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Exhibit 99.1
ULTA BEAUTY ANNOUNCES THIRD QUARTER FISCAL 2022 RESULTS
Net Sales of $2.3 Billion Compared to $2.0 Billion in the Year-Ago Quarter
Comparable Sales Increased 14.6%
Net Income of $274.6 Million or $5.34 Per Diluted Share
Company Raises Outlook for Fiscal Year 2022
Bolingbrook, IL – December 1, 2022 – Ulta Beauty, Inc. (NASDAQ: ULTA) today announced financial results for the thirteen-week period (“third quarter”) and thirty-nine-week period (“first nine months”) ended October 29, 2022 compared to the same periods ended October 30, 2021.
| 13 Weeks Ended | | 39 Weeks Ended | ||||||||||||||||
| | October 29, | | October 30, | | October 31, | | | October 29, | | October 30, | | October 31, | ||||||
(Dollars in millions, except per share data) | | 2022 | | 2021 | | 2020 | | | 2022 | | 2021 | | 2020 | ||||||
Net sales | | $ | 2,338.8 | | $ | 1,995.8 | | $ | 1,552.0 | | | $ | 6,981.8 | | $ | 5,901.5 | | $ | 3,953.3 |
Comparable sales | | | 14.6% | | | 25.8% | | | (8.9)% | | | | 15.6% | | | 47.1% | | | (23.8)% |
Gross profit (as a percentage of net sales) | | | 41.2% | | | 39.6% | | | 35.1% | | | | 40.6% | | | 39.7% | | | 29.8% |
Selling, general and administrative expenses | | $ | 597.2 | | $ | 503.4 | | $ | 416.4 | | | $ | 1,632.6 | | $ | 1,411.6 | | $ | 1,068.9 |
Operating income (as a percentage of net sales) | | | 15.5% | | | 14.2% | | | 6.5% | | | | 17.1% | | | 15.6% | | | 0.3% |
Diluted earnings per share | | $ | 5.34 | | $ | 3.94 | | $ | 1.32 | | | $ | 17.35 | | $ | 12.60 | | $ | 0.08 |
New store openings, net | | | 18 | | | 6 | | | (2) | | | | 35 | | | 38 | | | 8 |
“Amidst a challenging macro environment, the Ulta Beauty team delivered yet another outstanding quarter, with strong top and bottom-line results and growth across all major categories and channels,” said Dave Kimbell, chief executive officer. “Our third quarter results reflect the sustained resilience of the beauty category and the strong emotional connection and loyalty we have cultivated with our guests. I am confident our business model, which offers unmatched breadth, value, and convenience, is even more relevant today and unlocks opportunities to further delight guests as we continue to lead the beauty category.”
For the Third Quarter of Fiscal 2022
| ● | Net sales increased 17.2% to $2.3 billion compared to $2.0 billion in the third quarter of fiscal 2021 primarily due to the favorable impact from the continued resilience of the beauty category, retail price increases, and the impact of new brands and product innovation compared to the third quarter of fiscal 2021. |
| ● | Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 14.6% compared to an increase of 25.8% in the third quarter of fiscal 2021, driven by a 10.7% increase in transactions and a 3.5% increase in average ticket. |
| ● | Gross profit increased 22.0% to $962.8 million compared to $789.5 million in the third quarter of fiscal 2021. As a percentage of net sales, gross profit increased to 41.2% compared to 39.6% in the third quarter of fiscal 2021, primarily due to leverage in fixed costs, strong growth in other revenue, and higher merchandise margin, partially offset by higher inventory shrink. |
| ● | Operating income increased 27.3% to $361.9 million, or 15.5% of net sales, compared to $284.2 million, or 14.2% of net sales, in the third quarter of fiscal 2021. |
| ● | The tax rate increased to 24.3% compared to 24.1% in the third quarter of fiscal 2021. |
| ● | Net income increased 27.5% to $274.6 million compared to $215.3 million in the third quarter of fiscal 2021. |
