TIVP003: Ulta Beauty (ULTA): A Beautiful Compounder w/ Shawn O’Malley

In today’s episode, Shawn O’Malley (@Shawn_OMalley_) breaks down what you might call a beautiful compounder. That is, Ulta Beauty, one of America’s largest retailers for cosmetics, skincare, and hair care products, with an impressive track record of generating returns on capital while benefiting from industry trends where beauty enthusiasts increasingly see beauty products as being key to their wellness and self-care routines.

Shawn outlines what has worked well for Ulta, why its customers are so loyal, how it survived disruption from Amazon, his thoughts on the company’s valuation, and finally, his decision on whether to add the company to The Intrinsic Value Portfolio he’s building each week on the show, plus so much more!

Prefer to watch? Click here to watch this episode on YouTube.

IN THIS EPISODE, YOU’LL LEARN

00:00 - Intro

02:28 - How Mary Dillon made Ulta into an e-commerce giant.

11:27 - What customers love about Ulta.

13:35 - What makes the in-person experience at Ulta so special.

26:39 - How Ulta stacked up 44 million members in its loyalty program.

29:08 - How Ulta compares to Sephora and other competitors.

39:44 - Why Ulta has been able to generate such impressive returns on capital.

42:53 - What’s attractive about Ulta’s current valuation.

48:44 - Whether the company can continue growing.

And much, much more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

• Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Kyle and the other community members.
• Sign up for The Intrinsic Value Newsletter.
• ROIIC Formula: Intrinsic Value Compounding Rate = ROIC x Reinvestment Rate.
• John Huber on calculating the incremental return on invested capital.
• Berkshire Hathaway’s 1992 shareholder letter from Warren Buffett.
• Ulta’s 2024 Investor Day webcast.
• An interview with Ulta’s CEO , Dave Kimbell, on why Ulta is winning despite industry disruption.
• Attend the 2025 Berkshire Hathaway shareholder meeting and meet-ups with The Investors Podcast Network.
• Check out the books mentioned in the podcast here.
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