Cautious Outlook for Ulta Beauty Amid Online Growth and Retail ChallengesWe believe much of this relates to the company benefiting from easier comparisons. However, the online channel still outpaced brick-and-mortar, likely owing to the ongoing ramp-up of a new online platform launched roughly a year ago, enhanced by marketing strategy and dynamics of the app. Our concern here, and the primary risk as we see it, is potential cannibalization of the retail channel, which could hit margins harder moving through the year and into 2026. In contrast to our thesis, the company is seeing a notable tailwind in lapping incremental Sephora locations, with management noting seeing a return to growth in the year after these openings. What is more, we do not believe Sephora locations in Kohl’s will be any more successful than Sephora in JCPenney long term.