Total Sales Increased 22.5%
Comparable Sales Increased 14.3%
Diluted EPS Increased 41.4% to $2.05,
Including a $0.14 Tax Rate Benefit
Company Raises Guidance for Fiscal Year
2017
Ulta Beauty (NASDAQ:ULTA) today announced financial results for
the thirteen week period ended April 29, 2017 (“First Quarter”),
which compares to the same period ended April 30, 2016.
“The Ulta Beauty team kicked off 2017 with excellent performance
in the first quarter,” said Mary Dillon, Chief Executive Officer.
“Strong execution of our growth strategies delivered above plan
sales and earnings growth. Our results reflect continued newness
and innovation in merchandising, successful marketing programs,
steady progress in our salon business and exceptional growth in
e-commerce.”
Diluted EPS increased 41.4% to $2.05, including $0.14 per
diluted share primarily due to the adoption of a new accounting
standard for employee share-based payments, compared to $1.45 in
the first quarter of fiscal 2016. Excluding the $0.14 per diluted
share tax rate benefit, diluted EPS increased 31.7% to $1.91.
For the First Quarter
- Net sales increased 22.5% to $1,314.9
million from $1,073.7 million in the first quarter of fiscal
2016;
- Comparable sales (sales for stores open
at least 14 months and e-commerce sales) increased 14.3% compared
to an increase of 15.2% in the first quarter of fiscal 2016. The
14.3% comparable sales increase was driven by 8.7% transaction
growth and 5.6% growth in average ticket;
- Retail comparable sales increased
10.9%, including salon comparable sales growth of 9.9%;
- Salon sales increased 16.7% to $68.7
million from $58.9 million in the first quarter of fiscal
2016;
- E-commerce sales grew 70.9% to $104.3
million from $61.0 million in the first quarter of fiscal 2016,
representing 340 basis points of the total company comparable sales
increase of 14.3%;
- Gross profit as a percentage of net
sales decreased 20 basis points to 36.2% from 36.4% in the first
quarter of fiscal 2016, due to planned supply chain investments and
a higher mix of e-commerce sales, partly offset by leverage in
fixed store costs;
- Selling, general and administrative
expense as a percentage of net sales decreased 80 basis points to
21.6%, compared to 22.4% in the first quarter of 2016, due to
leverage of advertising and corporate overhead expenses attributed
to higher sales volume;
- Pre-opening expenses increased to $4.2
million, compared to $2.5 million in the first quarter of fiscal
2016. Real estate activity in the first quarter of fiscal 2017
included 18 new stores, two relocations and one remodel compared to
13 new stores in the first quarter of fiscal 2016;
- Operating income increased 28.0% to
$188.4 million, or 14.3% of net sales, compared to $147.2 million,
or 13.7% of net sales, in the first quarter of fiscal 2016;
- Tax rate decreased to 32.1% compared to
37.6% in the first quarter of fiscal 2016. The decrease was
primarily due to the adoption of a new accounting standard for
employee share-based payments; and
- Net income increased 39.4% to $128.2
million compared to $92.0 million in the first quarter of fiscal
2016.
Balance Sheet
Merchandise inventories at the end of the first quarter of
fiscal 2017 totaled $1,048.4 million, compared to $843.5 million at
the end of the first quarter of fiscal 2016, representing an
increase of $204.9 million. Average inventory per store increased
11.2%, compared to the first quarter of fiscal 2016. The increase
in inventory was driven by 104 net new stores, the scaling up of
the Greenwood, Indiana and the opening of the Dallas, Texas
distribution centers, investments in inventory to ensure high
in-stock levels to support sales growth, and incremental inventory
for new brands and the expansion of certain prestige brands.
The Company ended the first quarter of fiscal 2017 with $471.7
million in cash and short-term investments.
Share Repurchase Program
During the first quarter of fiscal 2017, the Company repurchased
184,667 shares of its stock at a cost of $51.6 million. As of April
29, 2017, approximately $394.5 million remained available under the
$425 million share repurchase program announced in March 2017.
Store Expansion
During the first quarter of fiscal 2017, the Company opened 18
stores located in Avon, IN; Cedar Park, TX; Chicago, IL;
Gloucester, VA; Gretna, NE; Hattiesburg, MS; Hinesville, GA;
Liberty, MO; Mobile, AL; New Philadelphia, OH; Owings Mills, MD;
Santa Monica, CA; Seattle, WA; Sherman Oaks, CA; Spring, TX;
Trussville, AL; Whittier, CA; and Yukon, OK. In addition, the
Company closed two stores. The Company ended the first quarter of
fiscal 2017 with 990 stores and square footage of 10,433,185, which
represents a 12% increase in square footage compared to the first
quarter of fiscal 2016.
