Ulta Beauty Announces Second Quarter Fiscal 2024 Results
Comparable Sales Decreased 1.2%
Net Income of
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13 Weeks Ended |
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26 Weeks Ended |
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(Dollars in millions, except per share data) |
2024 |
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2023 |
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2024 |
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2023 |
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Net sales |
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$ |
2,552.1 |
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$ |
2,529.8 |
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$ |
5,277.9 |
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$ |
5,164.1 |
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Comparable sales (1) |
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(1.2%) |
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8.0% |
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0.2% |
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8.7% |
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Gross profit (as a percentage of net sales) |
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38.3% |
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39.3% |
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38.8% |
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39.7% |
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Selling, general and administrative expenses |
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$ |
644.8 |
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$ |
600.7 |
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$ |
1,310.7 |
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$ |
1,212.8 |
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Operating income (as a percentage of net sales) |
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12.9% |
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15.5% |
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13.8% |
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16.1% |
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Diluted earnings per share |
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$ |
5.30 |
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$ |
6.02 |
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$ |
11.78 |
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$ |
12.90 |
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New store openings, net |
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16 |
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3 |
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26 |
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7 |
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(1) Comparable sales are calculated based on the comparable 13 and 26 calendar weeks in the current and prior year. |
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“While we are encouraged by many positive indicators across our business, our second quarter performance did not meet our expectations, driven primarily by a decline in comparable store sales. We are clear about the factors that adversely impacted our store performance, and we have actions underway to address the trends,” said
Second Quarter of Fiscal 2024 Compared to Second Quarter of Fiscal 2023
-
Net sales increased 0.9% to
$2.6 billion compared to$2.5 billion , primarily due to new store contribution and growth in other revenue. - Comparable sales (sales for stores open at least 14 months and e-commerce sales) decreased 1.2% compared to an increase of 8.0%, driven by a 1.8% decrease in transactions and a 0.6% increase in average ticket.
-
Gross profit was
$978.2 million compared to$993.6 million . As a percentage of net sales, gross profit decreased to 38.3% compared to 39.3%, primarily due to lower merchandise margins and deleverage of store fixed costs, partially offset by growth in other revenue and lower inventory shrink. -
Selling, general and administrative (SG&A) expenses were
$644.8 million compared to$600.7 million . As a percentage of net sales, SG&A expenses increased to 25.3% compared to 23.7%, primarily due to deleverage of store payroll and benefits, corporate overhead primarily due to strategic investments, store expenses, and marketing expenses, partially offset by lower incentive compensation. -
Operating income was
$329.2 million , or 12.9% of net sales, compared to$391.6 million , or 15.5% of net sales. - The tax rate was 24.3% compared to 24.2%.
-
Net income was
$252.6 million compared to$300.1 million . -
Diluted earnings per share was
$5.30 compared to$6.02 .
First Six Months of Fiscal 2024 Compared to First Six Months of Fiscal 2023
-
Net sales increased 2.2% to
$5.3 billion compared to$5.2 billion , primarily due to new store contribution and growth in other revenue. - Comparable sales increased 0.2% compared to an increase of 8.7%, driven by a 0.4% increase in average ticket and a 0.2% decrease in transactions.
-
Gross profit was flat at
$2.0 billion . As a percentage of net sales, gross profit decreased to 38.8% compared to 39.7%, primarily due to lower merchandise margin and deleverage of store fixed costs, partially offset by growth in other revenue. -
SG&A expenses were
$1.3 billion compared to$1.2 billion . As a percentage of net sales, SG&A expenses increased to 24.8% compared to 23.5%, primarily due to deleverage of corporate overhead primarily due to strategic investments, store payroll and benefits, store expenses, and marketing expenses, partially offset by lower incentive compensation. -
Operating income was
$730.1 million , or 13.8% of net sales, compared to$833.7 million , or 16.1% of net sales. - The tax rate was 23.7% compared to 23.5%.
-
Net income was
$565.7 million compared to$647.2 million . -
Diluted earnings per share was
$11.78 , including a$0.10 benefit due to income tax accounting for stock-based compensation, compared to$12.90 , including a$0.14 benefit due to income tax accounting for stock-based compensation.
Balance Sheet
Cash and cash equivalents at the end of the second quarter of fiscal 2024 totaled
Merchandise inventories, net at the end of the second quarter of fiscal 2024 increased 10.1% to
Share Repurchase Program
During the second quarter of fiscal 2024, the Company repurchased 549,852 shares of its common stock at a cost of
Store Update
During the second quarter of fiscal 2024, the Company opened 17 new stores, relocated one store, remodeled nine stores, and closed one store. During the first six months of fiscal 2024, the Company opened 29 new stores, relocated two stores, remodeled nine stores, and closed three stores. At the end of the second quarter of fiscal 2024, the Company operated 1,411 stores totaling 14.8 million square feet.