| ● | Diluted earnings per share increased 35.5% to $5.34, including a $0.02 benefit due to income tax accounting for stock-based compensation, compared to $3.94, including a $0.01 benefit due to income tax accounting for stock-based compensation, in the third quarter of fiscal 2021. |
For the First Nine Months of Fiscal 2022
| ● | Net sales increased 18.3% to $7.0 billion compared to $5.9 billion in the first nine months of fiscal 2021, primarily due to the favorable impact from the continued resilience of the beauty category, retail price increases, the impact of new brands and product innovation, and the easing of COVID-19 restrictions compared to the first nine months of fiscal 2021. |
| ● | Comparable sales increased 15.6% compared to an increase of 47.1% in the first nine months of fiscal 2021, driven by a 9.7% increase in transactions and a 5.4% increase in average ticket. |
| ● | SG&A expenses increased 15.7% to $1.6 billion compared to $1.4 billion in the first nine months of fiscal 2021. As a percentage of net sales, SG&A expenses decreased to 23.4% compared to 23.9% in the first nine months of fiscal 2021, due to lower marketing expenses, partially offset by deleverage in corporate overhead primarily due to strategic investments. |
| ● | Operating income increased 29.2% to $1.2 billion, or 17.1% of net sales, compared to $921.9 million, or 15.6% of net sales, in the first nine months of fiscal 2021. |
| ● | The tax rate decreased to 24.3% compared to 24.4% in the first nine months of fiscal 2021. |
| ● | Net income increased 29.5% to $901.7 million compared to $696.5 million in the first nine months of fiscal 2021. |
| ● | Diluted earnings per share increased 37.7% to $17.35, including a $0.05 benefit due to income tax accounting for stock-based compensation, compared to $12.60 including a |
| $0.08 benefit due to income tax accounting for stock-based compensation, in the first nine months of fiscal 2021. |
Balance Sheet
Cash and cash equivalents at the end of the third quarter of fiscal 2022 were $250.6 million.
Merchandise inventories, net at the end of the third quarter of fiscal 2022 totaled $2.11 billion compared to $1.92 billion at the end of the third quarter of fiscal 2021. The $198.3 million increase was primarily due to inventory to support new brand launches, the addition of 41 net new stores opened since October 30, 2021, inventory cost increases, and inventory receipts to maintain strong in-stocks of key items to support expected demand.
Share Repurchase Program
During the third quarter of fiscal 2022, the Company repurchased 340,271 shares of its common stock at a cost of $137.5 million. During the first nine months of fiscal 2022, the Company repurchased 1.5 million shares of its common stock at a cost of $571.9 million. As of October 29, 2022, $1.4 billion remained available under the $2.0 billion share repurchase program announced in March 2022.
Store Update
Real estate activity in the third quarter of fiscal 2022 included 18 new stores located in Boone, NC; Bullhead City, AZ; Campbell, CA; Clemmons, NC; Dallas, TX; Del Rio, TX; Huntsville, TX; Jasper, IN; McMinnville, OR; Paris, TX; Redmond, OR; Rehoboth Beach, DE; Selma, TX; Sequim, WA; St. Petersburg, FL; Starkville, MS; Stoughton, MA and Wilson, NC. In addition, the Company relocated one store and remodeled eight stores. During the first nine months of fiscal 2022, the Company opened 35 new stores, relocated 11 stores, and remodeled eight stores.
At the end of the third quarter of fiscal 2022, the Company operated 1,343 stores totaling 14.1 million square feet.
Based on third quarter results and updated expectations for the fourth quarter, the Company has increased its outlook for fiscal 2022.
