Net Sales of $2.6 Billion Compared to $2.3
Billion in the Year-Ago Quarter
Comparable Sales Increased 9.3%
Net Income of $347.1 Million or $6.88 Per
Diluted Share
Ulta Beauty, Inc. (NASDAQ: ULTA) today announced financial
results for the thirteen-week period (“first quarter”) ended April
29, 2023.
13 Weeks Ended
April 29,
April 30,
(Dollars in
millions, except per share data)
2023
2022
Net sales
$
2,634.3
$
2,345.9
Comparable sales
9.3%
18.0%
Gross profit (as a percentage of net
sales)
40.0%
40.1%
Selling, general and administrative
expenses
$
612.1
$
501.0
Operating income (as a percentage of net
sales)
16.8%
18.7%
Diluted earnings per share
$
6.88
$
6.30
New store openings, net
4
10
“The year is off to a positive start as the Ulta Beauty team
delivered revenue, operating margin, and diluted EPS consistent
with our internal expectations. Store traffic remained healthy,
member growth showed continued strength, we delivered growth across
key categories, and we strengthened engagement with the Ulta Beauty
brand,” said Dave Kimbell, chief executive officer. “While we
expect the operating environment to continue evolving, we remain
confident in the resilience of the beauty category and in our
ability to drive share and profitable growth with our proven
business model, a diverse, best-in-class assortment, an
industry-leading loyalty program, and our world-class team.”
For the First Quarter of Fiscal 2023
- Net sales increased 12.3% to $2.6 billion compared to $2.3
billion in the first quarter of fiscal 2022 due to increased
comparable sales, strong new store performance, and growth in other
revenue compared to the first quarter of fiscal 2022.
- Comparable sales (sales for stores open at least 14 months and
e-commerce sales) increased 9.3% compared to an increase of 18.0%
in the first quarter of fiscal 2022, driven by an 11.0% increase in
transactions and a 1.5% decrease in average ticket.
- Gross profit increased 12.1% to $1.1 billion compared to $941.0
million in the first quarter of fiscal 2022. As a percentage of net
sales, gross profit decreased to 40.0% compared to 40.1% in the
first quarter of fiscal 2022, primarily due to higher inventory
shrink, lower merchandise margins, higher supply chain costs, and
deleverage of salon expenses, partially offset by strong growth in
other revenue and leverage of store fixed costs.
- Selling, general and administrative (“SG&A”) expenses
increased 22.2% to $612.1 million compared to $501.0 million in the
first quarter of fiscal 2022. As a percentage of net sales,
SG&A expenses increased to 23.2% compared to 21.4% in the first
quarter of fiscal 2022, primarily due to deleverage of store
payroll and benefits, deleverage of corporate overhead due to
strategic investments, and deleverage of marketing expenses,
partially offset by leverage of incentive compensation and store
expenses.
- Operating income increased 1.0% to $442.1 million, or 16.8% of
net sales, compared to $437.7 million, or 18.7% of net sales, in
the first quarter of fiscal 2022.
- Interest income, net increased to $7.3 million compared to
interest expense, net of $0.4 million in the first quarter of
fiscal 2022, due to higher average interest rates and higher
average cash balances during the quarter.
- Tax rate decreased to 22.8% compared to 24.2% in the first
quarter of fiscal 2022, primarily due to benefits from income tax
accounting for stock-based compensation.
- Net income increased 4.7% to $347.1 million compared to $331.4
million in the first quarter of fiscal 2022.
- Diluted earnings per share increased 9.2% to $6.88, including a
$0.14 benefit due to income tax accounting for stock-based
compensation, compared to $6.30, including a $0.02 benefit due to
income tax accounting for stock-based compensation, in the first
quarter of fiscal 2022.
Balance Sheet
Cash and cash equivalents at the end of the first quarter of
fiscal 2023 totaled $636.4 million.
Merchandise inventories, net at the end of first quarter of
fiscal 2023 increased to $1.75 billion compared to $1.57 billion at
the end of the first quarter of fiscal 2022. The increase is due to
inventory to support higher demand, product cost increases, 41 net
new stores, new brand launches, and brand expansions.
