EX-99.1 2 d690979dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

 

 

Company Contacts:

Scott Settersten

Chief Financial Officer

(630) 410-4807

 
  Laurel Lefebvre
  Vice President, Investor Relations
  (630) 410-5230
 
  Media Contact:
  DKC
  Juliet Horn
  (212) 981-5221

ULTA BEAUTY ANNOUNCES FOURTH QUARTER 2013 RESULTS

Total Sales Increased 14.4% or 23.3% Excluding the 53rd Week of Fiscal 2012

Comparable Sales Increased 9.2%

Diluted EPS Increased 9.0% to $1.09 or 14.7% Excluding the 53rd Week of Fiscal 2012

Bolingbrook, IL – March 13, 2014 – Ulta Beauty [NASDAQ:ULTA] today announced financial results for the thirteen week period (“Fourth Quarter”) and fifty-two week period (“Fiscal Year”) ended February 1, 2014, which compares to the fourteen and fifty-three week periods ended February 2, 2013.

“Ulta Beauty achieved excellent top line growth in the fourth quarter,” said Mary Dillon, Chief Executive Officer. “We delivered earnings growth consistent with our expectations and made significant progress with our key growth strategies. I am very proud of the team’s accomplishments during 2013, including the completion of the most ambitious store opening program in our company’s history; the addition of 25 significant new brands contributing to 7.9% annual comparable store sales growth; exciting growth in our loyalty program, now 13 million members strong; and rapid growth in Ulta.com driven by major steps forward in our e-commerce platform and fulfillment capabilities.”

For the Fourth Quarter:

 

    Net sales increased 14.4% to $868.1 million from $758.8 million in the fourth quarter of fiscal 2012. Excluding the sales for the 53rd week of fiscal 2012 of approximately $55 million, sales increased 23.3%;

 

    Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 9.2% compared to an increase of 8.6% in the fourth quarter of fiscal 2012. This comparable sales performance benefited by approximately 200 basis points due to the negative impact of Super Storm Sandy and the timing impact of the 53rd week of fiscal 2012.


    E-commerce comparable sales grew 82.5%, representing 260 basis points of the total company comparable sales increase of 9.2%;

 

    Gross profit decreased 40 basis points to 33.8% from 34.2% in the fourth quarter of fiscal 2012;

 

    Selling, general and administrative (SG&A) expense as a percentage of net sales increased 20 basis points to 20.5% compared to 20.3% in the fourth quarter of 2012;

 

    Preopening expenses decreased to $1.8 million, compared to $1.9 million in the fourth quarter of fiscal 2012. Real estate activity in the fourth quarter of fiscal 2013 included 11 new stores compared to 13 new stores and one remodel in the fourth quarter of fiscal 2012;

 

    Operating income increased 10.0% to $114.1 million, or 13.1% of net sales, compared to $103.8 million, or 13.7% of net sales, in the fourth quarter of fiscal 2012;

 

    Net income increased 9.5% to $70.7 million compared to $64.5 million in the fourth quarter of fiscal 2012;

 

    Income per diluted share increased 9.0% to $1.09 compared to $1.00 in the fourth quarter of fiscal 2012. Excluding the approximately $0.05 earnings per share benefit of the 53rd week in fiscal 2012, income per dilutive share increased 14.7%.

For the Fiscal Year 2013:

 

    Net sales increased 20.3% to $2,670.6 million from $2,220.3 million in fiscal 2012. Excluding the sales for the 53rd week in fiscal 2012 of approximately $55 million, sales increased 23.3%;

 

    Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 7.9% compared to an increase of 9.3% in fiscal 2012;

 

    E-commerce comparable sales grew 76.6%, representing 180 basis points of the total company comparable sales increase of 7.9%;

 

    Gross profit decreased 10 basis points to 35.2% compared to 35.3% in fiscal 2012;

 

    SG&A expense as a percentage of net sales increased 30 basis points to 22.3% compared to 22.0% in fiscal 2012;

 

    Pre-opening expense increased to $17.3 million compared to $14.8 million in fiscal 2012. Real estate activity for fiscal 2013 included 127 new stores, 4 relocations and 7 remodels compared to 102 new stores, 3 relocations and 21 remodels in fiscal 2012;

 

    Operating income increased 17.0% to $327.6 million, or 12.3% of net sales, compared to $280.0 million, or 12.6% of net sales, in fiscal 2012;

 

    Net income increased 17.6% to $202.8 million compared to $172.5 million in fiscal 2012;

 

    Income per diluted share increased 17.5% to $3.15 compared to $2.68 in fiscal 2012. Non-GAAP income per diluted share adjusted for severance expense in the third quarter of fiscal 2013 and the impact of the 53rd week in fiscal 2012 increased 20.2%. A reconciliation of GAAP and Non-GAAP results is presented in Exhibit 5.


Balance Sheet and Cash Flow

Merchandise inventories at the end of the fourth quarter of fiscal 2013 totaled $457.9 million, compared to $361.1 million at the end of the fourth quarter of fiscal 2012, representing an increase of $96.8 million. Average inventory per store increased 3.3% for the fourth quarter of fiscal 2013 compared to the fourth quarter of fiscal 2012.

