Company Contacts:
Scott Settersten
Chief Financial Officer
(630) 410-4807
or
Laurel Lefebvre
Vice President, Investor Relations
(630) 410-5230
or
Media Contact:
DKC
Juliet Horn
(212) 981-5221
Total Sales Increased 24.8%
Comparable Store Sales Increased 8.4%
Diluted EPS Increased 29.6% to $0.70
Ulta Beauty (ULTA) today announced financial results for the thirteen week period (“Second Quarter”) and twenty-six week period (“First Six Months”) ended August 3, 2013, which compares to the same periods ended July 28, 2012.
“The Ulta Beauty team delivered a very strong quarter while moving our growth strategy forward,” stated Mary Dillon, Chief Executive Officer. “Ulta Beauty added several new brands to its stores; we further expanded the number of Clinique and Lancôme boutiques; we drove rapid growth in our e-commerce business; and we achieved record membership in our loyalty program. I am incredibly excited about the future potential of Ulta Beauty, and I look forward to working with the team to build on the solid foundation they have built.”
For the Second Quarter:
For the First Six Months:
Balance Sheet and Cash Flow
Merchandise inventories at the end of the second quarter of fiscal 2013 totaled $461.2 million, compared to $316.7 million at the end of the second quarter of fiscal 2012, representing an increase of $144.5 million. The increase in inventory is primarily due to the addition of 120 net new stores opened since July 28, 2012. Average inventory per store increased 16.9% for the second quarter of fiscal 2013 compared to the second quarter of fiscal 2012. This increase is primarily due to incremental inventory related to the recently added prestige brand boutiques, new brand additions and the expansion of e-commerce fulfillment to the Chambersburg, PA distribution center.
Store Expansion
During the second quarter, the Company opened 33 stores located in Alameda, CA; Benton Harbor, MI; Billings, MT; Canton, OH; Chicago, IL; Cincinnati, OH; Clarksville, TN; Delray Beach, FL; Eastvale, CA; El Centro, CA; Foxborough, MA; Gaylord, MI; Gilroy, CA; Grand Rapids, MI; Helena, MT; Leesburg, VA; Martinsburg, WV; Midlothian, VA; Morehead City, NC; Newport, KY; Norcross, GA; North Port, FL; Petaluma, CA; Philadelphia, PA; Pocatello, ID; Portland, OR; Rock Hill, SC; Royal Oak, MI; St. Joseph, MO; State College, PA; Tracy, CA; Vineland, NJ and Visalia, CA and relocated one store in Sacramento, CA. The Company ended the second quarter with 609 stores and square footage of 6,476,445, which represents a 25% increase in square footage compared to the second quarter of fiscal 2012.
Outlook
For the third quarter of fiscal 2013, the Company currently expects net sales in the range of $613 million to $623 million, compared to actual net sales of $505.6 million in the third quarter of fiscal 2012. Comparable store sales for the third quarter of 2013 are expected to increase 5% to 7%. The Company reported a comparable store sales increase of 8.4% in the third quarter of 2012.
Income per diluted share for the third quarter of fiscal 2013 is estimated to be in the range of $0.71 to $0.74. This compares to income per diluted share for the third quarter of fiscal 2012 of $0.59.
The Company is confirming its previously announced fiscal 2013 earnings guidance. The Company plans to:
Conference Call Information
A conference call to discuss second quarter results is scheduled for today, September 12, 2013, at 5:00 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 705-6003. The conference call will also be web-cast live at http://ir.ulta.com and remain available for 90 days. A replay of this call will be available until 11:59 p.m. (ET) on September 26, 2013 and can be accessed by dialing (877) 870-5176 and entering conference ID number 420117.
