Net Sales of $2.0 Billion Compared to $1.2 Billion in the Year-Ago Quarter
Comparable Sales Increased 56.3%
Net Income of $250.9 Million or $4.56 Per Diluted Share
BOLINGBROOK, Ill.--(BUSINESS WIRE)-- Ulta Beauty, Inc. (NASDAQ: ULTA) today announced financial results for the thirteen-week period (“second quarter”) and twenty-six-week period (“first six months”) ended July 31, 2021 compared to the same periods ended August 1, 2020.
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| 13 Weeks Ended | ||||||||
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| July 31, |
| August 1, |
| August 3, | |||
(Dollars in millions) |
| 2021 |
| 2020 |
| 2019 | |||
Net sales |
| $ | 1,967.2 |
| $ | 1,228.0 |
| $ | 1,666.6 |
Comparable sales |
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| 56.3% |
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| (26.7)% |
|
| 6.2% |
Gross profit (as a percentage of net sales) |
|
| 40.6% |
|
| 26.8% |
|
| 36.4% |
Selling, general and administrative expenses |
| $ | 464.3 |
| $ | 271.6 |
| $ | 392.8 |
Operating income (as a percentage of net sales) |
|
| 16.9% |
|
| 1.1% |
|
| 12.5% |
Diluted earnings per share |
| $ | 4.56 |
| $ | 0.14 |
| $ | 2.76 |
New store openings, net |
|
| 6 |
|
| — |
|
| 17 |
“The Ulta Beauty team delivered strong results for the second quarter. This performance reflects the recovery of the beauty category, investments and choices we’ve made over the last year to adapt to the market disruption and strengthen our leadership position, and the ongoing efforts of our associates to deliver great experiences for our guests,” said Dave Kimbell, chief executive officer. “Our value proposition is strong, and we are evolving and innovating to lead in the new beauty landscape, capture additional market share, and drive profitable growth.”
For the Second Quarter of Fiscal 2021
For the First Six Months of Fiscal 2021
Balance Sheet
Cash and cash equivalents at the end of the second quarter of fiscal 2021 were $770.1 million.
Merchandise inventories, net at the end of the second quarter of fiscal 2021 totaled $1.44 billion compared to $1.37 billion at the end of the second quarter of fiscal 2020. The $75.14 million increase in inventory was primarily due to the addition of 32 net new stores opened since August 1, 2020, the opening of the Jacksonville, FL fast fulfillment center, and increased purchases to support strong demand.
Share Repurchase Program
During the second quarter of fiscal 2021, the Company repurchased 746,367 shares of its common stock at a cost of $243.5 million. During the first six months of fiscal 2021, the Company repurchased 1,989,576 shares of its common stock at a cost of $635.8 million. As of July 31, 2021, $886.2 million remained available under the $1.6 billion share repurchase program announced in March 2020.
Store Update
Real estate activity in the second quarter of fiscal 2021 included 7 new stores located in Dyersburg, TN; Gig Harbor, WA; Little Rock, AR; Richmond, TX; Staten Island, NY; Sunnyvale, CA; and Troy, AL. In addition, the Company relocated one store, remodeled five stores, and closed one store. In the first six months of fiscal 2021, the Company opened 35 new stores, relocated two stores, remodeled five stores, and closed three stores.
The second quarter of fiscal 2021 ended with 1,296 stores and square footage of 13.6 million, representing a 2.7% increase in square footage compared to the second quarter of fiscal 2020.
Fiscal 2021 Outlook
Based on the results for the first six months of fiscal 2021 and revised expectations for consumer demand, the Company has increased its outlook for fiscal 2021.
The Company’s updated outlook for fiscal 2021 is as follows:
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| Prior FY21 Outlook |
| Updated FY21 Outlook |
Net sales |
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| $7.7 billion to $7.8 billion |
| $8.1 billion to $8.3 billion |
Comparable sales |
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| 23% to 25% |
| 30% to 32% |
New stores, net |
|
| 40 |
| 44 |
Remodel and relocation projects |
|
| 19 |
| 18 |
Operating margin |
|
| approximately 11% |
| approximately 13% |
Diluted earnings per share |
|
| $11.50 to $11.95 |
| $14.50 to $14.70 |
Share repurchases |
|
| approximately $850 million |
| no change |
Effective tax rate |
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| 24.8% |
| no change |
Capital expenditures |
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| $225 million to $250 million |
| no change |
Depreciation and amortization expense |
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| $270 million to $280 million |
| no change |
The Company’s outlook for fiscal 2021 assumes no material increases in the federal minimum wage and does not include assumptions for any impact related to a resurgence of COVID-19.
Non-GAAP Financial Information
In this press release, the Company provides information regarding adjusted operating income (loss), adjusted net income (loss), and adjusted diluted earnings (loss) per share, which are not recognized terms under U.S. generally accepted accounting principles (GAAP) and do not purport to be alternatives to operating income (loss), net income (loss), and diluted earnings (loss) per share as measures of operating performance. A reconciliation of adjusted operating income (loss), adjusted net income (loss), and adjusted diluted earnings (loss) per share is provided in this release. The Company believes the presentation of these non-GAAP financial measures provides additional information on comparisons between periods by excluding certain items that affect overall comparability and provides investors with enhanced visibility into its results with respect to the impact of certain costs. Non-GAAP financial measures should be considered in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP.
Conference Call Information
A conference call to discuss second quarter of fiscal 2021 results is scheduled for today, August 25, 2021, at 4:30 p.m. Eastern Time / 3:30 p.m. Central Time. Investors and analysts interested in participating in the call are invited to dial (877) 705‑6003. The conference call will also be webcast live at http://ir.ultabeauty.com. 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 September 8, 2021 and can be accessed by dialing (844) 512‑2921 and entering conference ID number 13721889.
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 1,296 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:
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.
Exhibit 1 | ||||||||||
Ulta Beauty, Inc. | ||||||||||
Consolidated Statements of Operations | ||||||||||
(In thousands, except per share data) | ||||||||||
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| 13 Weeks Ended | ||||||||
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| July 31, |
| August 1, | ||||||
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| 2021 |
| 2020 | ||||||
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| (Unaudited) |
| (Unaudited) | ||||||
Net sales |
| $ | 1,967,207 |
| 100.0% |
| $ | 1,228,009 |
| 100.0% |
Cost of sales |
|
| 1,169,244 |
| 59.4% |
|
| 899,002 |
| 73.2% |
Gross profit |
|
| 797,963 |
| 40.6% |
|
| 329,007 |
| 26.8% |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
| 464,299 |
| 23.6% |
|
| 271,587 |
| 22.1% |
Impairment, restructuring and other costs |
|
| — |
| 0.0% |
|
| 40,758 |
| 3.3% |
Pre-opening expenses |
|
| 1,357 |
| 0.1% |
|
| 3,907 |
| 0.3% |
Operating income |
|
| 332,307 |
| 16.9% |
|
| 12,755 |
| 1.1% |
Interest expense, net |
|
| 425 |
| 0.0% |
|
| 2,617 |
| 0.2% |
Income before income taxes |
|
| 331,882 |
| 16.9% |
|
| 10,138 |
| 0.9% |
Income tax expense |
|
| 80,989 |
| 4.1% |
|
| 2,086 |
| 0.2% |
Net income |
| $ | 250,893 |
| 12.8% |
| $ | 8,052 |
| 0.7% |
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Net income per common share: |
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Basic |
| $ | 4.59 |
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| $ | 0.14 |
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Diluted |
| $ | 4.56 |
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|
| $ | 0.14 |
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|
|
Weighted average common shares outstanding: |
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|
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|
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Basic |
|
| 54,675 |
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|
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| 56,318 |
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Diluted |
|
| 55,014 |
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|
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| 56,497 |
|
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Exhibit 2 | ||||||||||
Ulta Beauty, Inc. | ||||||||||
Consolidated Statements of Operations | ||||||||||
(In thousands, except per share data) | ||||||||||
| ||||||||||
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| 26 Weeks Ended | ||||||||
|
| July 31, |
| August 1, | ||||||
|
| 2021 |
| 2020 | ||||||
|
| (Unaudited) |
| (Unaudited) | ||||||
Net sales |
| $ | 3,905,726 |
| 100.0% |
| $ | 2,401,219 |
| 100.0% |
Cost of sales |
|
| 2,353,975 |
| 60.3% |
|
| 1,768,607 |
| 73.7% |
Gross profit |
|
| 1,551,751 |
| 39.7% |
|
| 632,612 |
| 26.3% |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
| 908,174 |
| 23.3% |
|
| 652,499 |
| 27.2% |
Impairment, restructuring and other costs |
|
| — |
| 0.0% |
|
| 60,300 |
| 2.5% |
Pre-opening expenses |
|
| 5,946 |
| 0.1% |
|
| 8,542 |
| 0.3% |
Operating income (loss) |
|
| 637,631 |
| 16.3% |
|
| (88,729) |
| (3.7)% |
Interest expense, net |
|
| 783 |
| 0.0% |
|
| 3,889 |
| 0.1% |
Income (loss) before income taxes |
|
| 636,848 |
| 16.3% |
|
| (92,618) |
| (3.8)% |
Income tax expense (benefit) |
|
| 155,666 |
| 4.0% |
|
| (22,161) |
| (0.9)% |
Net income (loss) |
| $ | 481,182 |
| 12.3% |
| $ | (70,457) |
| (2.9)% |
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|
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Net income (loss) per common share: |
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|
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Basic |
| $ | 8.71 |
|
|
| $ | (1.25) |
|
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Diluted |
| $ | 8.66 |
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| $ | (1.25) |
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|
|
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|
|
Weighted average common shares outstanding: |
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|
|
|
|
|
|
|
|
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Basic |
|
| 55,235 |
|
|
|
| 56,369 |
|
|
Diluted |
|
| 55,592 |
|
|
|
| 56,369 |
|
|
Exhibit 3 | |||||||||
Ulta Beauty, Inc. | |||||||||
Condensed Consolidated Balance Sheets | |||||||||
(In thousands) | |||||||||
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|
|
| July 31, |
| January 30, |
| August 1, | |||
|
| 2021 |
| 2021 |
| 2020 | |||
|
| (Unaudited) |
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|
|
| (Unaudited) | ||
Assets |
|
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|
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Current assets: |
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|
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|
|
|
|
Cash and cash equivalents |
| $ | 770,144 |
| $ | 1,046,051 |
| $ | 1,157,318 |
Receivables, net |
|
| 154,416 |
|
| 193,109 |
|
| 127,992 |
Merchandise inventories, net |
|
| 1,443,685 |
|
| 1,168,215 |
|
| 1,368,543 |
Prepaid expenses and other current assets |
|
| 108,145 |
|
| 107,402 |
|
| 102,713 |
Prepaid income taxes |
|
| 18,544 |
|
| — |
|
| 42,622 |
Total current assets |
|
| 2,494,934 |
|
| 2,514,777 |
|
| 2,799,188 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
| 909,507 |
|
| 995,795 |
|
| 1,077,825 |
Operating lease assets |
|
| 1,470,166 |
|
| 1,504,614 |
|
| 1,548,239 |
Goodwill |
|
| 10,870 |
|
| 10,870 |
|
| 10,870 |
Other intangible assets, net |
|
| 2,001 |
|
| 2,465 |
|
| 2,927 |
Deferred compensation plan assets |
|
| 36,396 |
|
| 33,223 |
|
| 28,789 |
Other long-term assets |
|
| 30,711 |
|
| 28,225 |
|
| 29,283 |
Total assets |
| $ | 4,954,585 |
| $ | 5,089,969 |
| $ | 5,497,121 |
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
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|
|
|
|
|
|
|
|
Accounts payable |
| $ | 535,257 |
| $ | 477,052 |
| $ | 398,011 |
Accrued liabilities |
|
| 313,372 |
|
| 296,334 |
|
| 201,754 |
Deferred revenue |
|
| 265,462 |
|
| 274,383 |
|
| 216,545 |
Current operating lease liabilities |
|
| 267,442 |
|
| 253,415 |
|
| 245,019 |
Accrued income taxes |
|
| — |
|
| 42,529 |
|
| — |
Total current liabilities |
|
| 1,381,533 |
|
| 1,343,713 |
|
| 1,061,329 |
|
|
|
|
|
|
|
|
|
|
Non-current operating lease liabilities |
|
| 1,585,539 |
|
| 1,643,386 |
|
| 1,718,549 |
Long-term debt |
|
| — |
|
| — |
|
| 800,000 |
Deferred income taxes |
|
| 64,535 |
|
| 65,359 |
|
| 94,272 |
Other long-term liabilities |
|
| 43,165 |
|
| 37,962 |
|
| 52,178 |
Total liabilities |
|
| 3,074,772 |
|
| 3,090,420 |
|
| 3,726,328 |
|
|
|
|
|
|
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|
|
Commitments and contingencies |
|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
| 1,879,813 |
|
| 1,999,549 |
|
| 1,770,793 |
Total liabilities and stockholders’ equity |
| $ | 4,954,585 |
| $ | 5,089,969 |
| $ | 5,497,121 |
Exhibit 4 | ||||||
Ulta Beauty, Inc. | ||||||
Condensed Consolidated Statements of Cash Flows | ||||||
(In thousands) | ||||||
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|
|
|
|
| 26 Weeks Ended | ||||
|
| July 31, |
| August 1, | ||
|
| 2021 |
| 2020 | ||
|
| (Unaudited) |
|
| (Unaudited) | |
Operating activities |
|
|
|
|
|
|
Net income (loss) |
| $ | 481,182 |
| $ | (70,457) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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|
|
|
|
|
Depreciation and amortization |
|
| 139,577 |
|
| 154,029 |
Non-cash lease expense |
|
| 137,521 |
|
| 132,808 |
Long-lived asset impairment charge |
|
| — |
|
| 59,997 |
Deferred income taxes |
|
| (824) |
|
| 4,905 |
Stock-based compensation expense |
|
| 19,097 |
|
| 14,595 |
Loss on disposal of property and equipment |
|
| 1,703 |
|
| 2,273 |
Change in operating assets and liabilities: |
|
|
|
|
|
|
Receivables |
|
| 38,693 |
|
| 11,345 |
Merchandise inventories |
|
| (275,470) |
|
| (74,842) |
Prepaid expenses and other current assets |
|
| (741) |
|
| 854 |
Income taxes |
|
| (61,074) |
|
| (26,235) |
Accounts payable |
|
| 59,360 |
|
| (18,486) |
Accrued liabilities |
|
| 17,858 |
|
| (32,901) |
Deferred revenue |
|
| (8,921) |
|
| (20,990) |
Operating lease liabilities |
|
| (146,892) |
|
| (137,383) |
Other assets and liabilities |
|
| 344 |
|
| 16,477 |
Net cash provided by operating activities |
|
| 401,413 |
|
| 15,989 |
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
Short-term investments, net |
|
| — |
|
| 110,000 |
Capital expenditures |
|
| (57,305) |
|
| (77,090) |
Acquisitions, net of cash acquired |
|
| — |
|
| (1,220) |
Purchases of equity investments |
|
| — |
|
| (5,386) |
Net cash provided by (used in) investing activities |
|
| (57,305) |
|
| 26,304 |
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
Proceeds from long-term debt |
|
| — |
|
| 800,000 |
Repurchase of common shares |
|
| (635,793) |
|
| (72,981) |
Stock options exercised |
|
| 22,808 |
|
| 577 |
Purchase of treasury shares |
|
| (6,974) |
|
| (3,065) |
Debt issuance costs |
|
| — |
|
| (1,861) |
Net cash provided by (used in) financing activities |
|
| (619,959) |
|
| 722,670 |
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
| (56) |
|
| 30 |
Net increase (decrease) in cash and cash equivalents |
|
| (275,907) |
|
| 764,993 |
Cash and cash equivalents at beginning of period |
|
| 1,046,051 |
|
| 392,325 |
Cash and cash equivalents at end of period |
| $ | 770,144 |
| $ | 1,157,318 |
Exhibit 5 | ||||||||
Ulta Beauty, Inc. | ||||||||
Store Update | ||||||||
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| Total stores open |
