Net Sales of $2.5 Billion Compared to $2.3 Billion in the Year-Ago Quarter
Comparable Sales Increased 4.5%
Net Income of $249.5 Million or $5.07 Per Diluted Share
BOLINGBROOK, Ill.--(BUSINESS WIRE)-- 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 28, 2023 compared to the same periods ended October 29, 2022.
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| 13 Weeks Ended |
| 39 Weeks Ended | |||||||||
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| October 28, |
| October 29, |
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| October 28, |
| October 29, | ||||
(Dollars in millions, except per share data) | 2023 |
| 2022 |
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| 2023 |
| 2022 | |||||
Net sales |
| $ | 2,488.9 |
| $ | 2,338.8 |
|
| $ | 7,653.0 |
| $ | 6,981.8 |
Comparable sales |
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| 4.5% |
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| 14.6% |
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| 7.3% |
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| 15.6% |
Gross profit (as a percentage of net sales) |
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| 39.9% |
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| 41.2% |
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| 39.7% |
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| 40.6% |
Selling, general and administrative expenses |
| $ | 661.4 |
| $ | 597.2 |
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| $ | 1,874.2 |
| $ | 1,632.6 |
Operating income (as a percentage of net sales) |
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| 13.1% |
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| 15.5% |
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| 15.2% |
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| 17.1% |
Diluted earnings per share |
| $ | 5.07 |
| $ | 5.34 |
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| $ | 17.99 |
| $ | 17.35 |
New store openings, net |
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| 12 |
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| 18 |
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| 19 |
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| 35 |
“The third quarter represented another strong performance by the Ulta Beauty team, as sales, gross profit, and diluted EPS all exceeded our internal expectations. Our traffic trends remained healthy, our brand awareness increased, and we expanded our loyalty program to a record 42.2 million members,” said Dave Kimbell, chief executive officer. “As we look to the future, the outlook for the Beauty category is bright, and I am confident Ulta Beauty has the right plans in place to delight our guests this holiday season, expand our leadership position in specialty beauty retail, and deliver long-term shareholder growth.”
Third Quarter of Fiscal 2023 Compared to Third Quarter of Fiscal 2022
First Nine Months of Fiscal 2023 Compared to First Nine Months of Fiscal 2022
Balance Sheet
Cash and cash equivalents at the end of the third quarter of fiscal 2023 totaled $121.8 million.
Merchandise inventories, net at the end of the third quarter of fiscal 2023 increased 9.8% to $2.3 billion compared to $2.1 billion at the end of the third quarter of fiscal 2022. The increase was primarily due to inventory to support expected demand, 31 net new stores, the new market fulfillment center in Greer, SC, new brand launches, and product cost increases.
Short-term debt at the end of the third quarter of fiscal 2023 was $195.4 million, as the Company drew on its revolving credit facility to support ongoing capital allocation priorities, including share repurchases and capital expenditures, and merchandise inventory growth.
Share Repurchase Program
During the third quarter of fiscal 2023, the Company repurchased 686,689 shares of its common stock at a cost of $281.5 million. During the first nine months of fiscal 2023, the Company repurchased 1.8 million shares of its common stock at a cost of $840.5 million. As of October 28, 2023, $259.4 million 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 2023 included 12 new stores located in Antioch, TN; Baraboo, WI; Cornelius, NC; Cottage Grove, MN; El Paso, TX (2); Elizabethtown, KY; Leominster, MA; Mesa, AZ; Parrish, FL; Pell City, AL; and Rialto, CA. In addition, the Company relocated two stores and remodeled 11 stores. During the first nine months of fiscal 2023, the Company opened 20 new stores, relocated five stores, remodeled 16 stores, and closed one store.