Share Repurchase Program
During the first quarter of fiscal 2023, the Company repurchased
541,108 shares of its common stock at a cost of $285.8 million,
including excise tax. As of April 29, 2023, $816.5 million remained
available under the $2.0 billion share repurchase program announced
in March 2022.
Store Update
Real estate activity in the first quarter of fiscal 2023
included five new stores located in Boulder, CO; Denton, TX;
Seattle, WA; Surprise, AZ; and Warrensville Heights, OH. In
addition, the Company closed one store, relocated one store, and
remodeled two stores.
At the end of the first quarter of fiscal 2023 the Company
operated 1,359 stores totaling 14.2 million square feet.
Fiscal 2023 Outlook
The Company has updated its outlook for fiscal 2023.
Prior FY23 Outlook
Updated FY23 Outlook
Net sales
$10.95 billion to $11.05
billion
$11.0 billion to $11.1
billion
Comparable sales
4% to 5%
no change
New stores, net
25-30
no change
Remodel and relocation projects
20-30
no change
Operating margin
14.7% to 15.0%
14.5% to 14.8%
Diluted earnings per share
$24.70 to $25.40
no change
Share repurchases
approximately $900 million
no change
Interest income
approximately $17 million
Effective tax rate
approximately 24.6%
approximately 23.9%
Capital expenditures
$400 million to $475 million
no change
Depreciation and amortization expense
$245 million to $250 million
no change
Conference Call Information
A conference call to discuss first quarter of fiscal 2023
results is scheduled for today, May 25, 2023, at 4:30 p.m. Eastern
Time / 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://www.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 June 8, 2023 and can be accessed
by dialing (844) 512‑2921 and entering conference ID number
13737585.
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 1,359 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:
- macroeconomic conditions, including inflation, rising interest
rates and recessionary concerns, as well as ongoing labor
pressures, transportation and shipping cost pressures, and the
COVID-19 pandemic, have had, and may continue to have, a negative
impact on our business, financial condition, profitability, and
cash flows (including future uncertain impacts);
- changes in the overall level of consumer spending and
volatility in the economy, including as a result of the
macroeconomic conditions and geopolitical events;
- 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;
- 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 of significant interruptions in the operations
of our distribution centers, fast fulfillment centers, and market
fulfillment centers;
- 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, including our Ulta.com website and mobile
applications;
- the failure to maintain satisfactory compliance with applicable
privacy and data protection laws and regulations;
- changes in the good relationships we have with our brand
partners and/or our ability to continue to offer permanent or
temporary exclusive products of our brand partners;
- changes in the wholesale cost of our products and/or
interruptions at our brand partners’ or third-party vendors’
operations;
- future epidemics, pandemics or natural disasters could
negatively impact sales;
- 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;
- a decline in operating results may lead to asset impairment and
store closure charges; 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 28, 2023, 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.
Exhibit 1
Ulta Beauty, Inc.
Consolidated Statements of
Income
(In thousands, except per
share data)
13 Weeks Ended
April 29,
April 30,
2023
2022
(Unaudited)
(Unaudited)
Net sales
$
2,634,263
100.0
%
$
2,345,901
100.0
%
Cost of sales
1,579,406
60.0
%
1,404,875
59.9
%
Gross profit
1,054,857
40.0
%
941,026
40.1
%
Selling, general and administrative
expenses
612,129
23.2
%
500,970
21.4
%
Pre-opening expenses
658
0.0
%
2,348
0.1
%
Operating income
442,070
16.8
%
437,708
18.7
%
Interest (income) expense, net
(7,348
)
(0.3
%)
401
0.0
%
Income before income taxes
449,418
17.1
%
437,307
18.6
%
Income tax expense
102,367
3.9
%
105,912
4.5
%
Net income
$
347,051
13.2
%
$
331,395
14.1
%
Net income per common share:
Basic
$
6.92
$
6.34
Diluted
$
6.88
$
6.30
Weighted average common shares
outstanding:
Basic
50,153
52,250
Diluted
50,469
52,582
Exhibit 2
Ulta Beauty, Inc.