Outlook
For the second quarter of fiscal 2017, the Company currently
expects net sales in the range of $1,257 million to $1,278 million,
compared to actual net sales of $1,069.2 million in the second
quarter of fiscal 2016. Comparable sales for the second quarter of
2017, including e-commerce sales, are expected to increase 10% to
12%. The Company reported a comparable sales increase of 14.4% in
the second quarter of 2016.
Income per diluted share for the second quarter of fiscal 2017
is estimated to be in the range of $1.72 to $1.77. This assumes a
tax rate of 37.5% and excludes any impact of the new accounting
standard for share-based payments. This compares to income per
diluted share for the second quarter of fiscal 2016 of $1.43.
The Company is raising its previously announced fiscal 2017
comparable sales and earnings per share guidance.
For fiscal 2017, the Company plans to:
- achieve comparable sales growth of
approximately 9% to 11%, including the impact of the e-commerce
business, compared to previous guidance of 8% to 10%;
- grow e-commerce sales in the 50% range,
compared to previous guidance of 40%;
- open approximately 100 net new
stores;
- remodel 11 locations and relocate 6
stores;
- deliver earnings per share growth in
the mid-twenties percent range, compared to previous guidance of
low twenties percent range. This includes the impact of the 53rd
week, the impact of approximately $300 million in share
repurchases, and the impact of the tax rate benefit recorded in the
first quarter, and excludes any tax rate impact from the new
accounting standard related to share-based payment for the rest of
the year; and
- incur capital expenditures in the $460
million range in fiscal 2017, compared to $374 million in fiscal
2016. The planned increase in capital expenditures includes
approximately $80 million to fund prestige brand expansions.
Conference Call Information
A conference call to discuss first quarter results is scheduled
for today, May 25, 2017, 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 June 8, 2017
and can be accessed by dialing (844) 512-2921 and entering
conference ID number 13661770.
About Ulta Beauty
Ulta Beauty (NASDAQ: ULTA) is the largest beauty retailer in the
United States and the premier beauty destination for cosmetics,
fragrance, skin, hair care products and salon services. Since
opening its first store in 1990, Ulta Beauty has grown to become
the top national retailer providing All Things Beauty. All in One
Place™. The Company offers more than 20,000 products from
approximately 500 well-established and emerging beauty brands
across all categories and price points, including Ulta Beauty’s own
private label. Ulta Beauty also offers a full-service salon in
every store featuring hair, skin and brow services. Ulta Beauty is
recognized for its commitment to personalized service, fun and
inviting stores and its industry-leading Ultamate Rewards loyalty
program. As of April 29, 2017, Ulta Beauty operates 990 retail
stores across 48 states and the District of Columbia 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 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,” “targets,”
“strategies” 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, targets, strategies 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; the possibility that we may be unable to compete
effectively in our highly competitive markets; the possibility that
cybersecurity breaches and other disruptions could compromise our
information or result in the unauthorized disclosure of
confidential information; weather conditions that could negatively
impact sales; our ability to gauge beauty trends and react to
changing consumer preferences in a timely manner; our ability to
attract and retain key executive personnel; the possibility that
the capacity of our distribution and order fulfillment
infrastructure and the performance of our newly opened and to be
opened distribution centers may not be adequate to support our
recent growth and expected future growth plans; our ability to
sustain our growth plans and successfully implement our long-range
strategic and financial plan; 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 of material disruptions to our information systems;
changes in the wholesale cost of our products; the possibility that
new store openings and existing locations may be impacted by
developer or co-tenant issues; customer acceptance of our rewards
program and technological and marketing initiatives; our ability to
successfully execute our common stock repurchase program or
implement future common stock repurchase programs; and other risk
factors detailed in our public filings with the Securities and
Exchange Commission (the “SEC”), including risk factors contained
in our Annual Report on Form 10-K for the fiscal year ended January
28, 2017, as such may be amended or supplemented in our
subsequently filed Quarterly Reports on Form 10-Q. Our 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 13 Weeks Ended April
29, April 30, 2017 2016 (Unaudited)
(Unaudited) Net sales $ 1,314,879 100.0 % $
1,073,716 100.0 % Cost of sales 838,871
63.8 % 683,286 63.6 %
Gross profit 476,008 36.2 % 390,430 36.4 % Selling, general
and administrative expenses 283,445 21.6 % 240,724 22.4 %
Pre-opening expenses 4,158 0.3 %
2,542 0.2 % Operating income 188,405 14.3 %
147,164 13.7 % Interest income, net (338 ) 0.0
% (315 ) 0.0 % Income before income taxes
188,743 14.3 % 147,479 13.7 % Income tax expense 60,520
4.6 % 55,503 5.2 %
Net income $ 128,223 9.8 % $ 91,976
8.6 % Net income per common share: Basic $
2.06 $ 1.46 Diluted $ 2.05 $ 1.45 Weighted average common
shares outstanding: Basic 62,101 63,031 Diluted 62,594 63,335
Exhibit 2
Ulta Beauty, Inc.
