Thank you, Layla. Good afternoon, everyone, thank you for joining us for a discussion of Ulta Beauty's results for the first quarter of fiscal 2026. Hosting our call today are Kecia Steelman, Chief Executive Officer, and Chris DelOrefice, Chief Financial Officer. During today's webcast, a presentation is being shared live and has also been posted to our website at ulta.com/investor. 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. 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 and no more than one follow-up question. As always, the IR team will be available for any questions after the call. Now I'll turn the call over to Kecia. Kecia?
Thank you, Kiley. Good afternoon, everyone. After meeting our ambitious goals in fiscal 2025, we entered fiscal 2026 with a keen focus on continuing our progress while optimizing our model with financial discipline to deliver profitable growth. Before I dive into the details of our first quarter performance and priorities for the year ahead, I want to share my perspectives on the business. First, our core U.S. business is fundamentally strong in delivering healthy sales growth. Second, the strategic initiatives we are driving to scale new businesses are gaining traction, are contributing to our results, and position us well for long-term growth and value creation. Third, we are exercising financial discipline and working thoughtfully to optimize our costs and investments to position our business to deliver consistent double-digit earnings growth.
Growth in the beauty category remains healthy even as consumers are increasingly value-focused, and Ulta Beauty's diverse assortment, omnichannel convenience, and compelling loyalty rewards program uniquely positions us to meet our guests' evolving needs. Finally, we are staying focused on capitalizing on the strengths of our model and executing our Ulta Beauty Unleashed strategy to deliver long-term profitable growth and value. While we are continuing to monitor how the macro landscape could evolve, we remain execution-focused and are confident we will deliver our fiscal 2026 expectations, which Chris will cover further later in the call. Turning now to our first quarter performance and the progress being made on our Ulta Beauty Unleashed pillars. The strength of our business continued as we delivered first quarter net sales growth of 11.1%, comparable sales growth of 5.3%, and 15.5% diluted EPS growth.
Performance was broad-based, with all channels and major categories contributing positively to our strong results. From a market share perspective, we gained share in prestige beauty, and we were roughly flat in mass beauty. Beginning with our driving the core business growth pillar. Overall company performance continues to be fueled by the strength of our core U.S. business, reflecting a relentless focus on delighting guests with every interaction and building on our new go-to-market approach, marketing leadership, and compelling merchandising innovation. Our stores delivered another solid sales performance, supported by the successful execution of key promotional and marketing events, including 21+ Days of Beauty and Spring Haul. As we begin the new fiscal year, our store team is focused on driving engagement, education, and excitement.
During the quarter, together with our brands, we executed more than 40,000 in-store events, including key activations to highlight newness from brands like Coach, Cécred, Live Tinted, and held several workshops to support education for brands like Redken, Rare Beauty, and Lancôme. As we look to Q2, we will stay focused on the fundamentals to ensure we are delivering great guest experiences, driving conversion, and fueling sales growth. E-commerce momentum continues, with the team delivering another quarter of robust sales performance. The sustained strength of our e-commerce channel is powered by the investments we've made over the last several years to elevate our infrastructure and the ongoing enhancements we're continuing to roll out, like expanded same-day delivery options through Uber Eats and new buy now, pay later options through Klarna to improve functionality, expand convenience, and improve the guest experience.
The convenience of buy anywhere, fill anywhere capabilities, including buy online, pickup in store, have been a key driver of our e-commerce growth and of our strong guest satisfaction metrics. This quarter marked the exciting launch of our TikTok Shop with a strategic focus on our only at Ulta exclusive brands. We hosted our first ever TikTok shoppable live stream at our Ulta Beauty World event, garnering more than 5 million impressions and strong GMV, rivaling top affiliate live stream performances. This initiative is driving a lot of excitement with guests and the creator community, which is showing high interest in collaborating with us. A number of brand partners have expressed interest in offering their products as part of our curated TikTok assortment and bundles.