The Company’s updated outlook for fiscal 2022 is as follows:
| | | Prior FY22 Outlook | | Updated FY22 Outlook |
Net sales | | | $9.65 billion to $9.75 billion | | $9.95 billion to $10.00 billion |
Comparable sales | | | 9.5% to 10.5% | | 12.6% to 13.2% |
New stores, net | | | 50 | | 47 |
Remodel and relocation projects | | | 35 | | 33 |
Operating margin | | | 14.6% to 14.8% | | 15.5% to 15.6% |
Diluted earnings per share | | | $20.70 to $21.20 | | $22.60 to $22.90 |
Share repurchases | | | approximately $900 million | | no change |
Effective tax rate | | | approximately 24.5% | | no change |
Capital expenditures | | | $350 million to $400 million | | $300 million to $350 million |
Depreciation and amortization expense | | | approximately $250 million | | no change |
The Company’s outlook for fiscal 2022 assumes a consistent federal tax rate.
Conference Call Information
A conference call to discuss third quarter of fiscal 2022 results is scheduled for today, December 1, 2022, at 4:30 p.m. ET / 3:30 p.m. CT. Investors and analysts interested in participating in the call are invited to dial (877) 704-4453. The conference call will also be webcast live at https://ulta.com/investor. A replay of the webcast will remain available for 90 days. A replay of the conference call will be available until 11:59 p.m. ET on December 15, 2022 and can be accessed by dialing (844) 512-2921 and entering conference ID number 13733783.
About Ulta Beauty
At Ulta Beauty (NASDAQ: ULTA), the possibilities are beautiful. Ulta Beauty is the largest U.S. beauty retailer and the premier beauty destination for cosmetics, fragrance, skin care products, hair care products and salon services. In 1990, the Company reinvented the beauty retail experience by offering a new way to shop for beauty – bringing together All Things Beauty, All in One Place®. Today, Ulta Beauty operates 1,343 retail stores across 50 states and also distributes its products through its website, which includes a collection of tips, tutorials, and social content. For more information, visit www.ulta.com.
Ulta Beauty was recently added to the Bloomberg Gender Equality Index, which tracks the financial performance of public companies committed to supporting gender equality through policy development, representation and transparency. More information about Ulta Beauty’s corporate responsibility efforts can be found at www.ulta.com/investor/ESG.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which reflect the company’s current views with respect to, among other things, future events and financial performance. These statements can be identified by the use of forward-looking words such as “outlook,” “believes,” “expects,” “plans,” “estimates,” “targets,” “strategies” or other comparable words. Any forward-looking statements contained in this press release are based upon the company’s historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the company or any other person that the future plans, estimates, targets, strategies or expectations contemplated by the company will be achieved. Such forward-looking statements are subject to various risks and uncertainties, which include, without limitation:
| ● | changes in the overall level of consumer spending and volatility in the economy, including as a result of the COVID-19 pandemic and geo-political events; |
| ● | the impact of current inflationary cost pressures on payroll, benefits, supply chain, and other operating costs; |
| ● | our ability to sustain our growth plans and successfully implement our long-range strategic and financial plan; |
| ● | the ability to execute our operational excellence priorities, including continuous improvement, Project SOAR (our replacement enterprise resource planning platform), and supply chain optimization; |
| ● | epidemics, pandemics or natural disasters that have and could continue to negatively impact sales; |
| ● | our ability to gauge beauty trends and react to changing consumer preferences in a timely manner; |
| ● | the possibility that we may be unable to compete effectively in our highly competitive markets; |
| ● | the possibility that cybersecurity or information security breaches and other disruptions could compromise our information or result in the unauthorized disclosure of confidential information; |
| ● | the possibility of material disruptions to our information systems; |
| ● | the failure to maintain satisfactory compliance with applicable privacy and data protection laws and regulations; |
| ● | the possibility that the capacity of our distribution and order fulfillment infrastructure and the performance of our distribution centers and fast fulfillment centers may not be adequate to support our expected future growth plans; |
| ● | changes in the wholesale cost of our products; |
| ● | a decline in operating results that has and may continue to lead to asset impairment and store closure charges; |
| ● | the possibility that new store openings and existing locations may be impacted by developer or co-tenant issues; |
| ● | our ability to attract and retain key executive personnel; |
| ● | the impact of climate change on our business operations and/or supply chain; |
| ● | our ability to successfully execute our common stock repurchase program or implement future common stock repurchase programs; and |
| ● | other risk factors detailed in the company’s public filings with the Securities and Exchange Commission (the SEC), including risk factors contained in its Annual Report on Form 10-K for the fiscal year ended January 29, 2022, as such may be amended or supplemented in its subsequently filed Quarterly Reports on Form 10-Q. |
The company’s filings with the SEC are available at www.sec.gov. Except to the extent required by the federal securities laws, the Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.
