The trend: Softening consumer confidence hasn’t dented beauty demand, according to executives from Ulta Beauty and Estée Lauder.

• Engagement with the category “remained healthy in Q3,” Ulta CEO Kecia Steelman said, noting that sales rose across both mass and prestige products. That helped the retailer boost comparable sales by 6.3% YoY and net sales by 12.9%.
• The US consumer is “resilient,” Estée Lauder CEO Stephane de la Faverie said at the Morgan Stanley Global Consumer & Retail Conference, though he acknowledged signs of price sensitivity.

The big picture: The strength isn’t isolated to Estée Lauder and Ulta: Beauty sales accelerated in Q3, according to Circana, showing that shoppers are prioritizing self-care amid uncertainty.

• Fragrance continues to be a top performer. It was Ulta’s fastest-growing category in Q3, delivering double-digit comparable sales growth as shoppers snapped up luxury scents from Valentino and Miu Miu as well as more affordable options from brands like Squishmallows. Year to date, category dollar sales are up 17% YoY in mass and 6% for prestige, according to Circana.
• Celebrity brands are resonating. Exclusive partnerships with Rihanna’s Fenty Skin Body and Beyoncé’s Cécred performed well for Ulta, with the latter becoming the most successful prestige haircare launch in the retailer’s history.
• Ecommerce channels are driving spending. Ulta’s ecommerce sales grew in the “mid-teen range,” its third-straight quarter of double-digit growth, aided by new offerings like “replenish and save.” The retailer’s newly launched marketplace will expand the breadth and depth of its assortment and create more advertising opportunities.

Our take: Shoppers are keen to buy beauty, but there are limits to their enthusiasm.

• Ulta’s internal research “suggests beauty consumers’ budgets are tight and they are focused on value,” Steelman said.
• As in other retail segments, spending is bifurcated. That trend is starkest in the fragrance category, where Circana reports shoppers are gravitating to both the higher and lower ends of the market.

Still, consumers’ unwillingness to give up their beauty and self-care routines should help insulate the category from broader economic headwinds.