Ulta Beauty Growth Slows, Competition Intensifies

This slowdown is "earlier and a bit bigger" than Ulta initially anticipated. Industry forecaster Circana corroborates this trend, projecting U.S. prestige beauty market growth to decelerate from 10% to 8% in 2025 and 7% in 2026, with consumers increasingly shifting spending towards mass-market products.

Compounding the market slowdown, Ulta faces "intense" competition, particularly from Sephora's strategic partnership with Kohl's, which has placed rival stores in close proximity. This competitive pressure has led to Ulta losing market share in prestige makeup and experiencing challenges in hair care.

Consequently, Ulta now expects its first-quarter comparable sales to land at the lower end of its low single-digit growth guidance for the first half of the year. While luxury makeup and premium fragrance remain strong segments for the retailer, the broader market deceleration and heightened competitive landscape present headwinds for Ulta's near-term performance.