago quarter, while its comparable sales rose by 6.3% year over year. The company reported a profit of $230.9 million, compared with $242.2 million a year ago.
Investors have benefited from consumers continuing to buy cosmetics and other beauty products, with shares rising 30% over the past six months.
Online shopping improvements increased sales
Consumers made more purchases at Ulta’s brick-and-mortar stores and website. During each shopping visit, consumers shelled out more money. The average purchase increased by 3.8% and transactions increased by 2.4% year over year.
Ulta has been working on its website and has made improvements, such as offering consumers a new option to refill their current orders regularly, a feature that many beauty and fragrance retailers have provided for several years. The company also added Venmo as a payment option and sped up its delivery times as it grows its program to ship products directly from its stores to its customers.
CEO Kecia Steelman said, “exciting assortment newness, improved in-store and digital experiences, and bold marketing efforts are resonating with our guests and driving strong sales results.”
The strongest category for spending was fragrance, generating double-digit sales growth year over year, ranging from less expensive scents such as Squishmallows perfumes to more costly ones from Dolce & Gabbana. The retailer also began adding more space on its shelves for fragrances in over 60% of its U.S. stores.
Sales and deals during Black Friday and Cyber Monday also spurred more interest and sales from shoppers, she said during the company’s earnings call.
“Our insights suggest beauty consumers’ budgets are tight, and they are focused on value,” she said. “Despite this, beauty enthusiasts tell us that they intend to spend on beauty for seasonal needs, affordable splurges, and gifts for loved ones. They are focused on replenishing their essentials and strategically making smart purchases around strong value.”
The company’s online business has benefited from a new replenish-and-save feature and Venmo payment capabilities, as well as faster delivery times as the company expands its ship-from-store program, Steelman said during a call with analysts.
The company’s brick-and-mortar business also reported more growth during the quarter, helped by improved in-stock inventory and in-store events, she said.
Ulta set a cautious tone regarding the volume of sales for the holiday season. Lower interest rates have benefited some shoppers in recent months.
Even though consumer confidence has waned this year, retailers such as Ulta have benefited from falling interest rates this year. The Federal Reserve has lowered interest rates twice in 2025.
Experts predict that central bankers will lower rates again at their December meeting next week, in an effort to encourage more spending and boost the economy.
The Federal Reserve will likely lower rates again by 0.25% next week and make two additional 0.25% cuts in 2026, said BofA Global Research in a research note.
Consumers have historically continued to spend money on beauty purchases even when the outlook for the economy is weaker.
During the first nine months of 2025, prestige beauty sales in dollars increased by 4% while mass beauty sales saw a 5% rise year over year, according to Circana, a market research firm.
The market research firm said that shoppers often make purchases of perfume, makeup, and other beauty items during the holiday season. Circana’s recent surveys show that more shoppers plan to make purchases of these items as gifts compared to 2024, especially among consumers who have higher incomes and those who are parents.
The recent addition of over 120 brands and 3,500 unique items to Ulta’s online store, while consumers continue to prefer their products, will produce higher sales, a trend that will likely benefit investors.
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