This new channel positions Ulta Beauty at the center of a critical discovery point and will enable us to spotlight our exclusive brands, build influence, and fuel our marketing efforts, particularly with younger consumers. Turning to brand building, we are making meaningful progress on our ambition to build multiple $100+ million exclusive brands over time. To compete and win in beauty and wellness, we are driving the innovation pipeline, co-investing in marketing with strategic and exclusive brand partners, and creating exciting activations in stores and online. We have several exciting success story on this brand. Today, I'd like to highlight an exclusive fragrance brand, NOYZ. An approachable, vegan, and cruelty-free fragrance brand inspired by relatable real-life feelings and self-expression. During Q1, NOYZ launched its innovative Mylk de Parfum. Part fragrance, part hydrating skincare.
Mylk de Parfum are perfect for layering and are creating a new subcategory that has excited our guests and is helping drive the brand's continued growth. Ulta Beauty collaborated with NOYZ on a 360-degree go-to-market activation strategy that helped catapult the brand into our top 20 in the category for the quarter. NOYZ continues to fuel social buzz into Q2 with the recent debut of Be Her, a fragrance collaboration with award-winning singer-songwriter Ella Langley. From a broader newness perspective, our balanced approach is driving consumer excitement across categories and fueling positive performance. During the quarter, we launched more than 20 new brands, including our record-breaking launch of Rare Beauty in makeup, Almond, an exclusive early lead brand in fragrance, Bloomeffects in skin, Hairstory in haircare, and Grown in wellness.
These launches are an addition to exciting newness from our existing brand partners like Estée Lauder, TATCHA, and exclusive brand Sake. In marketing, we focus on engaging storytelling to capture core moments in beauty and further Ulta Beauty's authority in high-impact shopping moments. The team drove outstanding activations around key marketing and promotional events, including Valentine's Day, 21+ Days of Beauty, and Spring Haul. In April, we hosted our flagship consumer event, Ulta Beauty World, in Orlando. Approximately 3,000 Ulta Beauty fans attended the event to engage with nearly 240 of our brand partners and discover newness through immersive, high-touch experiences, with master class education offered as a separate experience. Building on last year's inaugural event, Ulta Beauty World drove strong engagement across PR and social, and expanded into new platforms like TikTok Shop LIVE, more than doubling earned media value year-over-year.
During the quarter, we expanded our Ulta Beauty Rewards loyalty program to nearly 47 million members, up 4% year-over-year. We are leveraging our vast first-party data and recent tech improvements to enhance our leadership in personalization. Our teams are building around key customer journeys and actions to maximize incremental sales-driving opportunities. This includes utilizing our loyalty data to understand behaviors, predict replenishment purchases, and drive cart conversion. Moving to our second pillar, scaling new businesses. Beyond the U.S., we opened a handful of new stores across our international markets. Space NK, which operates stores in the U.K. and Ireland, continues to deliver healthy, well-balanced growth, expand its loyal customer base, and gain market share.
In Mexico, we opened two new stores, including the grand opening of our Madero store, a unique two-story building that blends modern beauty retail with historic architecture and charm in the heart of Mexico City. In addition, our franchise partner, Alshaya, opened our third store in the Middle East at the Dubai Mall, one of the largest and most visited shopping destinations in the world. While the situation in the Middle East remains fluid, we continue to be excited about the potential of this flagship location and for the expansion opportunity in the region over the long term. Our marketplace continues to gain traction with the addition of exciting new brands and items. We closed the quarter offering more than 325 brands and over 8,000 SKUs across our seven marketplace assortment focus areas.
During the quarter, we successfully integrated marketplace brands into our 21+ Days of Beauty promotion, contributing to strong ongoing guest engagement. I'm incredibly proud of the way our team continues to execute this important initiative and the strong guest satisfaction we are seeing for those who purchase products from our marketplace. In wellness, we're helping guests find their feel-good with expanded assortments across key wellness focus areas, nutrition and supplements, intimate care, rest and reset, and essential routines. During the quarter, we launched several new brands, including nutritional gummies brand Grüns and intimate skincare brand Medicine Mama. We drove awareness and guest acquisition through our wellness-focused events and integrated wellness offerings into key tentpole events. We also enhanced our digital navigation and storytelling. Performance continues to build, driven by assortment and space expansion, as well as guest engagement in key pillars, including nutrition and supplements and rest and reset.
