With the expansion, which will mark the beauty specialty retailer’s international debut, it will step into a multibillion-dollar beauty market hungry for international brands. According to the market intelligence firm Mordor Intelligence, Mexico’s beauty and personal care market is worth $11.3 billion this year. Propelled by a compound annual growth rate of roughly 6%, the market is forecast to top $15.2 billion in sales by 2029.

“The Mexican beauty market is sizable, growing and has significant beauty opportunity,” said CEO Dave Kimbell during Ulta’s fourth quarter earnings call last month. “Our research suggests there is a healthy awareness of the Ulta Beauty brand with local beauty enthusiasts, and we also see strong engagement in stores located in geographically adjacent markets.”

Mexico City resident Kara LaForgia, founder of the beauty brand consultancy Kaz Konsulting and general partner at Kaz Ventures, says, “A lot of Latin people and especially in Mexico City are looking for more American or international brands, and it’s just so hard to find them here. So, what we all do is we go back to the States, we get all of those brands and then we bring them back in our suitcases.”

She adds, “There’s just so much room for retailers to come in here, and I think Mexico is only going to grow exponentially. There’s so many things aside from just beauty or retail happening here right now. Tesla has a whole plant that’s coming here. Amazon is building corporate offices.”

Ulta is turning to South American distributor Grupo Axo to help it launch and operate stores in Mexico. Grupo Axo has a lengthy history of introducing beauty companies from abroad to Mexico. It shepherded Sephora in Mexico when the chain bowed in the country with a Mexico City location that opened in 2011.

Ulta has looked beyond the United States before. In 2019, it announced its intention to travel to Canada only to scrap the plans a year later to prioritize U.S. operations during the pandemic. In the U.S., Ulta opened 33 stores last year to hit 1,374 locations. Its reach extends into big-box retail through a shop-in-shop partnership with Target that kicked off in 2020. Last year, the number of new Ulta Beauty at Target installations increased 140 locations to a total of 800 locations.

Ana Zinser, founder and CEO of Mexican makeup brand Evie, which is carried in Sephora’s Mexican stores, senses that there’s interest for a retailer like Ulta in Mexico. “We are lacking a concept like Ulta where you can have a complete beauty experience in store, a place where you can find products for your hair, but also you can find a blow dryer and nail products,” she says. “I was speaking the other day with some industry experts within Mexico, and they were like, ‘We are missing Ulta Beauty here.’”

Ulta is broadening its borders in a strong position. After taking a sizable hit in 2020 when its net sales tanked almost 17%, it cracked $10 billion in annual revenues in 2022 for the first time in its over 30-year existence. In 2023, it beat its own record when net sales increased 9.8% to $11.2 billion. The same year, same-store sales advanced 5.7% versus 15.6% in 2022. Operating income for the year grew 2.4% to $1.7 billion from $1.6 billion in 2022.

However, Kimbell mentioned Wednesday at a J.P. Morgan investor conference that Ulta detects a decline in demand across beauty categories that he said is “a bit earlier and a bit bigger than we thought.” Ulta estimates its same-store sales will rise 4% to 5% for the year, and it will register softer profit margins as it contends with higher supply chain costs and narrowing product margins.

A presence in Mexico will enlarge Ulta’s already vast consumer base—it boasts 42 million U.S. members of its loyalty program—but it will pit it against a host of competitors. Similar to the U.S., Mexico’s beauty retail landscape is segmented into luxury, prestige, mass and drugstore retail players.

El Palacio De Hierro and Liverpool, department store chains stocking luxury and prestige brands like Sisley Paris, Givenchy, La Prairie, Clinique, MAC, Rare Beauty and La Mer, sit at the top of the price scale alongside Sephora. Sephora now has 35 stores in Mexico and is poised to nearly double its Mexican footprint by 2027.

Blush Bar, a millennial and gen Z-focused beauty retailer that hails from Colombia, is another prestige beauty retail entrant. It has two stores in Mexico and expects it will have 10 by the end of this year. Blush Bar carries international brands such as Too Faced, Anastasia Beverly Hills, Supergoop and Dr.Jart+, and the brands Indeed Labs, I Dew Care, Sand & Sky, Ellis Brooklyn and Bybi are exclusive to its selection.

Mall-centered retailers Trendy Accessories and Bellissima, operator of about 14 locations in Mexico City, are a few of Mexico’s key mass beauty players. With 45 stores clustered around Tijuana and owned by retail conglomerate Grupo Sanborns, operator of Sears and Saks Fifth Avenue in Mexico, DAX offers a wide array of mass beauty brands, including Kiss, Revlon, L’Oréal, Palladio, Maybelline and Avène. Farmacia San Pablo and Farmacia Guadalajara are the country’s most ubiquitous drugstore chains.

