ULTA's Fragrance Category Grows Double Digits in Q2: Trend to Watch?

Ulta Beauty, Inc.’s ULTA fragrance category delivered robust double-digit growth in the second quarter of fiscal 2025, emerging as the strongest-performing category for the period. Per the fiscal second-quarter earnings release, fragrance accounted for 12% of net sales in the 13-week quarter, up from 11% in the year-ago period.

The strong performance was driven by seasonal gifting, elevated newness and a growing slate of exclusive launches. Management pointed specifically to Mother's Day and Father's Day activations, strength in gift sets, expanded men’s fragrance assortments and the debut of Ulta Beauty’s first men's exclusive fragrance, Drake's Summer Mink, alongside freshness from brands such as YSL, Gucci and Chanel and exclusives like Snif and Noise.  

Management also emphasized improved in-store conversion and heightened brand engagement during the quarter, which provided a boost to sell-through for premium and gift assortments. Events, well-timed promotions, and exclusive launches have been attracting more shoppers and encouraging them to try new products, while gift sets and men’s fragrances boosted spending during busy shopping periods.

Looking ahead, the key question is whether Ulta Beauty can keep fragrance growth steady beyond gift seasons. The answer, however, depends on how often the company can bring in exclusive launches, how repeat buying holds up, and whether strong in-store conversion continues. For now, fragrance stands out as a bright spot worth watching.

Ulta Beauty’s Zacks Rank & Share Price Performance

Shares of this Zacks Rank #3 (Hold) company have rallied 20.8% in the year-to-date period, cruising ahead of the industry’s 9.7% increase. The renowned beauty retailer has also outpaced the broader Retail – Wholesale sector and the S&P 500’s respective gains of 10.3% and 13.5% during the same time frame.

ULTA Price Performance vs. Industry, S&P 500 & Sector

ULTA’s Valuation Under the Spotlight

Ulta Beauty currently trades at a forward 12-month P/E ratio of 20.42, which is higher than the industry average of 18.77, reflecting investor confidence in its growth drivers and brand strength. However, the multiple remains below the sector average of 25.55, indicating the shares are not as highly priced as some peers in the same space.

ULTA P/E Ratio (Forward 12 Months)

Retail Stocks to Consider

Sally Beauty Holdings, Inc. SBH operates as a specialty retailer and distributor of professional beauty supplies. It currently sports a Zacks Rank of 1 (Strong Buy). SBH delivered a trailing four-quarter average earnings surprise of 8.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Sally Beauty’s current fiscal-year earnings indicates growth of 8.9%, from the year-ago actuals.

Build-A-Bear Workshop, Inc. BBW operates as a multi-channel retailer of plush animals and related products. It has a Zacks Rank #1 at present. BBW delivered a trailing four-quarter earnings surprise of 21.3%, on average. 

The Zacks Consensus Estimate for Build-A-Bear Workshop’s current fiscal-year sales and earnings indicates growth of 7.4% and 6.9%, respectively, from the prior-year levels.

The TJX Companies, Inc. TJX, an off-price retailer, currently carries a Zacks Rank #2 (Buy). TJX delivered a trailing four-quarter earnings surprise of 5.4%, on average.

The Zacks Consensus Estimate for The TJX Companies’ current financial-year sales and earnings indicates growth of 5.4% and 7.5%, respectively, from the year-ago reported numbers.

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This article originally published on Zacks Investment Research (zacks.com).

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