Net Sales of $2.5 Billion Compared to $2.3 Billion in the Year-Ago Quarter
Comparable Sales Increased 8.0%
Net Income of $300.1 Million or $6.02 Per Diluted Share
Company Raises Outlook for Fiscal Year 2023
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 29, 2023 compared to the same periods ended July 30, 2022.
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|
| 13 Weeks Ended |
| 26 Weeks Ended | |||||||||
|
| July 29, |
| July 30, |
|
| July 29, |
| July 30, | ||||
(Dollars in millions, except per share data) | 2023 |
| 2022 |
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| 2023 |
| 2022 | |||||
Net sales |
| $ | 2,529.8 |
| $ | 2,297.1 |
|
| $ | 5,164.1 |
| $ | 4,643.0 |
Comparable sales |
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| 8.0% |
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| 14.4% |
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|
| 8.7% |
|
| 16.2% |
Gross profit (as a percentage of net sales) |
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| 39.3% |
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| 40.4% |
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|
| 39.7% |
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| 40.3% |
Selling, general and administrative expenses |
| $ | 600.7 |
| $ | 534.5 |
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| $ | 1,212.8 |
| $ | 1,035.4 |
Operating income (as a percentage of net sales) |
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| 15.5% |
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| 17.0% |
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| 16.1% |
|
| 17.9% |
Diluted earnings per share |
| $ | 6.02 |
| $ | 5.70 |
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| $ | 12.90 |
| $ | 12.00 |
New store openings, net |
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| 3 |
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| 7 |
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| 7 |
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| 17 |
“The Ulta Beauty team delivered another quarter of strong performance, with sales, gross profit, and SG&A expenses all better than our internal expectations. During the quarter, we drove growth across all major categories, increased the number of loyalty members, and strengthened engagement with the Ulta Beauty brand. In addition, our teams achieved important milestones for our multi-year, transformational investment agenda designed to drive efficiencies and support our future growth,” said Dave Kimbell, chief executive officer. “The beauty category has continued to deliver healthy growth, as consumers maintain their post-pandemic routines and expand their definition of beauty. Our proven business model, diverse assortment, best-in-class loyalty program, and outstanding teams have enabled us to deliver stronger-than expected results for the first half of fiscal 2023, and I remain confident we can deliver against our updated expectations for the rest of the year.”
For the Second Quarter of Fiscal 2023
For the First Six Months of Fiscal 2023
Balance Sheet
Cash and cash equivalents at the end of the second quarter of fiscal 2023 totaled $388.6 million.
Merchandise inventories, net at the end of the second quarter of fiscal 2023 increased 9.0% to $1.82 billion compared to $1.67 billion at the end of the second quarter of fiscal 2022. The increase was primarily due to inventory to support higher sales demand, 37 net new stores, product cost increases, and new brand launches.
Share Repurchase Program
During the second quarter of fiscal 2023, the Company repurchased 593,629 shares of its common stock at a cost of $275.5 million. During the first six months of fiscal 2023, the Company repurchased 1.1 million shares of its common stock at a cost of $559.0 million. As of July 29, 2023, $541.0 million remained available under the $2.0 billion share repurchase program announced in March 2022.
Store Update
Real estate activity in the second quarter of fiscal 2023 included three new stores located in Crestview, FL; Lebanon, TN; and Lynchburg, VA. In addition, the Company relocated two stores and remodeled three stores. During the first six months of fiscal 2023, the Company opened eight new stores, relocated three stores, remodeled five stores, and closed one store.
At the end of the second quarter of fiscal 2023, the Company operated 1,362 stores totaling 14.3 million square feet.
Fiscal 2023 Outlook
The Company has updated its outlook for fiscal 2023.
