Net Sales of $3.6 Billion Compared to $3.2
Billion in the Year-Ago Quarter
Comparable Sales Increased 2.5%
Net Income of $394.4 Million or $8.08 Per
Diluted Share
Ulta Beauty, Inc. (NASDAQ: ULTA) today announced financial
results for the fourteen-week period (“fourth quarter”) and
fifty-three-week period (“fiscal year”) ended February 3, 2024,
both of which contain one extra week (“53rd week”) versus the
comparable thirteen-week and fifty-two-week periods ended January
28, 2023.
14 Weeks Ended
13 Weeks Ended
53 Weeks Ended
52 Weeks Ended
February 3,
January 28,
February 3,
January 28,
(Dollars in
millions, except per share data)
2024
2023
2024
2023
Net sales
$
3,554.3
$
3,226.8
$
11,207.3
$
10,208.6
Comparable sales (1)
2.5%
15.6%
5.7%
15.6%
Gross profit (as a percentage of net
sales)
37.7%
37.6%
39.1%
39.6%
Selling, general and administrative
expenses
$
820.4
$
762.7
$
2,694.6
$
2,395.3
Operating income (as a percentage of net
sales)
14.5%
13.9%
15.0%
16.1%
Diluted earnings per share
$
8.08
$
6.68
$
26.03
$
24.01
New store openings, net
11
12
30
47
(1)
Comparable sales are based on a comparable
number of weeks from the prior year.
“We closed out a strong 2023 with better-than-expected fourth
quarter financial performance. Our compelling holiday plans and
thoughtfully curated assortment resonated with our guests and
delivered healthy traffic, record brand awareness, and strong
member growth. I am proud of how our teams drove these results
while making meaningful progress on our multi-year,
transformational investment agenda to enable new capabilities for
future growth,” said Dave Kimbell, chief executive officer. “We
enter 2024 well-positioned to drive strong top and bottom-line
growth, build on our foundational capabilities, and unlock further
advantages of our differentiated model. While we are mindful the
near-term macro environment remains dynamic, we are optimistic
about the resiliency of the beauty category, energized by the
growth opportunities ahead of us, and confident in our ability to
deliver for our guests and our shareholders.”
Kimbell continued, “International expansion represents an
incremental, long-term opportunity for Ulta Beauty to extend our
reach and leverage our differentiated value proposition. We have
evaluated various operating models and partners, and geographies,
and we are excited to announce the formation of a joint venture
with Axo, a highly experienced operator of global brands, to launch
and operate Ulta Beauty in Mexico in 2025.”
Fourth Quarter of Fiscal 2023 Compared to Fourth Quarter of
Fiscal 2022
- Net sales increased 10.2% to $3.6 billion compared to $3.2
billion, primarily due to increased comparable sales, strong new
store performance, strong growth in other revenue, and the benefit
of an extra week of sales in fiscal 2023. Net sales in the 53rd
week were approximately $181.9 million.
- Comparable sales (sales for stores open at least 14 months and
e-commerce sales) increased 2.5% compared to an increase of 15.6%,
driven by a 4.5% increase in transactions and a 1.9% decrease in
average ticket.
- Gross profit increased 10.6% to $1.3 billion compared to $1.2
billion. As a percentage of net sales, gross profit increased to
37.7% compared to 37.6%, primarily due to strong growth in other
revenue, lower shipping rates, and leverage of supply chain costs,
largely offset by lower merchandise margin.
- Selling, general and administrative (SG&A) expenses
increased 7.6% to $820.4 million compared to $762.7 million. As a
percentage of net sales, SG&A expenses decreased to 23.1%
compared to 23.6%, primarily due to lower incentive compensation
and leverage of marketing expenses and store payroll and benefits,
partially offset by deleverage of corporate overhead due to
strategic investments and store expenses.
- Operating income increased 15.5% to $517.1 million, or 14.5% of
net sales, compared to $447.6 million, or 13.9% of net sales.
- Net interest income decreased to $3.3 million compared to $4.4
million due to interest paid on borrowings during the quarter.
- The tax rate decreased to 24.2% compared to 24.6% primarily due
to benefits from a decrease in state income taxes.
- Net income increased 15.7% to $394.4 million compared to $340.8
million.
- Diluted earnings per share increased 21.0% to $8.08, including
$0.46 due to the extra week of sales, compared to $6.68, including
a $0.02 benefit due to income tax accounting for stock-based
compensation.
