Ulta Beauty is navigating a competitive retail landscape as shoppers ramp up spending on beauty and wellness, despite economic pressures.
As the beauty retailer benefits from strong demand, it is leveraging a bold new partnership with a growing rival to stay ahead, as it grows concerned about future customer behavior.
Despite recently implementing several price increases in its stores due to tariff pressures, Ulta Beauty saw comparable sales increase 5.8% year over year in the fourth quarter of 2025, according to its latest earnings report.
This sales increase was driven by a 1.6% rise in transactions and a 4.2% increase in the average amount customers spent per visit.
Ulta Beauty also saw strong sales growth in skin care and wellness, hair care, and fragrance, its strongest-performing category in the fourth quarter. However, sales growth in makeup slowed slightly.
Recent Placer.ai data also revealed that foot traffic at Ulta Beauty stores grew 4.9% year over year in October, 2.1% in November, and then fell 0.6% in December. However, the beauty retailer saw a rebound in Janurary, with visits up 5.6%.
The increased consumer momentum comes after the company launched its Ulta Beauty Unleased strategy in January last year, which involves enhancing the customer experience by remodeling stores, expanding beauty and wellness offerings, and becoming more digital-first.
As part of this strategy, Ulta Beauty launched its online third-party marketplace UB Marketplace in October, a move that further expanded its beauty, wellness, hair care, skin care and fragrance offerings to customers.
Ulta Beauty CEO warns of changing shopper behavior
Despite recent changes, consumers remain cautious about their spending amid economic uncertainty, said Ulta Beauty CEO Kecia Steelman during an earnings call on March 12.
“Throughout 2025, we closely monitored consumer behavior and observed continued resilience, a strong focus on value and affordability, and increasing discernment in spending decisions,” said Steelman. “At the same time, engagement with the beauty category remained healthy, and the landscape remained competitive.”
As Ulta Beauty expects this customer behavior to continue, it predicts that its comparable sales for fiscal year 2026 will increase by 2.5% to 3.5% year over year.
“We are increasingly mindful of rising global conflicts that could impact economic conditions,” said Steelman.
She added that while Ulta Beauty is aware that shoppers are looking for value, it has no plans to accelerate its promotional offers to customers, and that there may be future price increases in stores, but nothing “out of the ordinary.”
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Ulta Beauty bets on a new partnership to attract and retain customers
To help keep customers engaged amid economic pressures and drive sales, Ulta is relying not only on its Ulta Beauty Unleased strategy, but also on a new partnership with TikTok Shop.
On March 17, the beauty retailer made its debut on TikTok Shop, which is rapidly gaining popularity in the health and beauty sector.
The TikTok Shop partnership comes as Ulta Beauty plans to officially end its partnership with Target in August this year, which will result in the removal of its shop-in-shop locations from Target stores.
TikTok Shop launched in the U.S. in 2023. By 2024, the platform accounted for 79.3% of total sales in health and beauty, with annual sales in the category exceeding $1.34 billion, according to 2024 NielsenIQ data.
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“As the beauty and wellness authority, we see first-hand how discovery is happening everywhere today — and social platforms play an increasingly influential role in how guests engage with brands,” said Ulta Beauty Chief Merchandising and Digital Officer Lauren Brindley in a statement to Cosmetics Business.
“Partnering with TikTok Shop is a strategic and complementary extension of our discovery ecosystem,” she added. “It allows us to meet guests in the moments that inspire them, reduce friction between content and commerce, and drive incremental growth by welcoming new-to-Ulta Beauty shoppers into our community.”
Ulta Beauty’s TikTok Shop launch debut comes with over 15 brands in make-up, skin care, hair care and fragrance, alongside over 25 exclusive bundles.
It is the first major beauty and wellness retailer to launch on TikTok Shop, giving it a leg up on its top rivals.
Ulta Beauty battles rivals amid growing consumer demand
Ulta Beauty is navigating heightened competition as more retailers fight to attract consumers who are increasingly looking for value.
Last year, Amazon was the top beauty retailer in the U.S., according to data from market research company Circana, cited in a Market Defense report.
Amazon’s growth in the beauty space has even posed challenges for Sephora.
During an earnings call in April last year, LVMH Chief Financial Officer Cécile Cabanis said Amazon has been “very aggressive” about lowering prices, which contributed to Sephora’s lower-than-expected U.S. sales during the first quarter of 2025.
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When it comes to brick-and-mortar beauty, cosmetics, and fragrance retail, Ulta Beauty holds 15.3% market share in the sector. Still, it lags behind Sephora, which holds 18.2% market share, according to data from market research company IBISWorld, which was shared with TheStreet.
Despite economic challenges, consumer demand for beauty and wellness is increasing globally, according to NielsenIQ data, which was unveiled in October last year.
How global consumers shopped for beauty in 2025:
- Global beauty sales increased 10% year over year in 2025.
- Specifically, online beauty sales in the U.S. were up 21%.
- Beauty consumers across the globe are making more shopping trips (+2%), spending more per visit (+8%), and buying more units (+2.6%).
- Also, 50% of global consumers said regular self-care is more important now than it was five years ago.
- Additionally, 44% said they plan to take more vitamins or supplements in the next 12 months.
- About 63% said sleep is more important, which is increasing demand for beauty sleep aids, such as pillow mists, silk pillows, and sleep supplements.
Source: NielsenIQ
“Beauty is no longer just about appearance — it’s about experience, wellness, and digital convenience,” said Tara Taylor, senior vice president of beauty and personal care at NielsenIQ, in a press release.
“Digital-first strategies are now the backbone of beauty retail,” she added. “Brands must meet consumers where they are — online, on social, and on mobile. Today’s consumer demands flexibility and convenience. Brands and retailers must deliver a cohesive, channel-agnostic experience to stay relevant and capture share, with challengers ready to take a slice of the business.”
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