Warren Buffett’s Berkshire Hathaway has made a significant investment in Ulta Beauty, a leading beauty retailer in the United States. The conglomerate acquired approximately 690,106 shares of Ulta Beauty during the second quarter, valued at around $266 million as of June 30. This move has been described as a “big stamp of approval” by analysts, indicating that Ulta Beauty has passed Berkshire’s rigorous investment criteria.

Ulta Beauty offers a diverse range of products, including both mass-market and high-end cosmetics, fragrances, skincare, and hair care items. The company operates through approximately 1,400 retail locations and online. Despite a challenging year, Ulta Beauty has shown consistent growth, with a year-over-year sales increase of 3.5% in its latest quarterly report, reaching $2.7 billion.

The investment by Berkshire Hathaway has led to a notable rise in Ulta’s stock, with the company’s shares surging more than 11% on Thursday following the announcement. Analysts believe that Ulta Beauty’s strong fundamentals, including its debt-free balance sheet and substantial free cash flow, make it an attractive investment. The company is also expanding into Mexico by 2025, which is expected to contribute to its growth.

However, concerns about a slowdown in the beauty sector and potential declines in sales have emerged. Ulta Beauty’s CEO, Mary Dillon, has cautioned investors about a slowdown in the overall category, which has triggered a sell-off in the stock. Despite these concerns, analysts remain optimistic about Ulta Beauty’s long-term growth potential and the company’s ability to implement strategies to maintain its market share.