Condensed Consolidated Balance
Sheets
(In thousands)
April 29, January 28,
April 30, 2017 2017 2016
(Unaudited) (Unaudited) Assets Current assets:
Cash and cash equivalents $ 321,725 $ 385,010 $ 239,254 Short-term
investments 150,000 30,000 130,000 Receivables, net 62,936 88,631
54,112 Merchandise inventories, net 1,048,431 943,975 843,490
Prepaid expenses and other current assets 89,880
88,621 71,561 Total current assets 1,672,972
1,536,237
1,338,417
Property and equipment, net 1,020,853 1,004,358 870,835
Deferred compensation plan assets 13,776
11,283 9,698 Total assets $ 2,707,601 $
2,551,878 $ 2,218,950
Liabilities and
stockholders’ equity Current liabilities: Accounts payable $
319,352 $ 259,518 $ 266,278 Accrued liabilities 210,379 260,854
179,300 Accrued income taxes 54,521 8,971
50,156 Total current liabilities 584,252 529,343
495,734 Deferred rent 372,478 366,191 330,121 Deferred
income taxes 86,766 86,498 59,977 Other long-term liabilities
22,448 19,628 13,430 Total
liabilities 1,065,944 1,001,660 899,262 Commitments and
contingencies Total stockholders’ equity 1,641,657
1,550,218 1,319,688 Total liabilities
and stockholders’ equity $ 2,707,601 $ 2,551,878 $
2,218,950
Exhibit 3
Ulta Beauty, Inc.
Consolidated Statements of Cash
Flows
(In thousands)
13 Weeks Ended April 29, April
30, 2017 2016 (Unaudited)
Operating activities Net income $ 128,223 $ 91,976
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 62,476 47,887
Deferred income taxes 268 450 Non-cash stock compensation charges
5,491 4,022 Excess tax benefits from stock-based compensation –
(3,203 ) Loss on disposal of property and equipment 1,637 812
Change in operating assets and liabilities: Receivables 25,695
10,880 Merchandise inventories (104,456 ) (81,697 ) Prepaid
expenses and other current assets (1,259 ) 987 Income taxes 45,550
40,657 Accounts payable 59,834 70,104 Accrued liabilities (54,329 )
(25,664 ) Deferred rent 6,287 8,332 Other assets and liabilities
327 1,388 Net cash provided by
operating activities 175,744 166,931
Investing
activities Purchases of short-term investments (120,000 ) –
Purchases of property and equipment (76,754 ) (54,321
) Net cash used in investing activities (196,754 ) (54,321 )
Financing activities Repurchase of common shares (51,597 )
(226,666 ) Stock options exercised 11,831 6,209 Excess tax benefits
from stock-based compensation – 3,203 Purchase of treasury shares
(2,509 ) (1,942 ) Net cash used in financing
activities (42,275 ) (219,196 ) Net decrease
in cash and cash equivalents (63,285 ) (106,586 ) Cash and cash
equivalents at beginning of period 385,010
345,840 Cash and cash equivalents at end of period $ 321,725
$ 239,254
Exhibit 4
2017 Store
Expansion
Fiscal 2017
Total stores open
at beginning of the
quarter
Number of stores
opened during the
quarter
Number of stores
closed during the
quarter
Total stores open
at end of the quarter
1st Quarter 974 18 2 990
Fiscal 2017
Total gross square
feet at beginning of
the quarter
Gross square feet for
stores opened or
expanded during the
quarter
Gross square feet for
stores closed
during the quarter
Total gross square
feet at end of the
quarter
1st Quarter 10,271,184 184,833 22,832 10,433,185
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170525006024/en/
Ulta BeautyScott SetterstenChief Financial Officer(630)
410-4807orLaurel LefebvreVice President, Investor Relations(630)
410-5230orKaren MayDirector, Public Relations(630) 410-5457
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