Walking into an Ulta Beauty store could look a little different in the coming months.
To improve the customer experience and its own position amid increasing competition, the beauty retailer is making major changes.
One of the ways is changing how it selects which beauty products deserve a spot on its shelves.
Rather than waiting for major brands to bring it to their next big launch, Ulta is getting involved earlier.
It is working with beauty companies to identify market gaps and spot trends before products reach shoppers.
The company is also increasingly willing to test brands online or through its marketplace before expanding them into stores.
The upcoming changes were reported by Morgan Stanley analysts who recently met with Ulta’s management team, in a note shared with TheStreet.
This could give Ulta a faster way to respond when shoppers suddenly gravitate toward a new beauty trend, rather than committing to products before knowing whether demand will last.
Among the new changes consumers can expect is the launch of K-beauty products.
Morgan Stanley said Ulta sees K-beauty and other Asian beauty products, wellness, soft-glam makeup, and hair products as potential areas of additional growth.
The changes are part of a broader effort by Ulta’s newer management team to sharpen the retailer’s strategy amid heightened competition in the beauty industry.
Morgan Stanley analysts met with CEO Kecia Steelman, CFO Chris DelOrefice, and several other Ulta executives and also toured the retailer’s Dallas distribution center.
The analysts are more confident in the company’s direction, saying management appeared more aligned across merchandising, stores, marketing, and digital operations than during previous meetings.
Ulta Beauty changes how it finds new beauty trends
Finding the next popular beauty brand has become increasingly important for retailers.
As shoppers continue to discover products through TikTok, social media, and direct-to-consumer brands before they ever enter a physical store, retailers struggle to stay on top.
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Ulta’s response is to work more closely with brands before products launch.
Historically, simply adding more brands and products was an easier way for Ulta to drive growth.
Morgan Stanley said the strategy is now shifting toward finding the right products earlier and creating a more differentiated assortment.
Ulta is engaging with brand partners earlier to identify opportunities related to customer needs, price points, packaging, and global beauty trends.
The retailer is also bringing merchandising, marketing, digital, and store teams together more closely when products launch.
Morgan Stanley said Ulta’s scale is giving the company earlier access to fast-growing brands.
This could help sales while also improving economics through merchandise margins, advertising, and funding from brand partners.
The company is also trying to make its assortment less dependent on a small number of blockbuster product launches.
Testing brands online or through a marketplace before expanding them in stores could help Ulta see what resonates with shoppers before committing more shelf space.
Morgan Stanley believes that approach could smooth out the historical peaks and valleys that come with new product launches and keep Ulta closer to emerging trends.
Ulta sees opportunity beyond traditional beauty products
One of the biggest areas Ulta is watching is wellness.
Morgan Stanley described wellness as particularly notable because the broader category represents an estimated $400 billion market.
K-beauty and Asian beauty, soft-glam makeup, and hair are also among the areas management sees as potential growth drivers.
The strategy gives Ulta another way to broaden what customers buy when they visit its stores or website while still keeping beauty at the center of the business.
These changes come as competition for beauty shoppers has intensified.
Major retailers have expanded their beauty assortments.
Brands have built their own direct-to-consumer businesses.
Meanwhile, online marketplaces have made it easier for shoppers to buy many of the same products without visiting a specialty beauty store.
Morgan Stanley cited greater product availability from key suppliers on sites such as Amazon as a potential risk facing Ulta.
Ulta aims to get costs under control
The changes aren’t limited to what shoppers see on shelves.
Behind the scenes, Ulta is also trying to slow spending growth after making a series of investments in the business.
Morgan Stanley said selling, general, and administrative expense growth was about 11% during the first half of fiscal 2026 but expects that rate to slow to roughly 2.5% during the second half.
The improvement reflects the completion of many catch-up investments, tighter expense controls, and Ulta’s adoption of zero-based budgeting, according to the analysts.
Management told Morgan Stanley that it believes it can continue investing in products, marketing, employees, technology, and its supply chain while also expanding profitability over time.
The retailer is targeting double-digit earnings-per-share growth, while Morgan Stanley expects mid-single-digit sales growth, which should create additional operating leverage.
Morgan Stanley sees more room for Ulta Beauty
Morgan Stanley maintained an Overweight rating on Ulta with a $630 price target following the management meeting.
The analysts said the meeting left them “incrementally more constructive” on the company as management showed better alignment and greater visibility into its upcoming product pipeline.
Morgan Stanley estimates Ulta will earn $32.77 per share in fiscal 2027, about 1.8% above the Wall Street consensus of $32.20 cited in the report.
Ulta’s main challenge now is turning that behind-the-scenes improvement into something shoppers notice and bringing in products to shelves before a trend fades.