About Ulta Beauty
Ulta Beauty is the largest beauty retailer that provides one-stop shopping for prestige, mass and salon products and salon services in the United States. Ulta Beauty provides affordable indulgence to its customers by combining unmatched product breadth, value and convenience with the distinctive environment and experience of a specialty retailer. Ulta Beauty offers a unique combination of over 20,000 prestige and mass beauty products across the categories of cosmetics, fragrance, haircare, skincare, bath and body products and salon styling tools, as well as salon haircare products. Ulta Beauty also offers a full-service salon in all of its stores. As of August 3, 2013, Ulta operates 609 retail stores across 46 states and also distributes its products through the Company’s website: 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 our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “plans,” “estimates,” or other comparable words. Any forward-looking statements contained in this press release are based upon our historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties, which include, without limitation: the impact of weakness in the economy; changes in the overall level of consumer spending; changes in the wholesale cost of our products; the possibility that we may be unable to compete effectively in our highly competitive markets; the possibility that our continued opening of new stores could strain our resources and have a material adverse effect on our business and financial performance; the possibility that new store openings and existing locations may be impacted by developer or co-tenant issues; the possibility that the capacity of our distribution and order fulfillment infrastructure may not be adequate to support our recent growth and expected future growth plans; the possibility of material disruptions to our information systems; weather conditions that could negatively impact sales; our ability to attract and retain key executive personnel; our ability to successfully execute and implement our common stock repurchase program; and other risk factors detailed in our public filings with the Securities and Exchange Commission (SEC), including risk factors contained in our Annual Report on Form 10-K for the fiscal year ended February 2, 2013. Our filings with the SEC are available at www.sec.gov. 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 |
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Ulta Salon, Cosmetics & Fragrance, Inc. |
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Consolidated Statements of Income |
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(In thousands, except per share amounts) |
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13 Weeks Ended | 13 Weeks Ended | ||||||||||||
August 3, | July 28, | ||||||||||||
2013 | 2012 | ||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||
Net sales | $ | 600,998 | 100.0 | % | $ | 481,683 | 100.0 | % | |||||
Cost of sales | 388,921 | 64.7 | % | 314,058 | 65.2 | % | |||||||
Gross profit | 212,077 | 35.3 | % | 167,625 | 34.8 | % | |||||||
Selling, general and administrative expense | 134,400 | 22.4 | % | 106,040 | 22.0 | % | |||||||
Pre-opening expenses | 4,809 | 0.8 | % | 4,126 | 0.9 | % | |||||||
Operating income | 72,868 | 12.1 | % | 57,459 | 11.9 | % | |||||||
Interest (income) expense | (18 | ) | 0.0 | % | 104 | 0.0 | % | ||||||
Income before income taxes | 72,886 | 12.1 | % | 57,355 | 11.9 | % | |||||||
Income tax expense | 27,975 | 4.7 | % | 22,357 | 4.6 | % | |||||||
Net income | $ | 44,911 | 7.5 | % | $ | 34,998 | 7.3 | % | |||||
Net income per common share: | |||||||||||||
Basic | $ | 0.70 | $ | 0.55 | |||||||||
Diluted | $ | 0.70 | $ | 0.54 | |||||||||
Weighted average common shares outstanding: | |||||||||||||
Basic | 63,834 | 63,070 | |||||||||||
Diluted | 64,331 | 64,293 |
Exhibit 2 |
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Ulta Salon, Cosmetics & Fragrance, Inc. |
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Consolidated Statements of Income |
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(In thousands, except per share amounts) |
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26 Weeks Ended | 26 Weeks Ended | ||||||||||||
August 3, | July 28, | ||||||||||||
2013 | 2012 | ||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||
Net sales | $ | 1,183,710 | 100.0 | % | $ | 955,781 | 100.0 | % | |||||
Cost of sales | 767,684 | 64.9 | % | 617,244 | 64.6 | % | |||||||
Gross profit | 416,026 | 35.1 | % | 338,537 | 35.4 | % | |||||||
Selling, general and administrative expense | 267,448 | 22.6 | % | 216,983 | 22.7 | % | |||||||
Pre-opening expenses | 8,015 | 0.7 | % | 6,649 | 0.7 | % | |||||||
Operating income | 140,563 | 11.9 | % | 114,905 | 12.0 | % | |||||||
Interest (income) expense | (42 | ) | 0.0 | % | 125 | 0.0 | % | ||||||
Income before income taxes | 140,605 | 11.9 | % | 114,780 | 12.0 | % | |||||||
Income tax expense | 53,868 | 4.6 | % | 44,914 | 4.7 | % | |||||||
Net income | $ | 86,737 | 7.3 | % | $ | 69,866 | 7.3 | % | |||||
Net income per common share: | |||||||||||||