In UB Media, we are on a journey of scaling this incremental margin driver, rolling out enhanced capabilities, features, and products to support our brands. We recently launched a YouTube enhanced measurement product, which provides deeper insights and benefits to our brand. Clinique leveraged this new capability for a recent campaign that was executed with fresh talent and best-in-class practices. It was not only able to measure brand-level sales, but they also saw meaningful higher returns on the ad spend and conversion compared to other video channels. Finally, our third strategic pillar, aligning our foundation for the future. As part of our supply chain optimization efforts, we advanced plans to expand our distribution network with the commitment to open a new regional distribution center in Salt Lake City, Utah. This new facility will leverage the latest in automation technology to improve speed, increase efficiency, and simplify product flow.
Great. Thanks, Kecia, and good afternoon, everyone. I'll begin with a discussion of our first quarter results and then share our updated expectations for the year. Starting with the quarter, the Ulta Beauty team delivered profitable growth, reflecting benefits from strong revenue growth and gross margin expansion, driven by improvements in shrink and merchandise margin. I want to express my sincere appreciation to our teams for staying disciplined and working together to deliver this strong performance. Net sales for the quarter increased 11.1% to $3.2 billion compared to $2.8 billion last year. Total sales growth, excluding the impact of Space NK, was in the high single-digit range. During the quarter, we opened 16 net new Ulta Beauty stores and one new Space NK store. Other revenue increased $6 million to $62 million, primarily due to higher income from our credit card program and commissions from UB Marketplace.
This growth was partially offset by lower royalty income from our partnership with Target Corporation. Comparable sales for the period increased 5.3%, driven by a 3.7% increase in average ticket and a 1.6% increase in transactions. Looking at the cadence of sales through the quarter, the period played out largely as we expected. February delivered low double-digit comp growth as we lapped our weakest comp performance in fiscal 2025. Comp growth for both March and April was in the low single-digit range. From a channel perspective, both store and digital channels contributed to comp growth, with e-commerce delivering mid-teen sales growth and comp stores delivering sales growth in the low single-digit range. Turning now to sales by category. Fragrance was our strongest category again this quarter, delivering high teen comp growth and increasing from 11%-12% of total revenue.
We continue to execute well and advance towards our goal of being the number one destination for fragrance. We are playing to win and to support this ambition, we are investing in newness, enhancing our in-store experience, improving core in-stocks, and leaning into key events like Valentine's Day and Mother's Day. For the quarter, growth was primarily driven by newness from core luxury brands including YSL, Carolina Herrera, Valentino, and an early lead of new brand, UOMA, as well as innovation, including the new Mylk scent [for men] from exclusive brand NOYZ. The haircare category delivered high single-digit comp growth this quarter, driven primarily by strong performance in prestige haircare. New brands amika and Moroccanoil drove healthy growth, and exclusive brand Cécred continue to resonate with guests, driving robust results with core hero SKUs as well as exciting innovation.
Hair treatments, including repair focused products and scalp regimens, outperformed, while hair tools declined as the impact of lapping prior year launches and softness in traditional tools more than offset growth from innovative and accessible brands Shark and T3. Comp sales in the makeup category increased in the low single-digit range, with growth driven primarily by prestige makeup. Strong guest engagement with new brand Rare Beauty, as well as newness from existing brands including MAC, Kylie Cosmetics, and Estée Lauder helped deliver growth for prestige makeup. Mass makeup was relatively flat, with compelling innovation from brands like Morphe and L'Oréal offsetting limited innovation from other mass brands. The skincare and wellness category delivered low single-digit comp growth this quarter. Prestige skincare continued to perform well as newer brands, including medicube and DRMTLGY, and newness from existing brands, including TATCHA and exclusive brand Peach & Lily, drove healthy guest engagement.
Mass skincare delivered solid growth, supported by in-store expansion for Anua, sustained virality for BYOMA, and exclusivity from cocokind. In wellness, continued strength in supplements including Lemme and MaryRuth's, as well as self-care brands including Therabody, Nodpod, and Saje delivered strong growth. This growth was partially offset by pressure in body care as we lapped meaningful expansion of key brands last year. Finally, services delivered mid-single digit comp growth, driven by strong member engagement in salon and specialty services, including ear piercing and makeup services. Gross margin for the quarter increased 100 basis points to 40.1% of sales, primarily due to lower inventory shrink and higher merchandise margin. Our team's relentless focus on reducing inventory shrink continues to deliver meaningful benefits to profitability.