At the end of the third quarter of fiscal 2023, the Company operated 1,374 stores totaling 14.4 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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| $11.05 billion to $11.15 billion |
| $11.10 billion to $11.15 billion |
Comparable sales |
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| 4.5% to 5.5% |
| 5.0% 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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| 14.6% to 14.8% |
| no change |
Diluted earnings per share |
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| $25.10 to $25.60 |
| $25.20 to $25.60 |
Share repurchases |
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| approximately $900 million |
| approximately $950 million |
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 |
| $400 million to $425 million |
Depreciation and amortization expense |
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| $245 million to $250 million |
| $240 million to $245 million |
Conference Call Information
A conference call to discuss third quarter of fiscal 2023 results is scheduled for today, November 30, 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 December 14, 2023 and can be accessed by dialing (844) 512-2921 and entering conference ID number 13741934.
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 1,374 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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| October 28, |
| October 29, | ||||||||||
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| 2023 |
| 2022 | ||||||||||
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| (Unaudited) |
| (Unaudited) | ||||||||||
Net sales |
| $ | 2,488,933 |
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| 100.0 | % |
| $ | 2,338,793 |
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| 100.0 | % |
Cost of sales |
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| 1,496,866 |
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| 60.1 | % |
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| 1,375,976 |
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| 58.8 | % |
Gross profit |
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| 992,067 |
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| 39.9 | % |
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| 962,817 |
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| 41.2 | % |
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Selling, general and administrative expenses |
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| 661,380 |
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| 26.6 | % |
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| 597,164 |
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| 25.5 | % |
Pre-opening expenses |
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| 3,460 |
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| 0.1 | % |
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| 3,797 |
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| 0.2 | % |
Operating income |
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| 327,227 |
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| 13.1 | % |
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| 361,856 |
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| 15.5 | % |
Interest income, net |
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| (2,497 | ) |
| (0.1 | %) |
|
| (849 | ) |
| (0.0 | %) |
Income before income taxes |
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| 329,724 |
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| 13.2 | % |
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| 362,705 |
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| 15.5 | % |
Income tax expense |
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| 80,241 |
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| 3.2 | % |
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| 88,120 |
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| 3.8 | % |
Net income |
| $ | 249,483 |
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| 10.0 | % |
| $ | 274,585 |
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| 11.7 | % |
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Net income per common share: |
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Basic |
| $ | 5.09 |
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| $ | 5.37 |
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Diluted |
| $ | 5.07 |
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| $ | 5.34 |
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Weighted average common shares outstanding: |
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Basic |
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| 49,007 |
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| 51,131 |
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Diluted |
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| 49,226 |
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| 51,418 |
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Exhibit 2 | ||||||||||||||
Ulta Beauty, Inc. | ||||||||||||||
Consolidated Statements of Income | ||||||||||||||
(In thousands, except per share data) | ||||||||||||||
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| 39 Weeks Ended | ||||||||||||
|
| October 28, |
| October 29, | ||||||||||
|
| 2023 |
| 2022 | ||||||||||
|
| (Unaudited) |
| (Unaudited) | ||||||||||
Net sales |
| $ | 7,653,005 |
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| 100.0 | % |
| $ | 6,981,807 |
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| 100.0 | % |