Basic | $ | 1.36 | $ | 1.11 | |||||||||
Diluted | $ | 1.35 | $ | 1.09 | |||||||||
Weighted average common shares outstanding: | |||||||||||||
Basic | 63,838 | 62,782 | |||||||||||
Diluted | 64,362 | 64,202 | |||||||||||
Dividends declared per common share | $ | - | $ | 1.00 |
Exhibit 3 |
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Ulta Salon, Cosmetics & Fragrance, Inc. |
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Condensed Consolidated Balance Sheets |
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(In thousands) |
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August 3, | February 2, | July 28, | |||||||
2013 | 2013 | 2012 | |||||||
(Unaudited) | (Unaudited) | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 286,210 | $ | 320,475 | $ | 197,401 | |||
Receivables, net | 30,998 | 41,515 | 32,279 | ||||||
Merchandise inventories, net | 461,156 | 361,125 | 316,734 | ||||||
Prepaid expenses and other current assets | 51,992 | 50,452 | 46,345 | ||||||
Prepaid income taxes | 1,111 | – | 12,690 | ||||||
Deferred income taxes | 15,320 | 15,757 | 12,257 | ||||||
Total current assets | 846,787 | 789,324 | 617,706 | ||||||
Property and equipment, net | 541,557 | 483,059 | 421,063 | ||||||
Deferred compensation plan assets | 3,648 | 2,866 | – | ||||||
Total assets | $ | 1,391,992 | $ | 1,275,249 | $ | 1,038,769 | |||
Liabilities and stockholders’ equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 130,738 | $ | 118,886 | $ | 88,881 | |||
Accrued liabilities | 102,007 | 92,127 | 80,507 | ||||||
Accrued income taxes | – | 10,054 | – | ||||||
Total current liabilities | 232,745 | 221,067 | 169,388 | ||||||
Deferred rent | 239,179 | 208,003 | 186,486 | ||||||
Deferred income taxes | 55,492 | 56,361 | 43,210 | ||||||
Other long-term liabilities | 4,114 | 2,876 | – | ||||||
Total liabilities | 531,530 | 488,307 | 399,084 | ||||||
Commitments and contingencies | |||||||||
Total stockholders’ equity | 860,462 | 786,942 | 639,685 | ||||||
Total liabilities and stockholders’ equity | $ | 1,391,992 | $ | 1,275,249 | $ | 1,038,769 |
Exhibit 4 |
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Ulta Salon, Cosmetics & Fragrance, Inc. |
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Consolidated Statements of Cash Flows |
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(In thousands) |
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26 Weeks Ended | ||||||||
August 3, | July 28, | |||||||
2013 | 2012 | |||||||
(Unaudited) | ||||||||
Operating activities | ||||||||
Net income | $ | 86,737 | $ | 69,866 | ||||
Adjustments to reconcile net income to net cash | ||||||||
provided by operating activities: | ||||||||
Depreciation and amortization | 50,747 | 42,614 | ||||||
Deferred income taxes | (432 | ) | (978 | ) | ||||
Non-cash stock compensation charges | 7,539 | 6,346 | ||||||
Excess tax benefits from stock-based compensation | (6,699 | ) | (27,788 | ) | ||||
Loss on disposal of property and equipment | 2,030 | 447 | ||||||
Change in operating assets and liabilities: | ||||||||
Receivables | 10,517 | (6,126 | ) | |||||
Merchandise inventories | (100,031 | ) | (72,087 | ) | ||||
Prepaid expenses and other current assets | (1,540 | ) | (2,915 | ) | ||||
Income taxes | (4,466 | ) | 11,096 | |||||
Accounts payable | 11,852 | 2,439 | ||||||
Accrued liabilities | (3,366 | ) | (9,705 | ) | ||||
Deferred rent | 31,176 | 23,023 | ||||||
Other assets and liabilities |
456 | – | ||||||
Net cash provided by operating activities | 84,520 | 36,232 | ||||||
Investing activities | ||||||||
Purchases of property and equipment | (98,029 | ) | (71,338 | ) | ||||
Net cash used in investing activities | (98,029 | ) | (71,338 | ) | ||||
Financing activities | ||||||||
Repurchase of common shares | (37,337 | ) | – | |||||
Dividends paid | – | (62,482 | ) | |||||
Excess tax benefits from stock-based compensation | 6,699 | 27,788 | ||||||
Stock options exercised | 10,007 | 13,514 | ||||||
Purchase of treasury shares |
(125 | ) | (51 | ) | ||||
Net cash used in financing activities | (20,756 | ) | (21,231 | ) | ||||
Net decrease in cash and cash equivalents | (34,265 | ) | (56,337 | ) | ||||
Cash and cash equivalents at beginning of period | 320,475 | 253,738 | ||||||
Cash and cash equivalents at end of period | $ | 286,210 | $ | 197,401 |
Exhibit 5 |
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2013 Store Expansion |
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Total stores open | Number of stores | Number of stores | ||||||
at beginning of | opened during the | closed during the | Total stores open at | |||||
Fiscal 2013 | the quarter | quarter | quarter | end of the quarter | ||||
1st Quarter | 550 | 28 | 2 | 576 | ||||
2nd Quarter | 576 | 33 | 0 | 609 | ||||
Gross square feet for | ||||||||
Total gross square | stores opened or | Gross square feet | Total gross square | |||||
feet at beginning | expanded during the | for stores closed | feet at end of the | |||||
Fiscal 2013 | of the quarter | quarter | during the quarter | quarter | ||||
1st Quarter | 5,847,393 | 298,083 | 24,077 | 6,121,399 | ||||
2nd Quarter | 6,121,399 | 355,046 | 0 | 6,476,445 | ||||