In addition to our continued focus on process improvements and associate training across all stores, we've applied data insights to take deliberate, targeted actions to improve performance in high-risk locations. As a result of these combined efforts, we saw shrink reductions across every category and every region this quarter. Merchandise margin increased this quarter, primarily due to improving inventory turns and the impact of favorable category mix from Space NK. Elevated fuel prices resulted in higher than planned transportation costs, productivity and efficiency unlocks from our supply chain optimization investments enabled our teams to mitigate this pressure in the quarter.
Moving to expenses, SG&A increased 14.6% to $850 million as planned, driven primarily by the impact of Space NK and investments made to support our Ulta Beauty Unleashed strategy, including investments made in the second half of fiscal 2025, which have not yet anniversaried. Operating profit grew faster than net sales, increasing 11.6% to $448 million, or 14.2% of sales. Interest income was $0.7 million, inclusive of the impact from our increased share buybacks. The effective tax rate decreased 70 basis points to 23.9%, primarily due to the purchase of transferable federal tax credits, resulting in a one-time income tax benefit recorded during the quarter.
Wrapping up the P&L, net income increased 11.6% to $340 million, and diluted earnings per share for the quarter increased 15.5% to $7.74 per share. Moving to the balance sheet and our capital deployment strategies, our focus on cash management, including a disciplined approach to capital expenditures, is driving greater cash efficiency. We ended the quarter with $221 million in cash and short-term investments and $145 million in short-term debt. Total inventory increased 12.5% to $2.4 billion, primarily reflecting additional inventory to support new brands, the acquisition of Space NK, and the impact of 70 net new Ulta Beauty stores. On a per store basis, inventory increased 1.4%.
Capital expenditures were $58 million for the quarter, mostly driven by investments in new and existing stores. We executed against our increased share buyback plan and deployed cash and leveraged our revolver to support $555 million of stock repurchases during the quarter. Turning now to our updated outlook. We remain focused on expanding market share and delivering profitable growth in fiscal 2026. The first quarter positioned us well against these goals with strong execution throughout the P&L. At the same time, we believe it is prudent to take a measured approach to our guidance given the uncertain macro landscape. For the year, we are maintaining our guidance for sales and continue to expect net sales will increase between 6%-7%.
We expect net sales growth will be stronger in the first half, reflecting our strong Q1 performance and the benefit from the acquisition of Space NK. Given our strong Q1 performance, we are maintaining our comp sales growth commitment and continue to expect comp growth for the full year will be between 2.5% and 3.5%. Based on this, we expect our two-year stacked comp will be in the high single-digit range and relatively consistent across the balance of the quarters, including Q2, which was our highest comp performance last year. Reflecting the strong performance execution in the first quarter, we have enhanced our expectations and now expect operating profit will increase between 6.5% and 9% for the year.
For modeling purposes, we continue to expect gross margin will be roughly flat for the year, driven by higher inventory productivity, continued momentum in supply chain productivity, and a modest improvement in inventory shrink, which is expected to offset pressure from higher fuel costs and help balance targeted investments to bring competitive offerings across our unique mass-to-luxury assortment to our value-focused guests. We delivered SG&A growth in the first quarter, consistent with our expectations, and we've not changed our full year targets. We continue to plan SG&A growth in line to slightly below net sales growth and intend to invest in a disciplined way that supports and maximizes profitable growth. We continue to expect to generate strong operating cash flow, which will enable reinvestment to support future growth and also support our intent to return capital to shareholders through our stock repurchase program.
We see deploying capital towards increased share buybacks in the current environment as a compelling value creation opportunity, and in the first quarter, we announced an increase in our fiscal 2026 stock buyback target from $1 billion-$1.5 billion. Reflecting the impact of these assumptions, we have increased our EPS estimates. We now expect diluted EPS will be between $28.36 and $28.80 per share. Our new guidance represents growth between 10.6% and 12.3% respectively, compared to previous growth expectations of 9.4%-11.4%. Note, our updated estimates assume a weighted average share count of approximately 43 million shares and a tax rate of approximately 24.5%. In closing, Ulta Beauty is well positioned to deliver compelling value to our shareholders.