Full Year of Fiscal 2023 Compared to Full Year of Fiscal
2022
- Net sales increased 9.8% to $11.2 billion compared to $10.2
billion, primarily due to increased comparable sales, strong new
store performance, strong growth in other revenue, and the benefit
of the 53rd week of sales in fiscal 2023.
- Comparable sales increased 5.7% compared to an increase of
15.6%, driven by a 7.4% increase in transactions and a 1.5%
decrease in average ticket.
- Gross profit increased 8.3% to $4.4 billion compared to $4.0
billion. As a percentage of net sales, gross profit decreased to
39.1% compared to 39.6%, primarily due to lower merchandise margin
and higher inventory shrink, partially offset by strong growth in
other revenue and leverage of store fixed costs.
- SG&A expenses increased 12.5% to $2.7 billion compared to
$2.4 billion. As a percentage of net sales, SG&A expenses
increased to 24.0% compared to 23.5%, primarily due to higher
corporate overhead due to strategic investments, higher store
payroll and benefits, higher marketing expenses, and higher store
expenses, partially offset by lower incentive compensation.
- Operating income increased 2.4% to $1.7 billion, or 15.0% of
net sales, compared to $1.6 billion, or 16.1% of net sales.
- Net interest income increased to $17.6 million compared to $4.9
million, due to higher average interest rates on cash
balances.
- The tax rate decreased to 23.9% compared to 24.4%, primarily
due to a decrease in state income taxes and benefits from income
tax accounting for stock-based compensation.
- Net income increased 3.9% to $1.3 billion compared to $1.2
billion.
- Diluted earnings per share increased 8.4% to $26.03, including
a $0.14 benefit due to income tax accounting for stock-based
compensation and a $0.46 benefit due to the 53rd week, compared to
$24.01, including a $0.07 benefit due to income tax accounting for
stock-based compensation.
Balance Sheet
Cash and cash equivalents at the end of the fourth quarter of
fiscal 2023 totaled $766.6 million.
Merchandise inventories, net at the end of the fourth quarter of
fiscal 2023 increased 8.6% to $1.7 billion compared to $1.6 billion
at the end of the fourth quarter of fiscal 2022. The increase was
primarily due to inventory to support new brand launches, 30 net
new stores, increase in distribution center inventory primarily due
to the opening of the new market fulfillment center in Greer, SC,
and product cost increases.
As previously announced, during the third quarter of fiscal
2023, the Company borrowed $195.4 million on its revolving credit
facility to support ongoing capital allocation priorities,
including share repurchases and capital expenditures, and
merchandise inventory growth. During the fourth quarter of fiscal
2023, the Company repaid all amounts borrowed, together with
interest due. At the end of the fourth quarter of fiscal 2023, the
Company had no borrowings outstanding under the revolving credit
facility.
On March 13, 2024, the Company entered into an Amendment No. 3
to its Second Amended and Restated Loan Agreement, which amended
and restated the existing agreement. The new loan agreement extends
the maturity of the facility to March 13, 2029, provides maximum
revolving loans equal to the lesser of $800 million or a percentage
of eligible owned inventory, contains a $50 million sub-facility
for letters of credit and allows the Company to increase the
revolving facility by an additional $200 million.
Share Repurchase Program
During the fourth quarter of fiscal 2023, the Company
repurchased 352,005 shares of its common stock at a cost of $159.5
million. During fiscal 2023, the Company repurchased 2.2 million
shares of its common stock at a cost of $1.0 billion. As of
February 3, 2024, $99.9 million remained available under the $2.0
billion share repurchase program announced in March 2022.
Since 2014, Ulta Beauty has returned $5.8 billion to
shareholders through its share repurchase program, while continuing
to make strategic growth investments.
On March 12, 2024, the Company’s board of directors approved a
new share repurchase authorization of $2.0 billion, which replaces
the prior authorization implemented in March 2022. Under the new
program, as under the previous program, the Company may repurchase
outstanding shares of the Company's common stock from time to time
through accelerated share repurchases, privately negotiated
transactions, or open market transactions, including under plans
complying with Rule 10b5-1 under the Securities Exchange Act of
1934. The new program has no expiration date but may be terminated
by the Board at any time.