Store Expansion

During the fourth quarter, the Company opened 11 stores located in Capitola, CA; Eureka, CA; Glendale, WI; Irvine, CA; Lafayette, LA; Lakeland, FL; Longview, WA; Manassas, VA; Meriden, CT; Orlando, FL and San Rafael, CA. The Company ended the fourth quarter with 675 stores and square footage of 7,158,286, which represents a 22% increase in square footage compared to the fourth quarter of fiscal 2012.

Outlook

For fiscal 2014, the Company plans to:

 

    achieve comparable sales growth of approximately 4% to 6%, including the impact of the e-commerce business;

 

    expand square footage by 15% with the opening of 100 net new stores;

 

    increase total sales in the mid-teens percentage range;

 

    remodel 12 locations;

 

    deliver earnings per share growth in the mid-teens percentage range, including incremental investments representing approximately $0.10 of earnings per share to fund brand awareness and guest experience initiatives, and excluding any potential accretion from share repurchases;

 

    incur capital expenditures of approximately $265 million in fiscal 2014, compared to $226 million in fiscal 2013; and

 

    generate free cash flow in excess of $100 million.

For the first quarter of fiscal 2014, the Company currently expects net sales in the range of $693 million to $704 million, compared to actual net sales of $582.7 million in the first quarter of fiscal 2013. Comparable sales for the first quarter of 2014, including e-commerce sales, are expected to increase 5% to 7%. The Company reported a comparable sales increase of 6.7% in the first quarter of 2013.

Income per diluted share for the first quarter of fiscal 2014 is estimated to be in the range of $0.70 to $0.75. This compares to income per diluted share for the first quarter of fiscal 2013 of $0.65.

“From a position of strength, we are making important investments to support the long-term growth and success of Ulta Beauty,” said Mary Dillon. “We are building the right supply chain and systems to support 1,200 stores and a much larger e-commerce business, we are developing our customer loyalty programs and CRM capabilities, we are investing in brand awareness to drive new customer acquisition, and we are working to deliver a differentiated customer experience. All of these initiatives are designed to drive sustainable growth and create shareholder value.”


Conference Call Information

A conference call to discuss fourth quarter results is scheduled for today, March 13, 2014, 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 March 27, 2014 and can be accessed by dialing (877) 870-5176 and entering conference ID number 13577241.

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, hair care, skincare, bath and body products and salon styling tools, as well as salon hair care products. Ulta Beauty also offers a full-service salon in all of its stores. As of February 1, 2014, Ulta operates 675 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; our ability to sustain our growth plans and successfully develop and implement our long-range financial and strategic plan; 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

Ulta Salon, Cosmetics & Fragrance, Inc.

Consolidated Statements of Income

(In thousands, except per share amounts)

 

     13 Weeks Ended     14 Weeks Ended  
     February 1,
2014
    February 2,
2013
 
     (Unaudited)     (Unaudited)  

Net sales

   $ 868,082        100.0   $ 758,835         100.0

Cost of sales

     574,521        66.2     499,191         65.8
  

 

 

   

 

 

   

 

 

    

 

 

 

Gross profit

     293,561        33.8     259,644         34.2

Selling, general and administrative expense

     177,636        20.5     153,963         20.3

Pre-opening expenses

     1,787        0.2     1,915         0.3
  

 

 

   

 

 

   

 

 

    

 

 

 

Operating income

     114,138        13.1     103,766         13.7

Interest (income) expense

     (69     0.0     21         0.0
  

 

 

   

 

 

   

 

 

    

 

 

 

Income before income taxes

     114,207        13.2     103,745         13.7

Income tax expense

     43,525        5.0     39,213         5.2
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income

   $ 70,682        8.1   $ 64,532         8.5
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income per common share:

         

Basic

   $ 1.10        $ 1.01      

Diluted

   $ 1.09        $ 1.00      

Weighted average common shares outstanding:

         

Basic

     64,232          63,901      

Diluted

     64,607          64,675      


Exhibit 2

Ulta Salon, Cosmetics & Fragrance, Inc.

Consolidated Statements of Income

(In thousands, except per share amounts)

 

     52 Weeks Ended     53 Weeks Ended  
     February 1,
2014
    February 2,
2013
 
     (Unaudited)               

Net sales

   $ 2,670,573        100.0   $ 2,220,256         100.0

Cost of sales

     1,729,325        64.8     1,436,582         64.7
  

 

 

   

 

 

   

 

 

    

 

 

 

Gross profit

     941,248        35.2     783,674         35.3

Selling, general and administrative expense

     596,390        22.3     488,880         22.0

Pre-opening expenses

     17,270        0.6     14,816         0.7
  

 

 

   

 

 

   

 

 

    

 

 

 

Operating income

     327,588        12.3     279,978         12.6

Interest (income) expense

     (118     0.0     185         0.0
  

 

 

   

 

 

   

 

 

    

 

 

 

Income before income taxes

     327,706        12.3     279,793         12.6

Income tax expense

     124,857        4.7     107,244         4.8
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income

