Ulta Beauty Sees Fragrance ROI Lead Marketing, SG&A Margin Upside in Q1 2026

Ulta: Marketing/SG&A ROI by category and how SG&A should support back-half visibility

1) Categories showing the greatest ROI from marketing investments (and what specifically drove it)

Based on management’s discussion of “the categories [with] the greatest return on the investments…in marketing and…heavy SG&A,” the clearest ROI signal in the excerpts is:

Fragrance (highest stated ROI impact)

• Management explicitly identified fragrance as “one of the strongest categories” showing results from Ulta’s marketing investment plan. ¹
• The described mechanism ties marketing execution to measurable event/merchandising actions: for Mother’s Day, management cited “raised the fixtures,” “add[ed] assortment into our stores,” and paired that with “the marketing that we’ve done along with it,” calling this “definitely [coming] into play.” ¹
• In the earnings narrative, fragrance was also the top comp category for the quarter and grew to a larger mix: high-teen comp growth and increasing from 11% to 12% of total revenue. ²

Conclusion (from the excerpts): The best-supported “greatest ROI” category is fragrance, because management both (a) singled it out as the strongest ROI outcome of marketing spend ¹ and (b) reinforced strong category momentum (high-teen comp; rising revenue share). ²

Other categories with momentum, but not explicitly labeled “greatest ROI”

The excerpts provide strong growth references across multiple categories, but management does not rank them as “greatest ROI” the way it did for fragrance. For example:

• Wellness showed strength (e.g., supplements including Lemme and MaryRuth’s, plus self-care brands like Therabody, Nodpod, Saje), though partially offset by pressure in body care. ³
• Services delivered mid-single-digit comp growth driven by strong member engagement in salon/specialty services (ear piercing and makeup). ³
• Mass skincare delivered solid growth (supported by in-store expansion for ANUA; sustained vitality for BYOMA; exclusivity from cocokind). ³

Analytical takeaway: The company’s qualitative ROI “winner” in the marketing/SG&A discussion is fragrance. ¹ Other categories are described as growing (wellness/services/mass skincare), but the excerpts do not provide the same explicit ROI ranking. ³

2) Where SG&A discipline is already supporting ROI (and how ROI should carry into the back half)

Ulta’s management framed SG&A in two linked ways: (1) execution discipline (cost control) and (2) targeted leverage to improve operating profit through the year.

Evidence of SG&A discipline (near-term)

• Management said Q1 showed “very strong discipline and consistent performance on SG&A.” ⁴
• They also described Q1 SG&A growth as “as planned,” noting the increases were primarily due to Space NK and investments behind Ulta Beauty Unleashed that were made in 2H 2025 and “have not yet anniversaried.” ³
• They confirmed full-year SG&A growth targets were not changed and that they expect SG&A growth “in line to slightly below net sales growth,” with a “disciplined” investment approach. ⁵

Back-half margin logic: SG&A leverage should show up in the second half

Ulta provided a fairly explicit “thread-the-needle” framework for back-half visibility:

• They described a balanced operating profit growth profile across the year, with First half modestly above second half, attributing differences to gross margin timing (shrink benefits) rather than a collapse in SG&A. ⁶
• Critically for your question, they stated that in the second half, there is “a slight flip” where gross margin moderates a bit, and then they “start seeing benefits of SG&A driving some margin improvement in the second half of the year with low single-digit growth.” ⁶

Interpretation (grounded in the excerpts):

• Back-half visibility should improve as the company cycles through anniversary effects and turns SG&A into operating leverage—i.e., SG&A should not just be controlled, but should contribute to margin improvement in 2H. ⁶
• This is consistent with their stated operating profit goal (increase 6.5% to 9%) while maintaining gross margin roughly flat and planning SG&A growth tied to sales growth. ⁵

3) How updated profit/EPS guidance and higher buyback interact with the SG&A leverage story

Your question ties back-half visibility to (a) updated guidance and (b) a higher buyback. The excerpted materials support the following linkage:

EPS guidance was raised; the high end was boosted by buybacks

• Management raised EPS expectations and said diluted EPS should be $28.36 to $28.80, explicitly noting the range was “certainly due to probably the buyback,” and management added that EPS increases reflect both operating profit increase and share buybacks. ⁷⁸

Buyback target was increased materially

• In Q1, Ulta increased its fiscal 2026 stock buyback target from $1.0 billion to $1.5 billion. ⁸
• During Q1, Ulta deployed cash and leveraged its revolver to support $555 million of stock repurchases. ⁹

But operating profit and SG&A leverage still matter for “visibility”

While buybacks mechanically support EPS, management still anchored the operating story:

• They reiterated their goal: “maximize value creation through driving increases in operating profit.” ⁴
• They also described how SG&A is expected to contribute to margin improvement in the second half (as cited above). ⁶

Synthesis for the back half (what management is implicitly saying):

• EPS visibility is strengthened by (i) operating profit commitments and (ii) the larger buyback program that reduces share count effects. ⁸⁴
• Margin/operating visibility should improve in the back half through SG&A-driven margin improvement after gross margin timing differences flip between halves. ⁶
• Therefore, SG&A leverage is not redundant to EPS/buyback: it is the operational mechanism that helps sustain profit progression across the year while buybacks amplify EPS. ⁶⁴⁸

4) Direct answer: “greatest ROI” categories and how SG&A should leverage for back-half visibility

Categories with greatest stated marketing ROI

• Fragrance is the only category explicitly identified by management as among the strongest where marketing investments delivered “greatest return,” supported by Mother’s Day execution and high-teen category comp plus rising revenue mix. ¹²

How SG&A leverage should contribute to back-half visibility (given updated guidance and higher buyback)

• Management expects the back half to show margin improvement from SG&A benefits, even as gross margin moderates somewhat versus the first half—consistent with their “as planned” profit cadence and low-single-digit growth characterization for that phase. ⁶
• This supports back-half visibility because:
  • Operating profit growth guidance was enhanced (operating profit up 6.5% to 9%), while gross margin is expected roughly flat and SG&A investment is disciplined. ⁵
  • EPS guidance was raised and is supported by both operating profit increase and share buybacks; the company also increased buyback capacity to $1.5B and executed $555M of repurchases in Q1. ⁸⁹⁴
• Net effect: buybacks improve EPS visibility, while SG&A leverage is the stated operational contributor to back-half margin improvement. ⁶⁸

If you want the ROI view broadened beyond what’s explicitly “ranked” as highest (i.e., adding a quantified ROI framework), that would require more granular disclosure than these excerpts provide (e.g., category-level ad spend, promo expense, and incremental sales).