Investor Contacts:
Kiley Rawlins, CFA
Vice President, Investor Relations
krawlins@ulta.com
Media Contact:
Eileen Ziesemer
Vice President, Public Relations
eziesemer@ulta.com
(708) 305-4479
Exhibit 1
Ulta Beauty, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
| | 13 Weeks Ended | ||||||||
| | October 29, | | October 30, | ||||||
| | 2022 | | 2021 | ||||||
| | (Unaudited) | | (Unaudited) | ||||||
Net sales | | $ | 2,338,793 | | 100.0% | | $ | 1,995,775 | | 100.0% |
Cost of sales |
| | 1,375,976 |
| 58.8% | | | 1,206,301 |
| 60.4% |
Gross profit | | | 962,817 | | 41.2% | | | 789,474 | | 39.6% |
| | | | | | | | | | |
Selling, general and administrative expenses | | | 597,164 | | 25.5% | | | 503,403 | | 25.2% |
Pre-opening expenses | | | 3,797 | | 0.2% | | | 1,832 | | 0.1% |
Operating income | | | 361,856 | | 15.5% | | | 284,239 | | 14.2% |
Interest expense (income), net | | | (849) | | (0.0%) | | | 413 | | 0.0% |
Income before income taxes | | | 362,705 | | 15.5% | | | 283,826 | | 14.2% |
Income tax expense | | | 88,120 | | 3.8% | | | 68,537 | | 3.4% |
Net income | | $ | 274,585 | | 11.7% | | $ | 215,289 | | 10.8% |
| | | | | | | | | | |
Net income per common share: | | | | | | | | | | |
Basic | | $ | 5.37 | | | | $ | 3.97 | | |
Diluted | | $ | 5.34 | | | | $ | 3.94 | | |
| | | | | | | | | | |
Weighted average common shares outstanding: | | | | | | | | | | |
Basic | | | 51,131 | | | | | 54,291 | | |
Diluted | | | 51,418 | | | | | 54,660 | | |
Exhibit 2
Ulta Beauty, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
| | 39 Weeks Ended | ||||||||
| | October 29, | | October 30, | ||||||
| | 2022 | | 2021 | ||||||
| | (Unaudited) | | (Unaudited) | ||||||
Net sales | | $ | 6,981,807 | | 100.0% | | $ | 5,901,501 | | 100.0% |
Cost of sales | | | 4,149,800 | | 59.4% | | | 3,560,276 | | 60.3% |
Gross profit |
| | 2,832,007 | | 40.6% | | | 2,341,225 | | 39.7% |
| | | |
| | | | | | |
Selling, general and administrative expenses | | | 1,632,593 | | 23.4% | | | 1,411,577 |
| 23.9% |
Pre-opening expenses | | | 8,422 | | 0.1% | | | 7,778 | | 0.1% |
Operating income | | | 1,190,992 | | 17.1% | | | 921,870 | | 15.6% |
Interest expense (income), net | | | (556) | | (0.0%) | | | 1,196 | | 0.0% |
Income before income taxes | | | 1,191,548 | | 17.1% | | | 920,674 | | 15.6% |
Income tax expense | | | 289,891 | | 4.2% | | | 224,203 | | 3.8% |
Net income | | $ | 901,657 | | 12.9% | | $ | 696,471 | | 11.8% |
| | | | | | | | | | |
Net income per common share: | | | | | | | | | | |
Basic | | $ | 17.45 | | | | $ | 12.68 | | |
Diluted | | $ | 17.35 | | | | $ | 12.60 | | |
| | | | | | | | | | |
Weighted average common shares outstanding: | | | | | | | | | | |
Basic | | | 51,663 | | | | | 54,921 | | |
Diluted | | | 51,962 | | | | | 55,280 | | |
Exhibit 3
Ulta Beauty, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
| | October 29, | | January 29, | | October 30, | |||
| | 2022 | | 2022 | | 2021 | |||