   $ 202,849        7.6   $ 172,549         7.8
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income per common share:

         

Basic

   $ 3.17        $ 2.73      

Diluted

   $ 3.15        $ 2.68      

Weighted average common shares outstanding:

         

Basic

     63,992          63,250      

Diluted

     64,461          64,396      

Dividends declared per common share

   $ —          $ 1.00      


Exhibit 3

Ulta Salon, Cosmetics & Fragrance, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

 

     February 1,
2014
     February 2,
2013
 
     (Unaudited)         

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 419,476       $ 320,475   

Receivables, net

     47,049         41,515   

Merchandise inventories, net

     457,933         361,125   

Prepaid expenses and other current assets

     55,993         50,452   

Deferred income taxes

     22,246         15,757   
  

 

 

    

 

 

 

Total current assets

     1,002,697         789,324   

Property and equipment, net

     595,736         483,059   

Deferred compensation plan assets

     4,294         2,866   
  

 

 

    

 

 

 

Total assets

   $ 1,602,727       $ 1,275,249   
  

 

 

    

 

 

 

Liabilities and stockholders’ equity

     

Current liabilities:

     

Accounts payable

   $ 148,282       $ 118,886   

Accrued liabilities

     103,180         92,127   

Accrued income taxes

     15,349         10,054   
  

 

 

    

 

 

 

Total current liabilities

     266,811         221,067   

Deferred rent

     261,630         208,003   

Deferred income taxes

     66,718         56,361   

Other long-term liabilities

     4,474         2,876   
  

 

 

    

 

 

 

Total liabilities

     599,633         488,307   

Commitments and contingencies

     

Total stockholders’ equity

     1,003,094         786,942   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 1,602,727       $ 1,275,249   
  

 

 

    

 

 

 


Exhibit 4

Ulta Salon, Cosmetics & Fragrance, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 

     52 Weeks Ended     53 Weeks Ended  
     February 1,
2014
    February 2,
2013
 
     (Unaudited)        

Operating activities

    

Net income

   $ 202,849      $ 172,549   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     106,283        88,233   

Deferred income taxes

     3,868        8,673   

Non-cash stock compensation charges

     16,003        13,375   

Excess tax benefits from stock-based compensation

     (13,378     (47,345

Loss on disposal of property and equipment

     3,902        1,074   

Change in operating assets and liabilities:

    

Receivables

     (5,534     (15,362

Merchandise inventories

     (96,808     (116,478

Prepaid expenses and other current assets

     (5,541     (9,888

Income taxes

     18,673        53,397   

Accounts payable

     29,396        32,444   

Accrued liabilities

     14,215        13,789   

Deferred rent

     53,627        44,540   

Other assets and liabilities

     170        —     
  

 

 

   

 

 

 

Net cash provided by operating activities

     327,725        239,001   

Investing activities

    

Purchases of property and equipment

     (226,024     (188,578
  

 

 

   

 

 

 

Net cash used in investing activities

     (226,024     (188,578

Financing activities

    

Repurchase of common shares

     (37,337     —     

Dividend paid

     —          (62,482

Excess tax benefits from stock-based compensation

     13,378        47,345   

Stock options exercised

     21,890        31,530   

Common stock repurchased

     (631     (79
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (2,700     16,314   
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     99,001        66,737   

Cash and cash equivalents at beginning of period

     320,475        253,738   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 419,476      $ 320,475   
  

 

 

   

 

 

 


Exhibit 5

Ulta Salon, Cosmetics & Fragrance, Inc.

GAAP to Non-GAAP Reconciliation

(In thousands, except per share amounts)

We report our results in accordance with accounting principles generally accepted in the United States (“GAAP”). We also review certain financial measures excluding impacts of items that are not indicative of our core operations (“non-GAAP”).

 

     February 1, 2014      February 2, 2013         
     Reported
(GAAP)
     Severance
Adjustment
     As Adjusted
(Non-GAAP)
     Reported
(GAAP)
     53rd Week
Adjustment
    As Adjusted
(Non-GAAP)
     As Adjusted
Growth
 
     (Unaudited)      (Unaudited)         

Sales

     2,670,573         —         $ 2,670,573         2,220,256         (55,116   $ 2,165,140         23.3

Net income per common share:

                   

Basic

     3.17         0.01         3.18         2.73         (0.05     2.68         18.7

Diluted

     3.15         0.01         3.16         2.68         (0.05     2.63         20.2


Exhibit 6

Ulta Salon, Cosmetics & Fragrance, Inc.

2013 Store Expansion

 

Fiscal 2013

   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

     550         28         2         576   

2nd Quarter

     576         33         0         609   

3rd Quarter

     609         55         0         664   

4th Quarter

     664         11         0         675   

Fiscal 2013

   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

     5,847,393         298,083         24,077         6,121,399   

2nd Quarter

     6,121,399         355,046         0         6,476,445   

3rd Quarter

     6,476,445         569,555         0         7,046,000   

4th Quarter

     7,046,000         112,286         0         7,158,286