Cost of sales |
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| 4,612,469 |
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| 60.3 | % |
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| 4,149,800 |
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| 59.4 | % |
Gross profit |
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| 3,040,536 |
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| 39.7 | % |
|
| 2,832,007 |
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| 40.6 | % |
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Selling, general and administrative expenses |
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| 1,874,201 |
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| 24.5 | % |
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| 1,632,593 |
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| 23.4 | % |
Pre-opening expenses |
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| 5,396 |
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| 0.1 | % |
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| 8,422 |
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| 0.1 | % |
Operating income |
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| 1,160,939 |
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| 15.2 | % |
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| 1,190,992 |
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| 17.1 | % |
Interest income, net |
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| (14,294 | ) |
| (0.2 | %) |
|
| (556 | ) |
| (0.0 | %) |
Income before income taxes |
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| 1,175,233 |
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| 15.4 | % |
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| 1,191,548 |
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| 17.1 | % |
Income tax expense |
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| 278,597 |
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| 3.6 | % |
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| 289,891 |
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| 4.2 | % |
Net income |
| $ | 896,636 |
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| 11.7 | % |
| $ | 901,657 |
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| 12.9 | % |
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Net income per common share: |
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Basic |
| $ | 18.08 |
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| $ | 17.45 |
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Diluted |
| $ | 17.99 |
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| $ | 17.35 |
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Weighted average common shares outstanding: |
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Basic |
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| 49,592 |
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| 51,663 |
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Diluted |
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| 49,846 |
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| 51,962 |
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Exhibit 3 | |||||||||
Ulta Beauty, Inc. | |||||||||
Condensed Consolidated Balance Sheets | |||||||||
(In thousands) | |||||||||
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|
|
| October 28, |
| January 28, |
| October 29, | |||
|
| 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 |
| $ | 121,811 |
| $ | 737,877 |
| $ | 250,628 |
Receivables, net |
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| 202,868 |
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| 199,422 |
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| 200,304 |
Merchandise inventories, net |
|
| 2,321,306 |
|
| 1,603,451 |
|
| 2,114,669 |
Prepaid expenses and other current assets |
|
| 117,282 |
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| 130,246 |
|
| 137,642 |
Prepaid income taxes |
|
| 28,773 |
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| 38,308 |
|
| 42,572 |
Total current assets |
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| 2,792,040 |
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| 2,709,304 |
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| 2,745,815 |
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Property and equipment, net |
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| 1,117,874 |
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| 1,009,273 |
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| 967,039 |
Operating lease assets |
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| 1,578,316 |
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| 1,561,263 |
|
| 1,556,940 |
Goodwill |
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| 10,870 |
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| 10,870 |
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| 10,870 |
Other intangible assets, net |
|
| 591 |
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| 1,312 |
|
| 844 |
Deferred compensation plan assets |
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| 38,371 |
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| 35,382 |
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| 31,529 |
Other long-term assets |
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| 56,946 |
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| 43,007 |
|
| 18,512 |
Total assets |
| $ | 5,595,008 |
| $ | 5,370,411 |
| $ | 5,331,549 |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
| $ | 597,373 |
| $ | 559,527 |
| $ | 647,117 |
Accrued liabilities |