Fiscal 2024 Outlook
For fiscal 2024, the Company plans to:
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Prior FY24 Outlook |
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Updated FY24 Outlook |
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Net sales |
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Comparable sales |
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2% to 3% |
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(2%) to 0% |
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New stores, net |
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60-65 |
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no change |
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Remodel and relocation projects |
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40-45 |
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no change |
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Operating margin |
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13.7% to 14.0% |
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12.7% to 13.0% |
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Diluted earnings per share |
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Share repurchases |
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approximately |
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no change |
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Interest income |
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approximately |
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no change |
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Effective tax rate |
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approximately 24% |
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no change |
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Capital expenditures |
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Depreciation and amortization expense |
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Conference Call Information
A conference call to discuss second quarter of fiscal 2024 results is scheduled for today,
About
At
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 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 (the replacement of our 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, which 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 which could 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 (theSEC ), including risk factors contained in its Annual Report on Form 10‑K for the fiscal year endedFebruary 3, 2024 , as such may be amended or supplemented in its subsequently filed Quarterly Reports on Form 10-Q.
The Company’s filings with the
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Exhibit 1 |
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Consolidated Statements of Income |
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(In thousands, except per share data) |
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13 Weeks Ended |
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2024 |
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2023 |
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(Unaudited) |
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(Unaudited) |
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Net sales |
|
$ |
2,552,087 |
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|
100.0 |
% |
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$ |
2,529,809 |
|
|
100.0 |
% |
|
Cost of sales |
|
|
1,573,910 |
|
|
61.7 |
% |
|
|
1,536,197 |
|
|
60.7 |
% |
|
Gross profit |
|
|
978,177 |
|
|
38.3 |
% |
|
|
993,612 |
|
|
39.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
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|
Selling, general and administrative expenses |
|
|
644,821 |
|
|
25.3 |
% |
|
|
600,692 |
|
|
23.7 |
% |
|
Pre-opening expenses |
|
|
4,155 |
|
|
0.2 |
% |
|
|
1,278 |
|
|
0.1 |
% |
|
Operating income |
|
|
329,201 |
|
|
12.9 |
% |
|
|
391,642 |
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|
15.5 |
% |
|
Interest income, net |
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|
(4,526 |
) |
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(0.2 |
%) |
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|
(4,449 |
) |
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(0.2 |
%) |
|
Income before income taxes |
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|
333,727 |
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13.1 |
% |
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|
396,091 |
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|
15.7 |
% |
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Income tax expense |
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|
81,171 |
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3.2 |
% |
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|
95,989 |
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3.8 |
% |
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Net income |