Store Update
Real estate activity in the fourth quarter of fiscal 2023
included 13 new stores located in Anaheim, CA; Brea, CA; Brenham,
TX; Dartmouth, MA; Glassboro, NJ; Goldsboro, NC; Hialeah, FL;
Jacksonville, FL; Land O'Lakes, FL; Missouri City, TX; Orange, CT;
Orlando, FL; and Venice, FL. In addition, the Company relocated two
stores, remodeled two stores, and closed two stores. During fiscal
2023, the Company opened 33 new stores, relocated seven stores,
remodeled 18 stores, and closed three stores.
At the end of the fourth quarter of fiscal 2023, the Company
operated 1,385 stores totaling 14.5 million square feet.
Fiscal 2024 Outlook
For fiscal 2024, the Company plans to:
FY24 Outlook
Net sales
$11.7 billion to $11.8
billion
Comparable sales
4% to 5%
New stores, net
60-65
Remodel and relocation projects
40-45
Operating margin
14.0% to 14.3%
Diluted earnings per share
$26.20 to $27.00
Share repurchases
approximately $1 billion
Interest income
approximately $11 million
Effective tax rate
approximately 24.3%
Capital expenditures
$415 million to $490 million
Depreciation and amortization expense
$275 million to $280 million
Conference Call Information
A conference call to discuss fourth quarter of fiscal 2023
results is scheduled for today, March 14, 2024 at 4:30 p.m. ET /
3:30 p.m. CT. Investors and analysts who are interested in
participating in the call are invited to dial (877) 704-4453.
Participants may also listen to a real-time audio webcast of the
conference call by visiting the Investor Relations section of the
Company’s website located at https://www.ulta.com/investor. A
replay will be made available online approximately two hours
following the live call for a period of 30 days.
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 1,385 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, elevated
interest rates and recessionary concerns, as well as continuing
labor cost pressures, and transportation and shipping cost
pressures, 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, our ability to continue to obtain sufficient merchandise
from our brand partners, and/or our ability to continue to offer
permanent or temporary exclusive products of our brand
partners;
- our ability to effectively manage our inventory and protect
against inventory shrink;
- changes in the wholesale cost of our products and/or
interruptions at our brand partners’ or third-party vendors’
operations;
- 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)
14 Weeks Ended
13 Weeks Ended
February 3,
January 28,
2024
2023
(Unaudited)
(Unaudited)
Net sales
$
3,554,298
100.0%
$
3,226,773
100.0%
Cost of sales
2,213,734
62.3%
2,014,270
62.4%
Gross profit
1,340,564
37.7%
1,212,503
37.6%
Selling, general and administrative
expenses
820,360
23.1%
762,706
23.6%
Pre-opening expenses
3,114
0.1%
2,179
0.1%
Operating income
517,090
14.5%
447,618
13.9%
Interest income, net
(3,328)
(0.1%)
(4,378)
(0.1%)
Income before income taxes
520,418
14.6%
451,996
14.0%
Income tax expense
126,049
3.5%
111,245
3.4%
Net income
$
394,369
11.1%
$
340,751
10.6%
Net income per common share:
Basic
$
8.13
$
6.73
Diluted
$
8.08
$
6.68
Weighted average common shares
outstanding:
Basic
48,500
50,624
Diluted
48,795
50,976
Exhibit 2
Ulta Beauty, Inc. Consolidated
Statements of Income (In thousands, except per share
data)
53 Weeks Ended
52 Weeks Ended
February 3,
January 28,
2024
2023
(Unaudited)
Net sales
$
11,207,303
100.0%
$
10,208,580
100.0%
Cost of sales
6,826,203
60.9%
6,164,070
60.4%
Gross profit
4,381,100
39.1%
4,044,510
39.6%
Selling, general and administrative
expenses
2,694,561
24.0%
2,395,299
23.5%
Pre-opening expenses
8,510
0.1%
10,601
0.1%
Operating income
1,678,029
15.0%
1,638,610
16.1%
Interest income, net
(17,622)
(0.2%)
(4,934)
(0.0%)
Income before income taxes
1,695,651
15.1%
1,643,544
16.1%
Income tax expense
404,646
3.6%
401,136
3.9%
Net income
$
1,291,005
11.5%
$
1,242,408
12.2%
Net income per common share:
Basic
$
26.18
$
24.17
Diluted
$
26.03
$
24.01
Weighted average common shares