Condensed Consolidated Balance
Sheets
(In thousands)
April 29,
January 28,
April 30,
2023
2023
2022
(Unaudited)
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
636,449
$
737,877
$
654,486
Receivables, net
190,282
199,422
192,754
Merchandise inventories, net
1,751,235
1,603,451
1,570,552
Prepaid expenses and other current
assets
108,014
130,246
114,075
Prepaid income taxes
—
38,308
—
Total current assets
2,685,980
2,709,304
2,531,867
Property and equipment, net
1,019,978
1,009,273
909,543
Operating lease assets
1,559,560
1,561,263
1,488,040
Goodwill
10,870
10,870
10,870
Other intangible assets, net
1,015
1,312
1,307
Deferred compensation plan assets
37,002
35,382
35,978
Other long-term assets
61,314
43,007
34,431
Total assets
$
5,375,719
$
5,370,411
$
5,012,036
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
621,272
$
559,527
$
585,500
Accrued liabilities
308,583
444,278
305,000
Deferred revenue
357,217
394,677
324,694
Current operating lease liabilities
288,133
283,293
276,440
Accrued income taxes
58,695
—
108,113
Total current liabilities
1,633,900
1,681,775
1,599,747
Non-current operating lease
liabilities
1,610,256
1,619,883
1,568,356
Deferred income taxes
57,490
55,346
40,702
Other long-term liabilities
56,005
53,596
57,611
Total liabilities
3,357,651
3,410,600
3,266,416
Commitments and contingencies
Total stockholders’ equity
2,018,068
1,959,811
1,745,620
Total liabilities and stockholders’
equity
$
5,375,719
$
5,370,411
$
5,012,036
Exhibit 3
Ulta Beauty, Inc.
Consolidated Statements of
Cash Flows
(In thousands)
13 Weeks Ended
April 29,
April 30,
2023
2022
(Unaudited)
(Unaudited)
Operating activities
Net income
$
347,051
$
331,395
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
57,949
62,839
Non-cash lease expense
75,478
72,192
Deferred income taxes
2,144
1,009
Stock-based compensation expense
9,721
10,356
Loss on disposal of property and
equipment
1,451
1,002
Change in operating assets and
liabilities:
Receivables
9,140
40,928
Merchandise inventories
(147,784
)
(71,334
)
Prepaid expenses and other current
assets
22,232
(3,261
)
Income taxes
97,003
101,236
Accounts payable
62,257
42,586
Accrued liabilities
(98,515
)
(57,214
)
Deferred revenue
(37,460
)
(28,885
)
Operating lease liabilities
(78,562
)
(79,936
)
Other assets and liabilities
(17,204
)
3,390
Net cash provided by operating
activities
304,901
426,303
Investing activities
Capital expenditures
(109,766
)
(71,076
)
Other investments
(314
)
(797
)
Net cash used in investing activities
(110,080
)
(71,873
)
Financing activities
Repurchase of common shares
(283,517
)
(132,834
)
Stock options exercised
8,927
6,502
Purchase of treasury shares
(21,659
)
(5,172
)
Net cash used in financing activities
(296,249
)
(131,504
)
Net (decrease) increase in cash and cash
equivalents
(101,428
)
222,926
Cash and cash equivalents at beginning of
period
737,877
431,560
Cash and cash equivalents at end of
period
$
636,449
$
654,486
Exhibit 4
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
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
Exhibit 5
Ulta Beauty, Inc.
Sales by Category
The following table sets forth the
approximate percentage of net sales by primary category:
13 Weeks Ended
April 29,
April 30,
2023
2022
Cosmetics
44%
44%
Skincare
19%
18%
Haircare products and styling tools
18%
20%
Fragrance and bath
12%
12%
Services
4%
3%
Accessories and other
3%
3%
100%
100%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230525005601/en/
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
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