| | (Unaudited) | | | | | (Unaudited) | ||
Assets |
| | |
| | |
| | |
Current assets: | | | | | | | | | |
Cash and cash equivalents | | $ | 250,628 | | $ | 431,560 | | $ | 605,053 |
Receivables, net | | | 200,304 | | | 233,682 | | | 169,212 |
Merchandise inventories, net | | | 2,114,669 | | | 1,499,218 | | | 1,916,343 |
Prepaid expenses and other current assets | | | 137,642 | | | 110,814 | | | 105,584 |
Prepaid income taxes | | | 42,572 | | | 5,909 | | | 37,501 |
Total current assets | | | 2,745,815 | | | 2,281,183 | | | 2,833,693 |
| | | | | | | | | |
Property and equipment, net | | | 967,039 | | | 914,476 | | | 908,665 |
Operating lease assets | | | 1,556,940 | | | 1,482,256 | | | 1,464,533 |
Goodwill | | | 10,870 | | | 10,870 | | | 10,870 |
Other intangible assets, net | | | 844 | | | 1,538 | | | 1,770 |
Deferred compensation plan assets | | | 31,529 | | | 38,409 | | | 36,403 |
Other long-term assets | | | 18,512 | | | 35,647 | | | 31,833 |
Total assets | | $ | 5,331,549 | | $ | 4,764,379 | | $ | 5,287,767 |
| | | | | | | | | |
Liabilities and stockholders’ equity | | | | | | | | | |
Current liabilities: | | | | | | | | | |
Accounts payable | | $ | 647,117 | | $ | 552,730 | | $ | 747,451 |
Accrued liabilities | | | 462,773 | | | 364,797 | | | 329,672 |
Deferred revenue | | | 312,132 | | | 353,579 | | | 272,628 |
Current operating lease liabilities | | | 275,749 | | | 274,118 | | | 274,365 |
Accrued income taxes | | | — | | | 12,786 | | | — |
Total current liabilities | | | 1,697,771 | | | 1,558,010 | | | 1,624,116 |
| | | | | | | | | |
Non-current operating lease liabilities | | | 1,621,252 | | | 1,572,638 | | | 1,565,921 |
Deferred income taxes | | | 38,627 | | | 39,693 | | | 67,267 |
Other long-term liabilities | | | 51,644 | | | 58,665 | | | 43,663 |
Total liabilities | | | 3,409,294 | | | 3,229,006 | | | 3,300,967 |
| | | | | | | | | |
Commitments and contingencies | | | | | | | | | |
| | | | | | | | | |
Total stockholders’ equity | | | 1,922,255 | | | 1,535,373 | | | 1,986,800 |
Total liabilities and stockholders’ equity | | $ | 5,331,549 | | $ | 4,764,379 | | $ | 5,287,767 |
Exhibit 4
Ulta Beauty, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
| | 39 Weeks Ended | ||||
| | October 29, | | October 30, | ||
| | 2022 | | 2021 | ||
| | (Unaudited) | | (Unaudited) | ||
Operating activities | | | | | | |
Net income | | $ | 901,657 | | $ | 696,471 |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | |
Depreciation and amortization | | | 182,182 | | | 204,734 |
Non-cash lease expense | | | 222,548 | | | 206,017 |
Deferred income taxes | | | (1,066) | | | 1,908 |
Stock-based compensation expense | | | 32,554 | | | 38,217 |
Loss on disposal of property and equipment | | | 3,892 | | | 3,357 |
Change in operating assets and liabilities: | | | | | | |
Receivables | | | 33,378 | | | 23,897 |
Merchandise inventories | | | (615,451) | | | (748,128) |
