Ulta Beauty Model Seen as Resistant to AI Disruption

- Ulta's in-store experience is central to its strategy, with the typical 10,000 sq. ft. store format dedicating approximately 950 sq. ft. to a full-service salon offering hair, skin, makeup, brow, and lash services. - The company's physical retail growth remains strong, with comparable sales—from stores open at least 14 months and e-commerce—increasing 6.3% in the third quarter of fiscal 2025, driven by increases in both transactions and average ticket size. - As of late 2025, the retailer operated 1,500 stores across all 50 states and recently acquired UK-based retailer SpaceNK, adding 83 stores in the UK and Ireland as part of its international expansion. - In a major strategic shift, Ulta and Target have mutually agreed to end their "store-in-a-store" partnership; the 600+ Ulta Beauty locations inside Target stores will close by August 2026. - While its physical stores provide a defense, Ulta is actively leveraging AI, having acquired tech startups like QM Scientific for AI-powered recommendations and GlamST for its augmented reality "GLAMlab" virtual try-on feature. - The company's Chief Technology and Transformation Officer, Mike Maresca, has outlined plans to deploy AI agents to assist store associates with in-the-moment customer engagement, such as pulling up past purchases and making product recommendations. - Ulta's loyalty program, Ultamate Rewards, is a key data source for its AI-driven personalization, with its members accounting for roughly 90% of the company's sales. - The preference for in-person shopping in the beauty sector remains a significant factor, with one survey finding that 90% of Gen Z consumers—a digitally native demographic—would rather shop for beauty products in-store.