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| 405,443 |
|
| 444,278 |
|
| 462,773 |
Deferred revenue |
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| 350,937 |
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| 394,677 |
|
| 312,132 |
Current operating lease liabilities |
|
| 287,786 |
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| 283,293 |
|
| 275,749 |
Short-term debt |
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| 195,400 |
|
| — |
|
| — |
Total current liabilities |
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| 1,836,939 |
|
| 1,681,775 |
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| 1,697,771 |
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Non-current operating lease liabilities |
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| 1,616,747 |
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| 1,619,883 |
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| 1,621,252 |
Deferred income taxes |
|
| 56,874 |
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| 55,346 |
|
| 38,627 |
Other long-term liabilities |
|
| 55,906 |
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| 53,596 |
|
| 51,644 |
Total liabilities |
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| 3,566,466 |
|
| 3,410,600 |
|
| 3,409,294 |
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Commitments and contingencies |
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|
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|
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Total stockholders’ equity |
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| 2,028,542 |
|
| 1,959,811 |
|
| 1,922,255 |
Total liabilities and stockholders’ equity |
| $ | 5,595,008 |
| $ | 5,370,411 |
| $ | 5,331,549 |
Exhibit 4 | ||||||||
Ulta Beauty, Inc. | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
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| ||
|
| 39 Weeks Ended | ||||||
|
| October 28, |
| October 29, | ||||
|
| 2023 |
| 2022 | ||||
|
| (Unaudited) |
| (Unaudited) | ||||
Operating activities |
|
|
|
|
|
| ||
Net income |
| $ | 896,636 |
|
| $ | 901,657 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
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|
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|
| ||
Depreciation and amortization |
|
| 181,273 |
|
|
| 182,182 |
|
Non-cash lease expense |
|
| 232,772 |
|
|
| 222,548 |
|
Deferred income taxes |
|
| 1,528 |
|
|
| (1,066 | ) |
Stock-based compensation expense |
|
| 33,477 |
|
|
| 32,554 |
|
Loss on disposal of property and equipment |
|
| 6,310 |
|
|
| 3,892 |
|
Change in operating assets and liabilities: |
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|
|
|
|
| ||
Receivables |
|
| (3,446 | ) |
|
| 33,378 |
|
Merchandise inventories |
|
| (717,855 | ) |
|
| (615,451 | ) |
Prepaid expenses and other current assets |
|
| 12,964 |
|
|
| (26,828 | ) |
Income taxes |
|
| 9,535 |
|
|
| (49,446 | ) |
Accounts payable |
|
| 41,817 |
|
|
| 94,214 |
|
Accrued liabilities |
|
| (34,955 | ) |
|
| 64,164 |
|
Deferred revenue |
|
| (43,740 | ) |
|
| (41,447 | ) |
Operating lease liabilities |
|
| (248,469 | ) |
|
| (246,988 | ) |
Other assets and liabilities |
|
| (9,836 | ) |
|
| 20,063 |
|
Net cash provided by operating activities |
|
| 358,011 |
|
|
| 573,426 |
|
|
|
|
|
|
|
| ||
Investing activities |
|
|
|
|
|
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Capital expenditures |
|
| (311,030 | ) |
|
| (203,961 | ) |
Other investments |
|
| (4,870 | ) |
|
| (3,068 | ) |
Net cash used in investing activities |
|
| (315,900 | ) |
|
| (207,029 | ) |
|
|
|
|
|
|
| ||
Financing activities |
|
|
|
|
|
| ||
Borrowings from credit facility |
|
| 195,400 |
|
|
| — |
|
Repurchase of common shares |
|
| (840,551 | ) |
|
| (571,908 | ) |
Stock options exercised |
|
| 9,302 |
|
|
| 31,319 |
|
Purchase of treasury shares |
|
| (22,328 | ) |
|
| (6,740 | ) |
Net cash used in financing activities |
|
| (658,177 | ) |
|
| (547,329 | ) |
|
|
|
|
|
|
| ||
Net decrease in cash and cash equivalents |
|
| (616,066 | ) |
|
| (180,932 | ) |
Cash and cash equivalents at beginning of period |
|
| 737,877 |
|
|
| 431,560 |
|
Cash and cash equivalents at end of period |
| $ | 121,811 |
|
| $ | 250,628 |
|
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 2023 |
| quarter |
| quarter |
| quarter |
| end of the quarter |
1st Quarter |
| 1,355 |
| 5 |
| 1 |
| 1,359 |
2nd Quarter |
| 1,359 |
| 3 |
| 0 |
| 1,362 |
3rd Quarter |
| 1,362 |
| 12 |
| 0 |
| 1,374 |
|
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| Gross square feet for |
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|
|
| 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 |
3rd Quarter |
| 14,272,444 |
| 133,421 |
| 0 |
| 14,405,865 |
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 | ||||
|
| October 28, |
| October 29, | ||
| 2023 |
| 2022 | |||
Cosmetics |
| 42 | % |
| 44 | % |
Haircare products and styling tools |
| 19 | % |
| 21 | % |
Skincare |
| 19 | % |
| 16 | % |
Fragrance and bath |
| 13 | % |
| 12 | % |
Services |
| 4 | % |
| 4 | % |
Accessories and other |
| 3 | % |
| 3 | % |
|
| 100 | % |
| 100 | % |
|
|
|
|
| ||
|
| 39 Weeks Ended | ||||
|
| October 28, |
| October 29, | ||
|
| 2023 |
| 2022 | ||
Cosmetics |
| 42 | % |
| 43 | % |
Haircare products and styling tools |
| 20 | % |
| 21 | % |
Skincare |
| 19 | % |
| 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/20231130337622/en/
Investor Contacts: Kiley Rawlins, CFA Vice President, Investor Relations krawlins@ulta.com
Media Contact: Crystal Carroll Senior Director, Public Relations ccarroll@ulta.com
Source: Ulta Beauty, Inc.