Ulta Beauty E-Commerce Outpaces Stores with AI Assistant
Ulta Beauty’s e-commerce growth surges as AI assistant boosts sales, outpacing physical stores with double-digit online sales increases.
Ulta Beauty Inc. reported double-digit e-commerce sales growth in its fiscal Q1, outpacing physical store performance as customers increased spending and purchase frequency. Net sales rose 11.1% year over year to $3.16 billion, with overall comparable sales up 5.3%. E-commerce comparable sales grew in the mid-teens, while physical stores saw low single-digit gains, according to CFO Christopher DelOrefice.
E-Commerce Growth Outpaces Physical Store Sales
The company attributes the digital surge to investments in infrastructure and new features, including partnerships with Google and TikTok Shop. Ulta’s CEO, Kecia Steelman, called fiscal 2026 “a strong start” with broad-based growth across channels. E-commerce sales growth in fiscal Q4 also hit mid-teens, reflecting sustained momentum.
Ulta expanded fulfillment options by joining the Uber Eats marketplace, adding 1,500 U.S. stores to the delivery network. Same-day delivery and advance scheduling now available. The company also partnered with Klarna to offer buy now, pay later (BNPL) options, allowing interest-free installments or financing for larger orders.
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Steelman highlighted omnichannel strategies, including the Ulta Beauty Rewards loyalty program, which grew to 47 million active members, up 4% year over year. The program now uses first-party data to predict refill needs and boost digital cart conversions.
AI and Digital Innovations Drive Expansion
Ulta rolled out an AI assistant in April, enabling agentic commerce through Google’s AI Mode in Search and the Gemini app. Consumers can search, compare, and purchase directly via Google’s conversational interfaces. Steelman emphasized the partnership with Google to “leverage the strengths of our partners” and maximize AI opportunities.
The company also launched its storefront on TikTok Shop, focusing on exclusive brands. Steelman noted the partnership could attract new customers and boost physical store traffic. Early efforts include shoppable livestreams, with one event generating 5 million impressions and strong gross merchandise value (GMV).
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Ulta plans to expand exclusive product bundles and collaborate with brand partners for early access launches. Long-term goals include acquiring younger shoppers and growing its loyalty ecosystem through TikTok Shop.
Financials and Future Plans
Total comparable sales growth was driven by a 3.7% rise in average ticket and 1.6% increase in transactions. New store openings and the July 2025 acquisition of Space NK contributed to net sales growth. Excluding the acquisition, sales growth reached the high single digits.
Other revenue rose to $62 million, boosted by credit card program income and commissions from the UB Marketplace. However, lower royalty income from the Target shop-in-shop partnership partially offset gains. The partnership will end in August after mutual agreement not to renew.
Ulta opened 16 new stores and one Space NK location in Q1. Looking ahead, the company plans a “highly experiential” flagship store in New York City’s Times Square, set to debut in late 2027. The location will focus on immersive guest experiences and brand activations.
Ulta maintains its fiscal 2026 outlook, forecasting net sales growth of 6% to 7% and full-year comparable sales growth of 2.5% to 3.5%. The company will continue scaling digital initiatives, AI, personalization, and social commerce, alongside international expansion and wellness offerings.
