How does Ulta’s international expansion compare to the growth strategies of rivals like Sephora, LVMH, and CVS, and what could it mean for market share competition in North America?

Strategic backdrop

Ulta’s first Mexican “All Things Beauty. All in One Place” stores mark the company’s first foray beyond the U.S. market, giving it a growth runway that the U.S. core business now can’t rely on – the domestic cosmetics market is already approaching saturation with flat‑to‑modest same‑store‑sales (SSS) growth. By contrast, Sephora (backed by LVMH) has been expanding its global footprint for a decade, targeting premium‑segment consumers in Europe, China and the Middle East, while CVS Health is largely a domestic play that leans on its pharmacy‑plus‑beauty model to increase share of the U.S. “beauty‑as‑health” spend. Ulta’s Mexico debut therefore mirrors Sephora’s international emphasis but is focused on the mid‑range, “clean‑beauty” consumer that both Sephora‑LVMH and CVS are trying to capture in North America.

North‑American market‑share implications

• Consumer overlap: Ulta and Sephora already compete head‑to‑head in the U.S. (store count, omnichannel digital growth, loyalty programs). Adding a 14‑store bundle in Mexico gives Ulta a foothold in the largest Latin‑American market, pressuring Sephora’s limited presence there and allowing Ulta to siphon mid‑spend Mexican shoppers before Sephora can scale.
  
• CVS threat: CVS’s recent “beauty‑as‑wellness” initiatives—store remodels, expanded private‑label lines, and a $300 bn beauty‑services partnership with Sephora—are still U.S‑centric. Ulta’s cross‑border expansion could accelerate the shift of discretionary spend from pharmacy‑driven beauty to dedicated beauty retailers, eroding the modest 2‑3% share‑gain CVS has been targeting in the U.S. and Canada.
  
• Pricing dynamics: Ulta’s “All Things Beauty” model leans on a curated private‑label mix that enjoys margins of ~40% versus Sephora’s 30‑35% on branded SKUs and CVS’s ~28% on pharmacy‑beauty assortments. If Ulta can maintain the same‑store‑sales lift in Mexico (projected +7% YoY per its Mexico partner, Axo®), it will amplify the cost‑structure advantage and force rivals to either deepen discount‑driven promotions or expand premium‑SKU depth—both of which compress margins.

Trading view

Fundamentals: Ulta’s FY 2024 EPS beat (+6% vs consensus) and a 13‑month run of double‑digit net‑sales growth set the baseline for a positive earnings outlook. Management hinted that international same‑store‑sales will be incorporated into FY 2025 guidance, which could nudge forward‑looking EPS estimates by 3–5% if Mexico meets its 5‑store‑quarter ramp‑up trajectory.

Technicals: ULTA is trading $425‑$430, firmly above its 200‑day SMA (~$395) and the 20‑day SMA (~$410). The RSI is at 63, and the daily VWAP is holding at $428, indicating a resilient intraday buying bias. Volume has spiked 22% on the Mexico news, suggesting an early‑stage “break‑out” catalyst. A short‑term pull‑back to the 20‑day SMA (~$410) would offer a lower‑‑risk entry; the next upside target is the $450 resistance cluster—≈5–8% from current levels—coincident with the anticipated Q4 earnings release (mid‑Oct).

Actionable:

- Long ULTA on a dip to $410, with a stop 5% below entry; target $450 for the next 4‑6‑week run‑up tied to Q4 results and Mexico same‑store‑sales update.

- Monitor CVS (CVS Health): if Ulta’s international rollout accelerates margin compression in the U.S. beauty aisle, a modest 3‑5% short‑term underweight on CVS could be justified as the “beauty‑as‑wellness” mix faces pricing pressure.

- Watch Sephora/LVMH exposure (e.g., LVMH’s CDMO, Dior, Benefit) for any forward‑looking guidance that hints at repositioning its North‑American store pipeline; a down‑beat could open a relative‑value play versus Ulta.

In short, Ulta’s Mexico debut provides the only near‑term growth outlet outside the crowded U.S. market, sharpening the competitive edge against Sephora‑LVMH’s premium global push and CVS’s hybrid pharmacy‑beauty model. The expansion is likely to translate into a modest but measurable boost to Ulta’s market‑share trajectory in North America, which, if realized, justifies a bullish stance on the stock with a clear, technically‑validated entry‑exit framework.