Good afternoon, everyone, and thank you for joining us for a discussion of Ulta Beauty's results for the fourth quarter and fiscal 2025. Hosting our call today are Kecia Steelman, Chief Executive Officer, and Christopher DelOrefice, Chief Financial Officer. During today's webcast, a presentation is being displayed live and will be posted to our website at ulta.com/investor shortly after the webcast concludes. As a reminder, today's earnings release and the comments made by management during this call include forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, factors identified in the earnings release and in our most recent 10-K and 10-Q filings. The company undertakes no obligation to revise any forward-looking statements.
To allow us to accommodate as many questions as possible during the hour scheduled for this call, we respectfully ask that you limit your time to one question with no more than one follow-up question. As always, the IR team will be available for any follow-up questions after the call. Now I'll turn the call over to Kecia. Kecia?
Thank you, Kiley, and good afternoon, everyone. I'm excited today to be joined by Ulta Beauty's new CFO, Chris DelOrefice. Welcome, Chris. We're so thrilled to have you as a part of the team. As I reflect on the past 12 months, I'm incredibly proud of the Ulta Beauty team and all we have accomplished. We closed the year strong, delivering full-year financial performance ahead of our plans while making important guest-facing investments to position our business for future growth. For the year, we grew net sales by nearly 10% to $12.4 billion, delivered operating income of $1.5 billion or 12.4% of sales and EPS of $25.64.
Today, I will start by briefly highlighting our fourth quarter and holiday performance and then discuss our full-year performance and the progress we made against our Ulta Beauty Unleashed strategy before sharing more details on our plans and priorities for fiscal 2026. Our team stayed focused on executing and caring for our guests, delivering stronger than expected fourth quarter sales and continued market share gains in mass and prestige beauty. Successful events fueled all of our performance, including Black Friday and Cyber Monday, along with key post-holiday events like our fan favorite Love Your Skin and Jumbo Love promotions. Holiday served as a culmination of our efforts to advance the business throughout 2025. We developed a thoughtful cross-functional holiday strategy supported by outstanding in-store and digital execution, bold and relevant marketing campaigns and activations, and compelling holiday assortment and gift sets.
Guest engagement was high, and many guests leaned into convenience of our omni-channel buy anywhere, fill anywhere capabilities during the busy holiday season. Our store and digital teams executed with excellence, delivering record-breaking holiday performance. We introduced a fun holiday marketing campaign focused on the Twelve Days of Giftmas, featuring celebrity brand founders, which drove meaningful gains in awareness and brand love scores. We drove comp growth across all categories and made gifting easy with a curated and powerful holiday assortment, impactful newness, and leading fragrance offering. Our relentless commitment to operational excellence had store teams quickly restocking after high volume holidays to serve guests and maximize selling opportunities, while our supply chain teams leveraged recent distribution center upgrades to increase our delivery speed to guests. Turning to our full-year performance, fiscal 2025 was a year of strategic investment and deliberate transformative change for Ulta Beauty.
Change that challenged us to sharpen our focus, strengthen our capabilities, and position our business for sustainable, profitable growth in the rapidly evolving beauty market. We began the year with a clear vision on how we intend to unleash the power of our model, build on our foundational advantages, and reassert our leadership position in beauty through the execution of our Ulta Beauty Unleashed strategy with a clear focus on three priorities, driving core business growth, scaling new businesses, and realigning our foundation for the future. Paired with the collective commitment and agility of our teams, we turned vision into reality and made exceptional progress across each pillar of our strategy, reigniting our growth, strengthening our core, and delivering better than planned financial performance.
Let me briefly highlight the advancements we made during the quarter. We elevated our execution and more consistently delivered a differentiated omni-channel guest experience, further solidifying Ulta Beauty as the unmatched beauty destination for all guests. This came to life through a recommitment to the best-in-class execution and stronger merchandise in stock. Incremental investments in payroll hours to support the guest experience. More than 100,000 in-store events, which included brand launches, brand education, and celebrity appearances, and highlighted our differentiated in-store experience. Ongoing digital upgrades, which added guest-friendly features like Replenish and Save and Wishlist, and expanded convenience through features like Split Cart. Increased personalization through the power of AI in our automated marketing engine that delivered relevant, dynamic, and timely content across the customer journey.