| Number of stores |
| Number of stores |
| Total stores |
|
| at beginning of the |
| opened during the |
| closed during the |
| open at |
Fiscal 2021 |
| quarter |
| quarter |
| quarter |
| end of the quarter |
1st Quarter |
| 1,264 |
| 28 |
| 2 |
| 1,290 |
2nd Quarter |
| 1,290 |
| 7 |
| 1 |
| 1,296 |
|
|
|
|
|
|
|
|
|
|
|
|
| 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 2021 |
| the quarter |
| quarter |
| during the quarter |
| quarter |
1st Quarter |
| 13,291,838 |
| 327,476 |
| 22,906 |
| 13,596,408 |
2nd Quarter |
| 13,596,408 |
| 62,511 |
| 10,760 |
| 13,648,159 |
Exhibit 6 | ||||
Ulta Beauty, Inc. | ||||
Sales by Category | ||||
The following tables set forth the approximate percentage of net sales by primary category: | ||||
|
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|
|
|
|
| 13 weeks ended | ||
|
| July 31, |
| August 1, |
|
| 2021 |
| 2020 |
Cosmetics (1) |
| 43% |
| 45% |
Skincare (1) |
| 17% |
| 18% |
Haircare products and styling tools (1) |
| 21% |
| 21% |
Fragrance and bath |
| 12% |
| 9% |
Services |
| 4% |
| 3% |
Accessories and other (1) |
| 3% |
| 4% |
|
| 100% |
| 100% |
|
|
|
|
|
|
| 26 weeks ended | ||
|
| July 31, |
| August 1, |
|
| 2021 |
| 2020 |
Cosmetics (1) |
| 44% |
| 47% |
Skincare (1) |
| 18% |
| 18% |
Haircare products and styling tools (1) |
| 20% |
| 19% |
Fragrance and bath |
| 11% |
| 8% |
Services |
| 4% |
| 4% |
Accessories and other (1) |
| 3% |
| 4% |
|
| 100% |
| 100% |
(1) Certain sales departments were reclassified between categories in the prior year to conform to current year presentation. |
Exhibit 7 | ||||||
Ulta Beauty, Inc. | ||||||
Reconciliation of GAAP basis to Adjusted operating income (loss), Adjusted net income (loss) | ||||||
and Adjusted diluted earnings (loss) per share | ||||||
(In thousands, except per share data) | ||||||
(Unaudited) | ||||||
|
|
|
|
|
|
|
|
| 13 weeks ended |
| 26 weeks ended | ||
|
| August 1, |
| August 1, | ||
|
| 2020 |
| 2020 | ||
Operating income (loss) |
| $ | 12,755 |
| $ | (88,729) |
Add: Store asset impairment |
|
| 20,886 |
|
| 40,428 |
Add: Store closures |
|
| 19,872 |
|
| 19,872 |
Add: Store closures - inventory write-off |
|
| 1,400 |
|
| 1,400 |
Adjusted operating income (loss) |
| $ | 54,913 |
| $ | (27,029) |
|
|
|
|
|
|
|
Net income (loss) |
| $ | 8,052 |
| $ | (70,457) |
Add: Store asset impairment |
|
| 20,886 |
|
| 40,428 |
Less: Income tax benefit of store asset impairment1 |
|
| (4,303) |
|
| (9,662) |
Add: Store closures |
|
| 19,872 |
|
| 19,872 |
Less: Income tax benefit of store closures1 |
|
| (4,094) |
|
| (4,749) |
Add: Store closures - inventory write-off |
|
| 1,400 |
|
| 1,400 |
Less: Income tax benefit of store closures - inventory write-off1 |
|
| (288) |
|
| (335) |
Adjusted net income (loss) |
| $ | 41,525 |
| $ | (23,503) |
|
|
|
|
|
|
|
Diluted earnings (loss) per share |
| $ | 0.14 |
| $ | (1.25) |
Add: Store asset impairment |
|
| 0.37 |
|
| 0.72 |
Less: Income tax benefit of store asset impairment1 |
|
| (0.08) |
|
| (0.17) |
Add: Store closures |
|
| 0.35 |
|
| 0.35 |
Less: Income tax benefit of store closures1 |
|
| (0.07) |
|
| (0.09) |
Add: Store closures - inventory write-off |
|
| 0.03 |
|
| 0.03 |
Less: Income tax benefit of store closures - inventory write-off1 |
|
| (0.01) |
|
| (0.01) |
Adjusted diluted earnings (loss) per share |
| $ | 0.73 |
| $ | (0.42) |
1 The income tax benefit for non-GAAP adjustments was calculated using the Company's blended tax rate before discrete items. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210825005731/en/
Investor Contacts: Kiley Rawlins, CFA Vice President, Investor Relations krawlins@ulta.com (331) 757-2206
Media Contact: Eileen Ziesemer Vice President, Public Relations eziesemer@ulta.com (708) 305-4479
Source: Ulta Beauty, Inc.