While other retailers like Abercrombie & Fitch Co. (NYSE: ANF) and Urban Outfitters Inc. (NYSE: URBN) are seeing margin expansion, Ulta still deals with margin compression. Beauty, fragrance, cosmetics and skincare have been resilient industries throughout the pandemic, but inflation may be causing consumers to seek cheaper alternatives like e.l.f. Inventories grew to $1.75 billion to support higher product demand, cost increases and 41 net new stores.