We strengthened and modernized our assortment and merchandising strategy, accelerating pipeline momentum and delivering a powerful wave of newness that included more than 100 new brands this year, including Moroccanoil, Amika, Medicube, Anua, Drake's Better World fragrance, and TIRTIR, among many more. Key elements that supported our merchandising evolution included thoughtful, purposeful collaboration with our brand partners to fuel the innovation pipeline with new products like Fenty's Diamond Collection and Morphe eyeshadow palettes. A new elevated go-to-market approach that established tighter collaboration between our merchandising, marketing, and store teams and helped drive operational excellence, marketing leadership, and compelling merchandising innovation. A bold new marketing strategy with reimagined events like our Only at Ulta event, which highlighted our differentiated exclusive assortment and powerful cultural activations, like our sponsorship of the Cowboy Carter Tour in conjunction with Beyoncé's Cécred haircare launch.
Elevating our brand-building capabilities, enabling us to build stronger portfolios of exclusive brands and products that drive meaningful differentiation and new member acquisition. Noteworthy successes in 2025 include Cécred, which became our largest prestige haircare launch in history, prestige skincare K-beauty brand Peach & Lily, influencer-founded makeup brand DIBS, and Gen Z's most loved fragrance brand Noise. We built and expanded into new growth channels through our international expansion beyond the U.S., with nearly 100 stores in five countries. This included our acquisition of Space NK, a luxury beauty retailer operating more than 80 stores in the U.K. and Ireland. The opening of nine stores in Mexico via our joint venture partner, Grupo Axo, and the opening of two stores in the Middle East through our franchise partner, Alshaya.
Our newly launched marketplace, a curated online assortment that allows guests to explore a complimentary array of beauty, wellness, and lifestyle products on ulta.com and our app. The assortment includes more than 200 established and emerging brands and 5,000 SKUs. Our wellness initiative, which included the addition of nearly 30 new brands in our core wellness assortment and nearly 40 new brands in our marketplace assortment, along with an expanded store presence in more than 400 stores. New UB Media capabilities, like the addition of connected TV and streaming audio products that drove engagement and incremental ad revenue. We made notable progress aligning our foundation to support future growth through important leadership changes to ensure our team was positioned to meet the needs of our evolving business.
Ongoing cost optimization efforts, including investment in AI and automation, like the testing of new conversational AI capabilities for our guest services team, which streamlined and increased resolution efficiency and quality, as well as the implementation of an AI-powered order management system to optimize fulfillment across our network, enabling our expansion of ship from store and reducing out-of-stocks and markdown risks. Finally, and perhaps most importantly, we reignited our culture and reinvigorated our brand, and our guests, associates, and brand partners took notice. We did this through decisive organizational changes that accelerated decision-making and aligned teams and resources around guest-centric goals. Adopting a winning mindset as we stacked key successes and built momentum throughout the year, we steadily reignited our collective spirit, or as I like to say, we got our swagger back.
A new marketing brand equity campaign, Beauty Happens Here, and bold and fresh marketing activations, which placed Ulta Beauty at the center of exciting cultural moments like Lollapalooza and Coachella, and a renewed enthusiasm for the magic of our mission to bring the power of beauty to life for all ages and all life stages. By nearly all measures of success, our team delivered against our plans. During fiscal 2025, we drove 5.4% comparable sales growth and positive comp growth across all categories. We strengthened conversion in stores, increased transactions, and drove improving NPS scores. We grew our loyalty program by 5% to a record 46.7 million active members, driven by strong growth in reactivated members and strong retention of existing members. We gained market share in both mass and prestige beauty.
We delivered greater app engagement with approximately 60% of online sales made through the app and drove active app users up 15% year-over-year. We drove significant EMV and reached record levels of unaided awareness. While the guest-facing investments we made this year pressured profitability, the steady progress and results driven in fiscal 2025 reinforce our expectations that these investments position us to return sustainable, profitable growth and to deliver against our long-term financial targets in fiscal 2026 and beyond. Before I turn to our plans and priorities for 2026, let me first touch on our view of the consumer, the current beauty landscape, and our expectations going forward. Throughout 2025, we closely monitored consumer behavior and observed continued resilience, a strong focus on value and affordability, and increasing discernment in spending decisions.