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| Prior FY23 Outlook |
| Updated FY23 Outlook | ||
Net sales |
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| $11.0 billion to $11.1 billion |
| $11.05 billion to $11.15 billion |
Comparable sales |
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| 4% to 5% |
| 4.5% to 5.5% |
New stores, net |
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| 25-30 |
| no change |
Remodel and relocation projects |
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| 20-30 |
| no change |
Operating margin |
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| 14.5% to 14.8% |
| 14.6% to 14.8% |
Diluted earnings per share |
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| $24.70 to $25.40 |
| $25.10 to $25.60 |
Share repurchases |
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| approximately $900 million |
| no change |
Interest income |
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| approximately $17 million |
| no change |
Effective tax rate |
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| approximately 23.9% |
| no change |
Capital expenditures |
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| $400 million to $475 million |
| no change |
Depreciation and amortization expense |
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| $245 million to $250 million |
| no change |
Conference Call Information
A conference call to discuss second quarter of fiscal 2023 results is scheduled for today, August 24, 2023, 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 September 7, 2023 and can be accessed by dialing (844) 512‑2921 and entering conference ID number 13739561.
About Ulta Beauty
At Ulta Beauty (NASDAQ: ULTA), the possibilities are beautiful. Ulta Beauty is the largest specialty 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 1,362 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.
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 Income | ||||||||||||||
(In thousands, except per share data) | ||||||||||||||
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| 13 Weeks Ended | ||||||||||||
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| July 29, |
| July 30, | ||||||||||
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| 2023 |
| 2022 | ||||||||||
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| (Unaudited) |
| (Unaudited) | ||||||||||
Net sales |
| $ | 2,529,809 |
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| 100.0 | % |
| $ | 2,297,113 |
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| 100.0 | % |
Cost of sales |
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| 1,536,197 |
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| 60.7 | % |
|
| 1,368,949 |
|
| 59.6 | % |
Gross profit |
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| 993,612 |
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| 39.3 | % |
|
| 928,164 |
|
| 40.4 | % |
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|
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| ||||
Selling, general and administrative expenses |
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| 600,692 |
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| 23.7 | % |
|
| 534,459 |
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| 23.3 | % |
Pre-opening expenses |
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| 1,278 |
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| 0.1 | % |
|
| 2,277 |
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| 0.1 | % |
Operating income |
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| 391,642 |
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| 15.5 | % |
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| 391,428 |
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| 17.0 | % |
Interest income, net |
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| (4,449 | ) |
| (0.2 | %) |
|
| (108 | ) |
| (0.0 | %) |
Income before income taxes |
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| 396,091 |
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| 15.7 | % |
|
| 391,536 |
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| 17.0 | % |
Income tax expense |
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| 95,989 |
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| 3.8 | % |
|
| 95,859 |
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| 4.2 | % |
Net income |
| $ | 300,102 |
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| 11.9 | % |
| $ | 295,677 |
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| 12.9 | % |
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Net income per common share: |
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Basic |
| $ | 6.05 |
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| $ | 5.73 |
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Diluted |
| $ | 6.02 |
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| $ | 5.70 |
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Weighted average common shares outstanding: |
