Financial Data and Key Metrics Changes - For the second quarter, net sales increased by 9.3% to $2.8 billion compared to $2.6 billion last year [8][35] - Operating profit increased by 4.8% to $345 million, with an operating margin of 12.4%, down from 12.9% last year [41] - Diluted earnings per share rose by 9.1% to $5.78, including a $0.03 benefit from income tax accounting for stock-based compensation [41] Business Line Data and Key Metrics Changes - Comparable sales grew by 6.7%, driven by a 3.7% increase in transactions and a 2.9% increase in average ticket [36] - Fragrance was the strongest performing category with robust double-digit growth, supported by successful promotional events [13] - Skin care and wellness saw high single-digit growth, while makeup delivered mid single-digit comp growth [14][15] Market Data and Key Metrics Changes - The U.S. beauty category showed stable growth, with low single-digit growth in mass and mid single-digit growth in prestige beauty [10] - The wellness market is projected to be a $410 billion market in 2024, growing faster than beauty [67] Company Strategy and Development Direction - The company is focused on its "Ulta Beauty Unleashed" strategy, which aims to enhance core business growth and improve operational excellence [9][21] - The acquisition of Space NK marks a significant step in international expansion, allowing entry into the UK market with an established player [26][27] - The company plans to launch a curated online marketplace to explore a broader array of beauty and wellness products [29] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the future, acknowledging ongoing macroeconomic uncertainties while highlighting strong first-half performance [33][46] - The company anticipates comp sales growth in the second half to be flat to low single digits, reflecting a prudent approach to planning [43][44] - Management emphasized the importance of employee engagement and culture as a competitive advantage [30] Other Important Information - The company hosted over 30,000 events during the quarter to enhance customer engagement and brand experience [17] - The decision to end the partnership with Target will conclude in August 2026, with minimal impact on net sales [31][32] Q&A Session Summary Question: What is the sustainability of the initiatives under the Beauty Unleashed plan? - Management is pleased with the team's response and believes momentum will continue, but acknowledges higher comps in the back half of the year [52] Question: Can you clarify the assumptions behind the comp range for the back half of the year? - Management remains cautious but has modestly increased expectations for the second half, reflecting less uncertainty in the macro environment [62] Question: How is the promotional backdrop in the beauty sector evolving? - The company has optimized promotional strategies, reducing less productive events and aligning offers with consumer shopping behavior [65] Question: What is the outlook for the wellness category? - The wellness market is recognized as a significant growth opportunity, with plans to expand product offerings and store footprint [67] Question: How are the stores recovering from previous competitive pressures? - Management noted steady improvement in comp trends and emphasized the importance of the loyalty program in recapturing customers [78]

Financial Data and Key Metrics Changes - Net sales increased by 9.3% to $2.8 billion compared to $2.6 billion last year [6][32] - Operating profit increased by 4.8% to $345 million, with an operating margin of 12.4%, down from 12.9% last year [37] - Diluted earnings per share rose by 9.1% to $5.78, including a $0.03 benefit from income tax accounting for stock-based compensation [37] Business Line Data and Key Metrics Changes - Comparable sales grew by 6.7%, driven by a 3.7% increase in transactions and a 2.9% increase in average ticket [33] - Fragrance category led with double-digit growth, supported by successful promotions and new brand launches [12] - Skin care and wellness category saw high single-digit growth, while makeup delivered mid single-digit comp growth [13][14] Market Data and Key Metrics Changes - The U.S. beauty category showed stable growth, with low single-digit growth in mass and mid single-digit growth in prestige beauty [8] - Engagement with beauty and wellness remains healthy, with consumers prioritizing their beauty regimens despite economic pressures [9] Company Strategy and Development Direction - The company is focused on its "Ulta Beauty Unleashed" strategy, which aims to enhance core business growth and improve operational excellence [7][19] - International expansion includes the acquisition of Space NK to enter the UK market and plans for new stores in Mexico and the Middle East [23][25] - The company is enhancing its assortment and brand building capabilities, launching 24 new brands during the quarter [20] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about consumer spending in the second half of the year, despite strong first-half performance [29][43] - The company expects consolidated net sales for the year to be between $12 billion and $12.1 billion, with comp sales growth projected at 2.5% to 3.5% [40] - Operating profit is expected to decrease in the high single-digit range, reflecting ongoing macroeconomic uncertainties [41] Other Important Information - The company ended the quarter with $243 million in cash and cash equivalents and $289 million in short-term debt [38] - SG&A expenses increased by 15% to $742 million, influenced by higher incentive compensation and transaction expenses related to the Space NK acquisition [36] Q&A Session Summary Question: What is the sustainability of the initiatives under the Beauty Unleashed plan? - Management expressed confidence in the momentum of the Beauty Unleashed plan but acknowledged higher comps in the second half of the year [45][48] Question: Can you clarify the assumptions behind the comp range for the back half of the year? - Management indicated that while they are cautiously optimistic, they expect comp sales to be flat to low single digits in the second half due to ongoing economic conditions [52][57] Question: How is the promotional backdrop in the beauty sector evolving? - Management noted that promotional activity has been lower than in previous years, with a focus on optimizing key offers and events [60][61] Question: What are the growth prospects for the wellness category? - The wellness market is seen as a significant growth opportunity, with plans to expand product offerings and store footprint [63] Question: How is the company addressing competitive pressures and store recovery? - Management reported steady improvement in comp trends and emphasized the importance of their loyalty program in recapturing customers [70][74]