At the same time, engagement with the beauty category remained healthy, and the landscape remained competitive. We expect these themes to continue into fiscal 2026, though we are increasingly mindful of rising global conflicts that could impact economic conditions. Absent increased broader macro disruption for the year, our expectation for the beauty category growth is in line with the average historical growth rate, with expected growth in the 2%-4% range. As we turn to fiscal 2026, our Ulta Beauty Unleashed strategy will continue to guide our priorities as we build on the successes of fiscal 2025. Chris will highlight our financial outlook, but let me touch on our priorities and plans for 2026.
Thanks, Kecia, and good afternoon, everyone. Before I discuss our recent financial results and our outlook for fiscal 2026, let me first say how excited I am to join Ulta Beauty. Over the last three months, I've enjoyed getting to know the Ulta Beauty team and gaining a deeper appreciation for the company's strategic positioning, financial strengths, and its strong people-focused culture. Ulta Beauty is a beloved brand operating in an attractive and resilient category. Our Ulta Beauty Unleashed strategy is fueling market share growth, driving guest engagement, and furthering our differentiation in a competitive category. We have more than 60,000 talented associates who bring our brand to life and serve our guests with passion and commitment every day.
We have strengthened our foundation, invested in key capabilities, and maintained a solid financial foundation with strong operating cash flow that enables value creation and also provides us with financial flexibility to pursue growth opportunities and weather dynamic macro environments. I'm excited and optimistic about the future of Ulta Beauty, and I am energized to serve as a strategic partner to Kecia and the rest of the executive team to ensure we build on our momentum with a strong focus on driving long-term sustainable growth and maximizing value creation. With that, let's get into our results. Starting with the quarter, net sales for the quarter increased 11.8% to $3.9 billion compared to $3.5 billion last year. During the quarter, we opened five new and remodeled 18 Ulta Beauty stores. We also opened two new and relocated one Space NK store.
For the year, we opened a total of 63 net new stores, relocated six stores, and remodeled 42 stores in line with our previously provided guidance. We ended the year with 1,505 Ulta Beauty stores and 86 Space NK stores. Comparable sales for the period increased 5.8%, driven by a 4.2% increase in average ticket and a 1.6% increase in transactions. Looking at the cadence of sales through the quarter, comp sales were fairly consistent, reflecting both a strong holiday season and the lapping of softness in January last year. I would note that we did see some impact from the weather at the end of January this year.
From a channel perspective, both store and digital channels contributed to comp growth, with e-commerce sales delivering mid-teen growth and comp stores increasing sales in the low single-digit range. Turning now to sales by category. The skincare and wellness category increased to 24% of sales, and the makeup category decreased to 35% of sales, primarily reflecting the impact of Space NK, which has a higher mix of skincare sales than our Ulta Beauty business. Fragrance was the strongest performing category again this quarter, delivering double-digit comp growth fueled by newness from established brands, including YSL and Prada, as well as exclusive brands such as Noise, Snif, and Summer Mink by Drake, coupled with strong performance of holiday gift sets. New co-branded TV campaigns, expanded space in stores, and better in-stocks successfully positioned Ulta Beauty as the fragrance destination this holiday season.
The haircare category delivered its best comp performance this year with comp growth for the quarter in the high single-digit % range, primarily driven by strong performance from new brands, including Amika and Moroccanoil and exclusive Cécred, which continued to build sales momentum after a fantastic launch in April. The skincare and wellness category delivered mid-single-digit % comp growth, driven by prestige skincare and wellness K-beauty brands, Medicube, Anua, and Peach & Lily, and new brands, Dermalogica and Personal Day, drove strong guest engagement, while highly giftable launches from Therabody, Nodpod, and Saje, which is exclusive to Ulta Beauty, delivered strong growth in wellness. We took market share in the makeup category with low single-digit % growth in total, supported by positive comps in both mass and prestige makeup.