The indie beauty retail scene is nascent in Mexico. Balmoria and Olivine have assembled assortments of upscale international brands like Augustinus Bader, Westman Atelier, Kosas, RMS Beauty and Roen Beauty. “We don’t have as many local indie brands,” says Zinser: “For an indie beauty concept to work here, you would need many, many indie brands to feed the concept. It’s easier for the Mexican consumer to believe in a brand that comes from the U.S. than a local brand.”

While not as developed as it is in the U.S., beauty e-commerce in Mexico is rising. According to market research firm Nielsen IQ, beauty and personal care is the top-performing online consumer product goods (CPG) category in the country and its value recently jumped 28% versus 9.7% for CPG generally. Active skincare, sunscreen and shampoo are fueling beauty’s online growth.

Large multi-category online marketplaces Amazon and Mercado Libre dominate Mexican beauty e-commerce, and there are beauty-specific e-commerce players for online shoppers seeking alternatives. Beauty e-tailer Nuestro Secreto, for example, has exclusives on brands like Jeffree Star Cosmetics, Danessa Myricks, RCMA and Make Up For Ever.

With over 40% of its population living below the poverty line, Mexico’s mass beauty market is its largest segment. According to a 2022 market study from agency Flanders Investment & Trade, mass beauty products accounted for 74.05% of sales in Mexico. Premium beauty products accounted for 13.94% and prestige beauty products accounted for 12.71%. Flanders Investment & Trade figures Mexican consumers spend approximately $215 on beauty and personal care products annually. U.S. consumers shell out an average of $1,754 yearly on beauty products and services.

Esmeralda Hernandez, founder and CEO of Beauty Creations, says the makeup brand is “pioneering the masstige market” in Mexico. The brand’s products are priced from $4 to $25, and Mexico is its second-biggest market. The U.S. is its biggest market. Beauty Creations’ Mexican retail network contributes more than 30% of its revenues and spans DAX, Belissima, Trendy Accessories, Sally’s Beauty and local department store retailer Sanborns. Last year, Beauty Creations was on track to cross $60 million in sales.

“Mexican consumers can be very loyal to their brands and products, so you really need to offer additional value here,” says Hernandez. “Anyone can sell a product for a low price, so we are always looking for new ways to innovate and differentiate ourselves in the market.”

Mexico’s thriving mass market presents an opportunity for Ulta. In the U.S., Kimbell noted during the retailer’s earnings call that Ulta’s mass beauty sales growth last year outpaced the sector as a whole. Its prestige beauty business, on the other hand, shrank as a result of competition and elevated results from the year prior. The retailer has onboarded mass and masstige beauty brands this year in tandem with key prestige beauty additions Charlotte Tilbury and Ole Henriksen.

Pia Velasco, a freelance beauty editor and independent consultant based in Mexico City, argues the robustness of mass beauty in Mexico shouldn’t cause beauty companies to ignore the appetite for luxury beauty in the country. “Despite overwhelming evidence that there’s wealth in Mexico and that people are willing and able to spend money on luxury-priced items, there’s still a misconception that Mexicans only shop mass or budget products,” she says. “I’ve even seen this happen with Latinx-owned startups who face difficulty getting funding because investors don’t believe the Latin market will spend money on higher-priced, quality products. This misconception feeds stereotypes, which ultimately can be a missed opportunity for brands, retailers and investors looking to grow.”

To thrive in Mexico, LaForgia theorizes Ulta has to have the right combination of location, accessibility, product mix and market deftness. “They really need to understand the market here and what’s needed from a category perspective,” she says. “Differentiating from competitors is also wildly important as are hosting events and being immersed in the culture. I think also aligning themselves with locals here and bringing them into their building is imperative.”

Zinser agrees that location and accessibility will be critical to Ulta’s fate in Mexico. She advises the retailer to deploy a geographic strategy heavy on urban locations to appeal to customers in cities such as Mexico City, Tijuana and Leon. The strategy is distinct from the one Ulta has pursued in the U.S. where it’s spread in suburban strip malls. Strip malls aren’t as pervasive in Mexica as they are in the U.S. In Mexico, Sephora is anchored in shopping malls.

LaForgia and Zinser assert that it’s imperative Ulta curate a compelling collection of new and exclusive brands to gain traction in Mexico. LaForgia is convinced the retailer can distinguish its assortment from Sephora’s assortment in Mexico. “I’m underwhelmed with Sephora’s assortment here,” she says. “It feels very mainstream, very commercial and very safe with the brands that they’re sorting within their stores.”

Velasco is betting that Ulta will win big in Mexico. “Mexico is a fast-growing beauty market with no signs of slowing down,” she says. “Being directly on the border and so heavily influenced by American consumer trends, Ulta is well-positioned for success.”