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Basic |
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| 49,617 |
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| 51,607 |
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Diluted |
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| 49,849 |
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| 51,900 |
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Exhibit 2 | |||||||||||||
Ulta Beauty, Inc. | |||||||||||||
Consolidated Statements of Income | |||||||||||||
(In thousands, except per share data) | |||||||||||||
| |||||||||||||
|
| 26 Weeks Ended | |||||||||||
|
| July 29, |
| July 30, | |||||||||
|
| 2023 |
| 2022 | |||||||||
|
| (Unaudited) |
| (Unaudited) | |||||||||
Net sales |
| $ | 5,164,072 |
|
| 100.0 | % |
| $ | 4,643,014 |
| 100.0 | % |
Cost of sales |
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| 3,115,603 |
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| 60.3 | % |
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| 2,773,824 |
| 59.7 | % |
Gross profit |
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| 2,048,469 |
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| 39.7 | % |
|
| 1,869,190 |
| 40.3 | % |
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| |||
Selling, general and administrative expenses |
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| 1,212,821 |
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| 23.5 | % |
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| 1,035,429 |
| 22.3 | % |
Pre-opening expenses |
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| 1,936 |
|
| 0.0 | % |
|
| 4,625 |
| 0.1 | % |
Operating income |
|
| 833,712 |
|
| 16.1 | % |
|
| 829,136 |
| 17.9 | % |
Interest (income) expense, net |
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| (11,797 | ) |
| (0.2 | %) |
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| 293 |
| 0.0 | % |
Income before income taxes |
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| 845,509 |
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| 16.4 | % |
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| 828,843 |
| 17.9 | % |
Income tax expense |
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| 198,356 |
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| 3.8 | % |
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| 201,771 |
| 4.3 | % |
Net income |
| $ | 647,153 |
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| 12.5 | % |
| $ | 627,072 |
| 13.5 | % |
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Net income per common share: |
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Basic |
| $ | 12.97 |
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| $ | 12.08 |
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Diluted |
| $ | 12.90 |
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| $ | 12.00 |
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Weighted average common shares outstanding: |
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Basic |
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| 49,885 |
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| 51,928 |
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Diluted |
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| 50,157 |
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| 52,237 |
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Exhibit 3 | |||||||||
Ulta Beauty, Inc. | |||||||||
Condensed Consolidated Balance Sheets | |||||||||
(In thousands) | |||||||||
| |||||||||
|
| July 29, |
| January 28, |
| July 30, | |||
|
| 2023 |
| 2023 |
| 2022 | |||
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| (Unaudited) |
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| (Unaudited) | ||
Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 388,627 |
| $ | 737,877 |
| $ | 434,226 |
Receivables, net |
|
| 174,444 |
|
| 199,422 |
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| 180,514 |
Merchandise inventories, net |
|
| 1,815,539 |
|
| 1,603,451 |
|
| 1,666,130 |
Prepaid expenses and other current assets |
|
| 110,524 |
|
| 130,246 |
|
| 123,014 |
Prepaid income taxes |
|
| 30,114 |
|
| 38,308 |
|
| 39,029 |
Total current assets |
|
| 2,519,248 |
|
| 2,709,304 |
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| 2,442,913 |
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Property and equipment, net |
|
| 1,073,144 |
|
| 1,009,273 |
|
| 912,017 |
Operating lease assets |
|
| 1,549,146 |
|
| 1,561,263 |
|
| 1,509,246 |
Goodwill |
|
| 10,870 |
|
| 10,870 |
|
| 10,870 |
Other intangible assets, net |
|
| 718 |
|
| 1,312 |
|
| 1,075 |
Deferred compensation plan assets |
|
| 40,087 |
|
| 35,382 |
|
| 33,393 |
Other long-term assets |
|
| 55,547 |
|
| 43,007 |
|
| 36,480 |
Total assets |
| $ | 5,248,760 |
| $ | 5,370,411 |
| $ | 4,945,994 |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
| $ | 521,315 |
| $ | 559,527 |
| $ | 586,851 |
Accrued liabilities |
|
| 328,247 |
|
| 444,278 |
|
| 323,939 |
Deferred revenue |
