Ulta Rethinks Store Experience, Promotional Strategy
Ulta Beauty delivered a stronger-than-expected second quarter of fiscal 2025, signaling a shift from heavy investment into a new phase of scalable growth.
For brand partners, the key takeaway is clear: Ulta is positioning its stores as both experience hubs and omnichannel fulfillment engines, while also strengthening digital, marketing, assortment and cultural engagement strategies.
Q2 Performance Highlights
- Net sales up 9.3% year-over-year.
- Loyalty membership hit 45.8 million, up 4% from last year.
- Half of all e-commerce orders were fulfilled by stores — the highest level to date.
- Strong comparable sales growth across all major categories, with fragrance as the strongest performer.
About 'Ulta Beauty Unleashed'
Unveiled during Ulta's March earnings call, the Unleashed strategy is designed to reignite growth and expand market share. The plan centers on elevating in-store experiences, expanding wellness and product assortments, launching a curated third-party online marketplace, and deepening digital engagement. It also emphasizes inventory optimization, stronger customer connections and diversified revenue streams to position Ulta for long-term success in a competitive beauty market.
Stores as Omnichannel Powerhouses
A key takeaway from Ulta’s latest earnings, which took place on Aug. 28, is that its "Ulta Beauty Unleashed" strategy is gaining significant traction — and delivering tangible results — with physical stores at the center.
- In-store execution: CEO Kecia Steelman said Ulta is “getting back to the basics,” which has boosted in-store conversion and guest satisfaction.
- Upgraded formats: In Q3, 50 more stores will debut “elevated fixtures” as part of an enhanced guest experience.
- Events and workshops: Ulta hosted more than 30,000 in-store events in Q2, including its ongoing “Cecred Sundays” salon workshops created in partnership with Beyonce’s hair care brand Cecred.
- Omnichannel fulfillment: Stores fulfilled half of all e-commerce orders in Q2. “We're leveraging our power as an omnichannel retailer to deliver speed to guests and provide more choices in the way they shop,” Steelman said.
The conclusion of Ulta’s shop-in-shop partnership with Target in 2026 was positioned as an opportunity rather than a setback. Steelman said it creates “huge upside potential” to pull those guests back into the Ulta ecosystem.
Marketing, Media and Cultural Play
- New brand platform: This fall, Ulta will launch a multi-year platform and campaign, “Beauty Happens Here,” designed to inspire self-expression and deepen guest connections.
- Curated online marketplace: As part of its "Unleashed" plan, Ulta is set to launch a curated, “invitation-only” online marketplace designed to expand its beauty and wellness assortment in a “low-risk” way. Shoppers will earn loyalty points and have the option for in-store returns.
- Cultural activations: Ulta is embedding itself in pop culture with campaigns like “Get the Look” for Beyonce’s “Cowboy Carter” tour as well as in-store activations and festival pop-ups through a partnership with K-Beauty World. These efforts tie retail media, creator content and in-store discovery into cohesive, culturally relevant shopper experiences. Steelman said Ulta is moving at "the speed of culture" with this focus.
- Digital personalization: Ulta is accelerating automation and real-time content delivery to create more personalized experiences across digital channels. New features like Split Cart, Replenish & Save and tailored recommendations are reducing friction, boosting relevance and fueling e-commerce growth.
Promotional Discipline
The broader beauty sector has normalized into mid-single-digit growth, but Ulta is leaning into promotional restraint.
- Q2 gross margin impact from promotions was lower than last year due to more "effective promotional strategies."
- The retailer eliminated unproductive and overlapping offers and optimized event timing, including for the “Big Summer Beauty Sale” and back-to-school campaigns.
- Steelman said Ulta will continue to evolve its promotional calendar with “purposeful considerations around holidays, tentpole events and brand launches,” keeping the environment rational.
Betting on Wellness
Ulta also highlighted wellness as a major long-term growth driver:
- Expanded wellness sections to 370-plus stores, with another 50 coming soon.
- Assortment includes 150 brands and 700 SKUs, spanning self-care, supplements, ingestibles, intimate wellness and more.
- Steelman said wellness could become a $1 billion business, noting the category’s size ($410 billion in 2024) and faster growth compared to beauty.
- Seven new wellness brands launched in Q2, with Ulta closely monitoring store-level productivity to ensure profitable expansion.
Other Notable Takeaways
- Store growth adjusted: Ulta will scale back from its earlier target of 200 new stores, instead planning 50-56 new locations per year over the next 2-3 years.
- International push: The acquisition of U.K. retailer Space NK offers a “strategically compelling” entry into the U.K. market.