outstanding:
Basic
49,304
51,403
Diluted
49,596
51,738
Exhibit 3
Ulta Beauty, Inc. Condensed
Consolidated Balance Sheets (In thousands)
February 3,
January 28,
2024
2023
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
766,594
$
737,877
Receivables, net
207,939
199,422
Merchandise inventories, net
1,742,136
1,603,451
Prepaid expenses and other current
assets
115,598
130,246
Prepaid income taxes
4,251
38,308
Total current assets
2,836,518
2,709,304
Property and equipment, net
1,182,335
1,009,273
Operating lease assets
1,574,530
1,561,263
Goodwill
10,870
10,870
Other intangible assets, net
510
1,312
Deferred compensation plan assets
43,516
35,382
Other long-term assets
58,732
43,007
Total assets
$
5,707,011
$
5,370,411
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
544,001
$
559,527
Accrued liabilities
382,468
444,278
Deferred revenue
436,591
394,677
Current operating lease liabilities
283,821
283,293
Accrued income taxes
11,310
—
Total current liabilities
1,658,191
1,681,775
Non-current operating lease
liabilities
1,627,271
1,619,883
Deferred income taxes
85,921
55,346
Other long-term liabilities
56,300
53,596
Total liabilities
3,427,683
3,410,600
Commitments and contingencies
Total stockholders’ equity
2,279,328
1,959,811
Total liabilities and stockholders’
equity
$
5,707,011
$
5,370,411
Exhibit 4
Ulta Beauty, Inc. Condensed
Consolidated Statements of Cash Flows (In thousands)
53 Weeks Ended
52 Weeks Ended
February 3,
January 28,
2024
2023
(Unaudited)
Operating activities
Net income
$
1,291,005
$
1,242,408
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
243,840
241,372
Non-cash lease expense
332,754
301,912
Deferred income taxes
30,575
15,653
Stock-based compensation expense
48,246
43,044
Loss on disposal of property and
equipment
11,419
6,688
Change in operating assets and
liabilities:
Receivables
(8,517)
34,260
Merchandise inventories
(138,685)
(104,233)
Prepaid expenses and other current
assets
14,648
(19,432)
Income taxes
45,367
(45,182)
Accounts payable
(20,873)
8,309
Accrued liabilities
(62,238)
48,249
Deferred revenue
41,914
41,098
Operating lease liabilities
(338,105)
(324,500)
Other assets and liabilities
(15,084)
(7,731)
Net cash provided by operating
activities
1,476,266
1,481,915
Investing activities
Capital expenditures
(435,267)
(312,126)
Other investments
(6,158)
(2,458)
Net cash used in investing activities
(441,425)
(314,584)
Financing activities
Borrowings from credit facility
195,400
—
Payments on credit facility
(195,400)
—
Repurchase of common shares
(995,738)
(900,033)
Stock options exercised
12,176
46,011
Purchase of treasury shares
(22,562)
(6,992)
Net cash used in financing activities
(1,006,124)
(861,014)
Net increase in cash and cash
equivalents
28,717
306,317
Cash and cash equivalents at beginning of
year
737,877
431,560
Cash and cash equivalents at end of
year
$
766,594
$
737,877
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
3rd Quarter
1,362
12
0
1,374
4th Quarter
1,374
13
2
1,385
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
3rd Quarter
14,272,444
133,421
0
14,405,865
4th Quarter
14,405,865
132,464
22,736
14,515,593
Exhibit 6
Ulta Beauty, Inc. Sales by
Category
The following tables set forth the approximate percentage of net
sales by primary category:
14 Weeks Ended
13 Weeks Ended
February 3,
January 28,
2024
2023
Cosmetics
39%
40%
Skincare
18%
16%
Haircare products and styling tools
18%
20%
Fragrance and bath
19%
18%
Services
3%
3%
Accessories and other
3%
3%
100%
100%
53 Weeks Ended
52 Weeks Ended
February 3,
January 28,
2024
2023
Cosmetics
41%
42%
Skincare
19%
17%
Haircare products and styling tools
19%
21%
Fragrance and bath
15%
14%
Services
3%
3%
Accessories and other
3%
3%
100%
100%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240314247150/en/
Investor Contact: Kiley Rawlins, CFA Vice President, Investor
Relations krawlins@ulta.com
Media Contact: Crystal Carroll Senior Director, Public Relations
ccarroll@ulta.com
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