Ulta Beauty (NASDAQ:ULTA) shares surged nearly 12% intra-day today after the cosmetics retailer posted better-than-expected fourth-quarter earnings, driven by strong demand during the holiday season. However, weaker-than-anticipated full-year guidance raised concerns about the impact of economic headwinds on consumer spending.

The company reported earnings per share of $8.46 on revenue of $3.5 billion, surpassing analyst expectations of $7.11 EPS and $3.46 billion in revenue. Comparable sales rose 1.5%, outperforming estimates despite heightened competition in the beauty industry. To attract customers during the critical holiday period, Ulta introduced strategic discounts, particularly around Thanksgiving, which helped drive sales momentum.

Despite the strong quarter, Ulta continues to navigate broader pressures on consumer spending, as inflation and economic uncertainty lead some shoppers to cut back on discretionary purchases.

Looking ahead, Ulta’s full-year 2025 guidance fell short of expectations. The company projects earnings per share between $22.50 and $22.90 on revenue of $11.5 billion to $11.6 billion, trailing analyst estimates of $23.47 EPS and $11.67 billion in revenue. Comparable sales growth is expected to be flat to 1%, signaling a potential slowdown in spending trends.