Prepaid expenses and other current assets | | | (26,828) | | | 1,818 |
Income taxes | | | (49,446) | | | (80,027) |
Accounts payable | | | 94,214 | | | 266,104 |
Accrued liabilities | | | 64,164 | | | 24,482 |
Deferred revenue | | | (41,447) | | | (1,755) |
Operating lease liabilities | | | (246,988) | | | (222,451) |
Other assets and liabilities | | | 20,063 | | | 213 |
Net cash provided by operating activities | | | 573,426 | | | 414,857 |
| | | | | | |
Investing activities | | | | | | |
Capital expenditures | | | (203,961) | | | (108,418) |
Other investments | | | (3,068) | | | — |
Net cash used in investing activities | | | (207,029) | | | (108,418) |
| | | | | | |
Financing activities | | | | | | |
Repurchase of common shares | | | (571,908) | | | (762,167) |
Stock options exercised | | | 31,319 | | | 30,297 |
Purchase of treasury shares | | | (6,740) | | | (15,511) |
Net cash used in financing activities | | | (547,329) | | | (747,381) |
| | | | | | |
Effect of exchange rate changes on cash and cash equivalents | | | — | | | (56) |
Net decrease in cash and cash equivalents | | | (180,932) | | | (440,998) |
Cash and cash equivalents at beginning of period | | | 431,560 | | | 1,046,051 |
Cash and cash equivalents at end of period | | $ | 250,628 | | $ | 605,053 |
Exhibit 5
Ulta Beauty, Inc.
Store Update
|
| Total stores open | | Number of stores | | Number of stores | | Total stores |
| | at beginning of the | | opened during the | | closed during the | | open at |
Fiscal 2022 | | quarter |
| quarter |
| quarter |
| end of the quarter |
1st Quarter | | 1,308 | | 10 | | 0 | | 1,318 |
2nd Quarter | | 1,318 | | 7 | | 0 | | 1,325 |
3rd Quarter | | 1,325 | | 18 | | 0 | | 1,343 |
| | | | Gross square feet for | | | | |
|
| Total gross square | | stores opened or | | Gross square feet for | | Total gross square |
| | feet at beginning of | | expanded during the | | stores closed | | feet at end of the |
Fiscal 2022 | | the quarter |
| quarter |
| during the quarter |
| quarter |
1st Quarter | | 13,770,438 | | 90,905 | | 0 | | 13,861,343 |
2nd Quarter | | 13,861,343 | | 61,257 | | 0 | | 13,922,600 |
3rd Quarter | | 13,922,600 | | 151,730 | | 0 | | 14,074,330 |
Exhibit 6
Ulta Beauty, Inc.
Sales by Category
The following tables set forth the approximate percentage of net sales by primary category:
| | 13 Weeks Ended | ||
|
| October 29, |
| October 30, |
| | 2022 | | 2021 |
Cosmetics | | 44% | | 45% |
Haircare products and styling tools | | 21% | | 21% |
Skincare | | 16% | | 16% |
Fragrance and bath | | 12% | | 12% |
Services | | 4% | | 3% |
Accessories and other | | 3% | | 3% |
| | 100% | | 100% |
| | 39 Weeks Ended | ||
|
| October 29, |
| October 30, |
| | 2022 | | 2021 |
Cosmetics | | 43% | | 44% |
Haircare products and styling tools | | 21% | | 20% |
Skincare | | 17% | | 17% |
Fragrance and bath | | 12% | | 12% |
Services | | 4% | | 4% |
Accessories and other | | 3% | | 3% |
| | 100% | | 100% |