Mass makeup growth was driven by compelling newness from brands like L'Oréal, Morphe, and Ulta Beauty Collection, while prestige beauty benefited from newness from Kylie Cosmetics and MAC. Finally, services delivered mid-single-digit comp growth, driven by increases in salon and specialty services, including ear piercing and makeup services. Gross margin for the quarter decreased 10 basis points to 38.1% of sales. The decrease was primarily due to channel mix and deleverage of store fixed costs and other revenue. These headwinds were mostly offset by lower inventory shrink and leverage of supply chain fixed costs, reflecting efficiencies from our supply chain optimization efforts. Our team's relentless focus on reducing inventory shrink has delivered meaningful benefits every quarter this year. Our investments in fixtures and process improvements, targeted efforts in high-risk markets, and focused associate training have resulted in shrink reductions across every category.
Moving to expenses, SG&A increased 23% to $1 billion. SG&A growth was primarily driven by higher incentive compensation, including rewarding our frontline and field associates, reflecting strong financial performance versus our targets this year, compared to lower incentive comp in fiscal 2024. The impact of Space NK and investments we made to support our Ulta Beauty Unleashed strategy also contributed to SG&A growth. Excluding the impact of incentive compensation and Space NK, SG&A growth for the quarter was about 17%. As a percentage of sales, SG&A increased 230 basis points to 25.7%. Consistent with our investment strategy, expenses deleveraged across most components of SG&A, with the exception of store payroll and benefits, which were approximately flat as a percentage of sales.
Operating profit was $477 million, or 12.2% of sales, and diluted earnings per share for the quarter was $8.01 per share. Now to recap fiscal 2025 on a full year basis, net sales increased 9.7%, or $1.1 billion-$12.4 billion. Comp sales increased 5.4%, driven by a 3.3% increase in average ticket and a 2% increase in transactions. Gross margin increased 30 basis points to 39.1% of sales. The increase was primarily due to lower inventory shrink and higher merchandise margin, which were partially offset by channel mix and the deleverage of other revenue. SG&A expense increased 17.4% to $3.3 billion.
The growth was primarily driven by higher incentive compensation, the impact of Space NK, and investments we made to support our Ulta Beauty Unleashed strategy. Excluding the impact of incentive compensation and Space NK, SG&A growth for the year was about 13%. Operating profit was $1.5 billion, or 12.4% of sales, and diluted EPS increased 1.2% to $25.64 per share, above our previously provided guidance. Moving to the balance sheet and our capital deployment strategies, we ended the year with $494 million in cash and short-term investments and $62 million in short-term debt, primarily related to Space NK.
Total inventory increased 10.8% to $2.2 billion, primarily reflecting additional inventory to support new brands, the acquisition of Space NK, and the impact of 60 net new Ulta Beauty stores. The increase also reflects inventory investments in key categories to improve in-stock levels and support strategic growth opportunities. Our business generated more than $1.5 billion in cash from operations for the year, which supported reinvestment of $435 million in capital expenditures and $890 million in share repurchases. To summarize our fiscal 2025 performance, the strategic investments and actions taken as part of the Ulta Beauty Unleashed strategy enabled us to accelerate top-line growth, capture market share faster than expected, and ultimately exceed the commitments we made at the start of the year.
I want to express my sincere gratitude to our teams for delivering this outperformance and positioning us well as we enter fiscal 2026. As we look to fiscal 2026, we are focused on expanding our market share, driving returns from the investments we've made over the last few years, and importantly, returning to profitable growth. Our 2026 plan is aligned to our long-term targets and reflects several key financial goals anchored in our value creation principles, including disciplined cost management, which helps fuel investment to support a strong growth profile. For the year, we anticipate net sales will increase between 6%-7%, with comp sales growth between 2.5%-3.5%. We are planning on operating profit to grow in line or faster than net sales, and we expect diluted EPS will increase more than operating profit.
For modeling purposes, we expect net sales will be between $13.1 billion-$13.2 billion, primarily driven by comp sales growth and the impact of 50-60 net new company-operated stores. Overall, we are planning stronger sales growth in the first half of the year as we benefit from the acquisition of Space NK and lap easier comp growth comparisons in the first quarter. We expect gross margin will be approximately flat as benefits from higher merchandise margin, driven primarily by greater inventory productivity, will likely be offset by deleverage of store fixed costs and other revenue. We will continue to invest in growth opportunities, but we are planning SG&A growth to be in line with to slightly below net sales growth and significantly lower than fiscal 2025, enabled by productivity programs and disciplined investment prioritization.