Ulta Beauty reported a strong year-end, with record sales and member growth. 

The company reported $3.23 billion in Q4 revenue, higher than the $3.03 billion analysts expected. Full-year revenue exceeded $10 billion, while net income increased to more than $1 billion. The revenue growth was driven by double-digit growth across the company’s four key categories, including makeup, haircare, skincare and fragrance, as well as its Ultamate Rewards program, which is now 40 million strong. 

Ulta Beauty also benefited from its continued shop-in-shop partnership with Target, which grew by 254 additional locations. The company plans to have 1,500 to 1,700 stores, with an additional 800 Ulta Beauty at Target locations.

While the company largely reported impressive results, its gross margins have remained flat year over year due to shrinkage. Chief Operating Officer Kecia Steelman noted that the company has been investing more in deterrents, such as locked fragrance cabinets, which have helped reduce theft and fraud.

Looking ahead, the company remains optimistic about its growth prospects, with consumers continuing to spend money on affordable luxuries such as makeup and skincare, which is the fastest-growing category.

According to GlobalData Managing Director Neil Saunders, Ulta has taken advantage of this trend by becoming a more competitive player with new offerings across various price points.

Saunders added that beauty is no longer just about adding color to the complexion. Instead, it is associated with health, vitality, and well-being, helping consumers remedy problems with skin, hair, and other things.

Ulta’s outlook for the next year is more conservative, with the company expecting to see net sales reach between $10.95 billion to $11.05 billion and comps up 4% to 5%. However, this is more of a normalization for the company following a period of solid growth, CEO Dave Kimbell said.