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$ |
252,556 |
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|
9.9 |
% |
|
$ |
300,102 |
|
|
11.9 |
% |
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Net income per common share: |
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Basic |
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$ |
5.32 |
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$ |
6.05 |
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Diluted |
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$ |
5.30 |
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|
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$ |
6.02 |
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Weighted average common shares outstanding: |
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Basic |
|
|
47,505 |
|
|
|
|
|
49,617 |
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Diluted |
|
|
47,667 |
|
|
|
|
|
49,849 |
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Exhibit 2 |
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Consolidated Statements of Income |
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(In thousands, except per share data) |
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26 Weeks Ended |
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2024 |
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2023 |
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|
(Unaudited) |
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(Unaudited) |
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Net sales |
|
$ |
5,277,935 |
|
|
100.0 |
% |
|
$ |
5,164,072 |
|
|
100.0 |
% |
|
Cost of sales |
|
|
3,229,978 |
|
|
61.2 |
% |
|
|
3,115,603 |
|
|
60.3 |
% |
|
Gross profit |
|
|
2,047,957 |
|
|
38.8 |
% |
|
|
2,048,469 |
|
|
39.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Selling, general and administrative expenses |
|
|
1,310,734 |
|
|
24.8 |
% |
|
|
1,212,821 |
|
|
23.5 |
% |
|
Pre-opening expenses |
|
|
7,074 |
|
|
0.1 |
% |
|
|
1,936 |
|
|
0.0 |
% |
|
Operating income |
|
|
730,149 |
|
|
13.8 |
% |
|
|
833,712 |
|
|
16.1 |
% |
|
Interest income, net |
|
|
(11,426 |
) |
|
(0.2 |
%) |
|
|
(11,797 |
) |
|
(0.2 |
%) |
|
Income before income taxes |
|
|
741,575 |
|
|
14.1 |
% |
|
|
845,509 |
|
|
16.4 |
% |
|
Income tax expense |
|
|
175,906 |
|
|
3.3 |
% |
|
|
198,356 |
|
|
3.8 |
% |
|
Net income |
|
$ |
565,669 |
|
|
10.7 |
% |
|
$ |
647,153 |
|
|
12.5 |
% |
|
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|
|
|
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Net income per common share: |
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|
|
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Basic |
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$ |
11.83 |
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|
|
|
$ |
12.97 |
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Diluted |
|
$ |
11.78 |
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|
|
$ |
12.90 |
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Weighted average common shares outstanding: |
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|
|
|
|
|
|
|
|
|
||||
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Basic |
|
|
47,815 |
|
|
|
|
|
49,885 |
|
|
|
||
|
Diluted |
|
|
48,022 |
|
|
|
|
|
50,157 |
|
|
|
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|
Exhibit 3 |
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Condensed Consolidated Balance Sheets |
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(In thousands) |
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|
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|
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|
|||
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|
2024 |
|
2024 |
|
2023 |
|||
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|
(Unaudited) |
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(Unaudited) |
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Assets |
|
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|
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Current assets: |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
413,962 |
|
$ |
766,594 |
|
$ |
388,627 |
|
Receivables, net |
|
|
200,863 |
|
|
207,939 |
|
|
174,444 |
|
Merchandise inventories, net |
|
|
1,998,286 |
|
|
1,742,136 |
|
|
1,815,539 |
|
Prepaid expenses and other current assets |
|
|
132,023 |
|
|
115,598 |
|
|
110,524 |
|
Prepaid income taxes |
|
|
53,607 |
|
|
4,251 |
|
|
30,114 |
|
Total current assets |
|
|
2,798,741 |
|
|
2,836,518 |
|
|
2,519,248 |
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
1,225,850 |
|
|
1,182,335 |
|
|
1,073,144 |
|
Operating lease assets |
|
|
1,599,735 |
|
|
1,574,530 |
|
|
1,549,146 |
|
|
|
|
10,870 |
|
|
10,870 |
|
|
10,870 |
|
Other intangible assets, net |
|
|
357 |
|
|
510 |
|
|
718 |
|
Deferred compensation plan assets |
|
|
46,280 |
|
|
43,516 |
|
|
40,087 |
|
Other long-term assets |
|
|
55,575 |
|
|
58,732 |
|
|
55,547 |
|
Total assets |
|
$ |
5,737,408 |
|
$ |
