Ulta Beauty, Inc. (NASDAQ: ULTA), as a profitable domestic retailer, stands to be one of the biggest beneficiaries of the new federal tax law, which will lower the U.S. corporate tax rate from 35% to 21% this year.

However, Ulta investors may not see all of that money just yet. That's because if all your competitors get the same cut, some may try to gain market share by lowering prices and/or upgrading service. In addition, the rise of e-commerce has forced retailers to become omnichannel businesses, needing to invest in physical stores, distribution centers, and fast shipping.

Though Ulta was thought to be coming off a heavy investment cycle, management is doubling down on spending in 2018, in order to stay ahead of the pack in an increasingly competitive environment. Here's how Ulta is spending its tax cut, and what it means for investors.

Ulta continues to reinvest in growth. Image source: Getty Images.

Boutiques

One of the bigger Ulta headwinds has been a slowdown in prestige cosmetics, Ulta's core segment. While that category slowed overall in 2017, Ulta's top four prestige brands -- MAC, Lancome, Clinique, and Benefit -- were standout performers.

Ulta has been featuring these names in branded in-store boutiques, just as fellow specialty retailer Best Buy has found success with branded boutiques for electronic equipment at its stores.

This year, Ulta will continue installing these boutiques, with another 675 set for 2018 after 700 installations last year, including 200 dedicated to MAC, a top brand the company only began selling last spring.

Skin care

While prestige cosmetics decelerated last year, skin care, apparently, is on the rise. As such, CEO Mary Dillon said the company will add several new skincare brands this year, such as The Better Skin Co., Crepe Erase, Mamonde, and House 99 by David Beckham. The David Beckham brand, as you might imagine, is geared toward men, and exclusive to Ulta Beauty.

Ulta also plans to capitalize on the trend by adding a new Skin Bar to 180 of the company's roughly 1,100 stores and hiring a dedicated "skin expert" at each, who will be directly responsible for sales of skin care products and services at each location.

People

Not only will Ulta boost spending on skin care experts, but it will also raise wages and/or employee benefits across the board. In the wake of the tax cuts, Ulta paid store associates a one-time bonus totaling $12.3 million last quarter. And in a world of low 4% unemployment, the ability to attract high-quality employees, especially in a services business like Ulta's, will become increasingly important.