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Ulta Beauty (ULTA -10%) is trading lower following its Q4 (Jan) earnings report after the company surprised investors with an EPS miss for the holiday quarter after posting five consecutive large EPS beats of $0.53+ in prior quarters. The company also guided FY27 EPS below analyst expectations, although it did deliver modest revenue upside in Q4 along with decent FY27 revenue guidance.

• Q4 same-store comps rose +5.8% yr/yr, down slightly from +6.3% in Q3, driven by a +4.2% increase in average ticket and a +1.6% increase in transactions. Comps were fairly consistent throughout the quarter, benefiting from a strong holiday season and easier comparisons after softness in January last year, although weather late in January created some pressure.
• Fragrance was again the strongest category with double-digit comps, supported by launches from established brands like YSL and Prada along with exclusive brands such as Noyz, Snif, and Summer Mink by Drake, as well as strong holiday gift set demand.
• Haircare delivered its best performance of the year with high single-digit comp growth, primarily driven by strong demand for newer brands. Makeup comps grew in the low single digits with share gains across both mass and prestige segments.
• ULTA guided to FY27 comps of +2.5-3.5%, a noticeable slowdown from +5.4% comps posted in FY26. We think investors are disappointed with the comp guidance.
• Operating margin fell to 12.2% from 14.8% a year ago, pressured by a 23% yr/yr increase in SG&A tied to higher corporate overhead from enterprise investments, increased advertising spending, and higher incentive compensation.

Briefing.com Analyst Insight:

ULTA's selloff appears to be driven largely by investor surprise after the company broke a streak of five sizable EPS beats with an EPS miss in the critical holiday quarter. The underlying demand trends were not especially concerning, as revenue slightly exceeded expectations and comps remained solid, but margin compression weighed heavily on the bottom line. Higher SG&A spending tied to strategic investments and advertising appears to be the primary culprit behind the profit pressure. Investors also seem disappointed with the FY27 comp guidance of +2.5-3.5%, which represents a meaningful deceleration from FY26 levels and suggests a more moderate growth outlook heading into the new fiscal year. Together, the combination of weaker profitability and softer forward comps is likely driving today's negative reaction.