|
| 354,253 |
|
| 394,677 |
|
| 316,571 |
Current operating lease liabilities |
|
| 287,359 |
|
| 283,293 |
|
| 274,693 |
Total current liabilities |
|
| 1,491,174 |
|
| 1,681,775 |
|
| 1,502,054 |
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|
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|
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|
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|
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Non-current operating lease liabilities |
|
| 1,593,040 |
|
| 1,619,883 |
|
| 1,582,003 |
Deferred income taxes |
|
| 56,012 |
|
| 55,346 |
|
| 40,029 |
Other long-term liabilities |
|
| 56,657 |
|
| 53,596 |
|
| 52,840 |
Total liabilities |
|
| 3,196,883 |
|
| 3,410,600 |
|
| 3,176,926 |
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Commitments and contingencies |
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|
|
|
|
|
|
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|
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Total stockholders’ equity |
|
| 2,051,877 |
|
| 1,959,811 |
|
| 1,769,068 |
Total liabilities and stockholders’ equity |
| $ | 5,248,760 |
| $ | 5,370,411 |
| $ | 4,945,994 |
Exhibit 4 | ||||||||
Ulta Beauty, Inc. | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
| ||||||||
|
| 26 Weeks Ended | ||||||
|
| July 29, |
| July 30, | ||||
|
| 2023 |
| 2022 | ||||
|
| (Unaudited) |
| (Unaudited) | ||||
Operating activities |
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|
|
|
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| ||
Net income |
| $ | 647,153 |
|
| $ | 627,072 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
| ||
Depreciation and amortization |
|
| 119,862 |
|
|
| 123,721 |
|
Non-cash lease expense |
|
| 152,867 |
|
|
| 146,251 |
|
Deferred income taxes |
|
| 666 |
|
|
| 336 |
|
Stock-based compensation expense |
|
| 21,539 |
|
|
| 22,875 |
|
Loss on disposal of property and equipment |
|
| 3,878 |
|
|
| 2,277 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
| ||
Receivables |
|
| 24,978 |
|
|
| 53,168 |
|
Merchandise inventories |
|
| (212,088 | ) |
|
| (166,912 | ) |
Prepaid expenses and other current assets |
|
| 19,722 |
|
|
| (12,200 | ) |
Income taxes |
|
| 8,194 |
|
|
| (45,906 | ) |
Accounts payable |
|
| (38,752 | ) |
|
| 40,051 |
|
Accrued liabilities |
|
| (102,763 | ) |
|
| (49,364 | ) |
Deferred revenue |
|
| (40,424 | ) |
|
| (37,008 | ) |
Operating lease liabilities |
|
| (163,527 | ) |
|
| (163,302 | ) |
Other assets and liabilities |
|
| (12,497 | ) |
|
| (392 | ) |
Net cash provided by operating activities |
|
| 428,808 |
|
|
| 540,667 |
|
|
|
|
|
|
|
| ||
Investing activities |
|
|
|
|
|
| ||
Capital expenditures |
|
| (204,748 | ) |
|
| (120,500 | ) |
Other investments |
|
| (1,687 | ) |
|
| (1,249 | ) |
Net cash used in investing activities |
|
| (206,435 | ) |
|
| (121,749 | ) |
|
|
|
|
|
|
| ||
Financing activities |
|
|
|
|
|
| ||
Repurchase of common shares |
|
| (559,011 | ) |
|
| (434,448 | ) |
Stock options exercised |
|
| 9,147 |
|
|
| 24,521 |
|
Purchase of treasury shares |
|
| (21,759 | ) |
|
| (6,325 | ) |
Net cash used in financing activities |
|
| (571,623 | ) |
|
| (416,252 | ) |
|
|
|
|
|
|
| ||
Net (decrease) increase in cash and cash equivalents |
|
| (349,250 | ) |
|
| 2,666 |
|
Cash and cash equivalents at beginning of period |
|
| 737,877 |
|
|
| 431,560 |
|
Cash and cash equivalents at end of period |
| $ | 388,627 |
|
| $ | 434,226 |
|
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 2023 |
| quarter |
| quarter |
| quarter |
| end of the quarter |
1st Quarter |
| 1,355 |
| 5 |
| 1 |
| 1,359 |
2nd Quarter |
| 1,359 |
| 3 |
| 0 |
| 1,362 |
|
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|
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|
|
|
|
|
| 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 2023 |
| the quarter |
| quarter |
| during the quarter |
| quarter |
1st Quarter |
| 14,200,403 |
| 54,495 |
| 9,984 |
| 14,244,914 |
2nd Quarter |
| 14,244,914 |
| 27,530 |
| 0 |
| 14,272,444 |
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 | ||||
|
| July 29, |
| July 30, | ||
| 2023 |
| 2022 | |||
Cosmetics |
| 40 | % |
| 42 | % |
Haircare products and styling tools |
| 21 | % |
| 22 | % |
Skincare |
| 20 | % |
| 17 | % |
Fragrance and bath |
| 12 | % |
| 12 | % |
Services |
| 4 | % |
| 4 | % |
Accessories and other |
| 3 | % |
| 3 | % |
|
| 100 | % |
| 100 | % |
|
|
|
|
| ||
|
| 26 Weeks Ended | ||||
|
| July 29, |
| July 30, | ||
|
| 2023 |
| 2022 | ||
Cosmetics |
| 42 | % |
| 43 | % |
Haircare products and styling tools |
| 19 | % |
| 21 | % |
Skincare |
| 20 | % |
| 17 | % |
Fragrance and bath |
| 12 | % |
| 12 | % |
Services |
| 4 | % |
| 4 | % |
Accessories and other |
| 3 | % |
| 3 | % |
|
| 100 | % |
| 100 | % |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230824800150/en/
Investor Contacts: Kiley Rawlins, CFA Vice President, Investor Relations krawlins@ulta.com
Media Contact: Crystal Carroll Director, Public Relations ccarroll@ulta.com
Source: Ulta Beauty, Inc.