5,707,011 |
|
$ |
5,248,760 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
566,904 |
|
$ |
544,001 |
|
$ |
521,315 |
|
Accrued liabilities |
|
|
348,042 |
|
|
382,468 |
|
|
328,247 |
|
Deferred revenue |
|
|
394,987 |
|
|
436,591 |
|
|
354,253 |
|
Current operating lease liabilities |
|
|
281,301 |
|
|
283,821 |
|
|
287,359 |
|
Accrued income taxes |
|
|
— |
|
|
11,310 |
|
|
— |
|
Total current liabilities |
|
|
1,591,234 |
|
|
1,658,191 |
|
|
1,491,174 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-current operating lease liabilities |
|
|
1,647,698 |
|
|
1,627,271 |
|
|
1,593,040 |
|
Deferred income taxes |
|
|
88,461 |
|
|
85,921 |
|
|
56,012 |
|
Other long-term liabilities |
|
|
61,855 |
|
|
56,300 |
|
|
56,657 |
|
Total liabilities |
|
|
3,389,248 |
|
|
3,427,683 |
|
|
3,196,883 |
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
2,348,160 |
|
|
2,279,328 |
|
|
2,051,877 |
|
Total liabilities and stockholders’ equity |
|
$ |
5,737,408 |
|
$ |
5,707,011 |
|
$ |
5,248,760 |
|
Exhibit 4 |
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Condensed Consolidated Statements of Cash Flows |
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(In thousands) |
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26 Weeks Ended |
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|
2024 |
|
2023 |
||||
|
|
|
(Unaudited) |
|
(Unaudited) |
||||
|
Operating activities |
|
|
|
|
|
|
||
|
Net income |
|
$ |
565,669 |
|
|
$ |
647,153 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
|
Depreciation and amortization |
|
|
130,053 |
|
|
|
119,862 |
|
|
Non-cash lease expense |
|
|
163,481 |
|
|
|
152,867 |
|
|
Deferred income taxes |
|
|
2,540 |
|
|
|
666 |
|
|
Stock-based compensation expense |
|
|
19,272 |
|
|
|
21,539 |
|
|
Loss on disposal of property and equipment |
|
|
5,204 |
|
|
|
3,878 |
|
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
||
|
Receivables |
|
|
7,076 |
|
|
|
24,978 |
|
|
Merchandise inventories |
|
|
(256,150 |
) |
|
|
(212,088 |
) |
|
Prepaid expenses and other current assets |
|
|
(16,425 |
) |
|
|
19,722 |
|
|
Income taxes |
|
|
(60,666 |
) |
|
|
8,194 |
|
|
Accounts payable |
|
|
29,715 |
|
|
|
(38,752 |
) |
|
Accrued liabilities |
|
|
(33,634 |
) |
|
|
(102,763 |
) |
|
Deferred revenue |
|
|
(41,604 |
) |
|
|
(40,424 |
) |
|
Operating lease liabilities |
|
|
(170,779 |
) |
|
|
(163,527 |
) |
|
Other assets and liabilities |
|
|
15,127 |
|
|
|
(12,497 |
) |
|
Net cash provided by operating activities |
|
|
358,879 |
|
|
|
428,808 |
|
|
|
|
|
|
|
|
|
||
|
Investing activities |
|
|
|
|
|
|
||
|
Capital expenditures |
|
|
(186,301 |
) |
|
|
(204,748 |
) |
|
Other investments |
|
|
(5,091 |
) |
|
|
(1,687 |
) |
|
Net cash used in investing activities |
|
|
(191,392 |
) |
|
|
(206,435 |
) |
|
|
|
|
|
|
|
|
||
|
Financing activities |
|
|
|
|
|
|
||
|
Repurchase of common shares |
|
|
(501,768 |
) |
|
|
(559,011 |
) |
|
Stock options exercised |
|
|
9,196 |
|
|
|
9,147 |
|
|
Purchase of treasury shares |
|
|
(23,459 |
) |
|
|
(21,759 |
) |
|
Debt issuance costs |
|
|
(4,088 |
) |
|
|
— |
|
|
Net cash used in financing activities |
|
|
(520,119 |
) |
|
|
(571,623 |
) |
|
|
|
|
|
|
|
|
||
|
Net decrease in cash and cash equivalents |
|
|
(352,632 |
) |
|
|
(349,250 |
) |
|
Cash and cash equivalents at beginning of period |
|
|
766,594 |
|
|
|
737,877 |
|
|
Cash and cash equivalents at end of period |
|
$ |
413,962 |
|
|
$ |
388,627 |
|
|
Exhibit 5 |
||||||||
|
|
||||||||
|
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 2024 |
|
quarter |
|
quarter |
|
quarter |
|
end of the quarter |
|
1st Quarter |
|
1,385 |
|
12 |
|
2 |
|
1,395 |
|
2nd Quarter |
|
1,395 |
|
17 |
|
1 |
|
1,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 2024 |
|
the quarter |
|
quarter |
|
during the quarter |
|
quarter |
|
1st Quarter |
|
14,515,593 |
|
114,786 |
|
15,615 |
|
14,614,764 |
|
2nd Quarter |
|
14,614,764 |
|
178,624 |
|
10,800 |
|
14,782,588 |
|
Exhibit 6 |
||||
|
|
||||
|
Sales by Category |
||||
|
|
||||
|
The following tables set forth the approximate percentage of net sales by primary category: |
||||
|
|
|
|
|
|
|
|
|
13 Weeks Ended |
||
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
|
Cosmetics |
|
39% |
|
40% |
|
Skincare |
|
24% |
|
23% |
|
Haircare |
|
20% |
|
22% |
|
Fragrance |
|
11% |
|
9% |
|
Services |
|
4% |
|
4% |
|
Other |
|
2% |
|
2% |
|
|
|
100% |
|
100% |
|
|
|
|
|
|
|
|
|
26 Weeks Ended |
||
|
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
Cosmetics |
|
40% |
|
42% |
|
Skincare |
|
24% |
|
22% |
|
Haircare |
|
19% |
|
21% |
|
Fragrance |
|
11% |
|
9% |
|
Services |
|
4% |
|
4% |
|
Other |
|
2% |
|
2% |
|
|
|
100% |
|
100% |
Certain sales departments were reclassified between categories in the prior year to conform to current year presentation, including moving the bath category from Fragrance to Skincare.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240829270411/en/
Investor Contact:
Vice President, Investor Relations
krawlins@ulta.com
Media Contact:
Senior Director, Public Relations
ccarroll@ulta.com
Source:
