Ulta Beauty Announces First Quarter Fiscal 2024 Results

Net Sales of $2.7 Billion Compared to $2.6 Billion in the Year-Ago Quarter

Comparable Sales Increased 1.6%

Net Income of $313.1 Million or $6.47 Per Diluted Share

Company Updates Fiscal 2024 Guidance

Ulta Beauty, Inc. (NASDAQ: ULTA) today announced financial results for the thirteen-week period (“first quarter”) ended May 4, 2024.

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

 

May 4,

 

April 29,

(Dollars in millions, except per share data)

2024

 

2023

Net sales

 

$

2,725.8

 

$

2,634.3

Comparable sales (1)

 

 

1.6%

 

 

9.3%

Gross profit (as a percentage of net sales)

 

 

39.2%

 

 

40.0%

Selling, general and administrative expenses

 

$

665.9

 

$

612.1

Operating income (as a percentage of net sales)

 

 

14.7%

 

 

16.8%

Diluted earnings per share

 

$

6.47

 

$

6.88

New store openings, net

 

 

10

 

 

4

(1)

Comparable sales are calculated based on the comparable 13 calendar weeks in the current and prior year.

“The Ulta Beauty team delivered net sales growth of 3.5% and comparable sales growth of 1.6% in a dynamic operating environment. I am proud of how our teams continued to execute our transformational agenda, adapt to a rapidly evolving marketplace, and thoughtfully manage expenses across the enterprise,” said Dave Kimbell, chief executive officer. “We have a clear plan to accelerate our momentum and continue delivering a best-in-class assortment and engaging experiences for our guests. I remain confident in our differentiated model, the resilience of the beauty category, and our ability to execute against our plans, but we have adjusted our annual guidance as we anticipate the dynamics we faced in the first quarter to continue for the balance of the year.”

First Quarter of Fiscal 2024 Compared to First Quarter of Fiscal 2023

• Net sales increased 3.5% to $2.7 billion compared to $2.6 billion, primarily due to increased comparable sales, new store contribution, and growth in other revenue.
• Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 1.6% compared to the first quarter of fiscal 2023, driven by a 1.3% increase in transactions and a 0.3% increase in average ticket.
• Gross profit increased 1.4% to $1.07 billion compared to $1.05 billion. As a percentage of net sales, gross profit decreased to 39.2% compared to 40.0%, primarily due to lower merchandise margins and higher inventory shrink, partially offset by growth in other revenue.
• Selling, general and administrative (“SG&A”) expenses increased 8.8% to $665.9 million compared to $612.1 million. As a percentage of net sales, SG&A expenses increased to 24.4% compared to 23.2%, primarily due to higher corporate overhead for strategic investments, higher store payroll and benefits, and higher store expenses.
• Operating income was $400.9 million, or 14.7% of net sales, compared to $442.1 million, or 16.8% of net sales.
• The tax rate increased to 23.2% compared to 22.8% primarily due to a reduced benefit from income tax accounting for stock-based compensation.
• Net income was $313.1 million compared to $347.1 million.
• Diluted earnings per share was $6.47, including a $0.10 benefit due to income tax accounting for stock-based compensation, compared to $6.88, 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 first quarter of fiscal 2024 totaled $524.6 million.

Merchandise inventories, net at the end of first quarter of fiscal 2024 increased to $1.9 billion compared to $1.8 billion at the end of the first quarter of fiscal 2023. The increase was primarily due to inventory to support new brand launches, 36 net new stores, and an increase in distribution center inventory primarily due to the opening of the market fulfillment center in Greer, SC.

Share Repurchase Program

During the first quarter of fiscal 2024, the Company repurchased 588,004 shares of its common stock at a cost of $285.1 million. As of May 4, 2024, $1.8 billion remained available under the $2.0 billion share repurchase program announced in March 2024.

Store Update

During the first quarter of fiscal 2024, we opened 12 new stores, closed two stores, and relocated one store. At the end of the first quarter of fiscal 2024 the Company operated 1,395 stores totaling 14.6 million square feet.

Fiscal 2024 Outlook

The Company has updated its outlook for fiscal 2024.

 

 

 

 

 

 

 

Prior FY24 Outlook

 

Updated FY24 Outlook

Net sales

 

 

$11.7 billion to $11.8 billion

 

$11.5 billion to $11.6 billion

Comparable sales

 

 

4% to 5%

 

2% to 3%

New stores, net

 

 

60-65

 

no change

Remodel and relocation projects

 

 

40-45

 

no change

Operating margin

 

 

14.0% to 14.3%

 

13.7% to 14.0%

Diluted earnings per share

 

 

$26.20 to $27.00

 

$25.20 to $26.00

Share repurchases

 

 

approximately $1 billion

 

no change

Interest income

 

 

approximately $11 million

 

approximately $13 million

Effective tax rate

 

 

approximately 24.3%

 

approximately 24%

Capital expenditures

 

 

$415 million to $490 million

 

no change

Depreciation and amortization expense

 

 

$275 million to $280 million

 

$270 million to $275 million

Conference Call Information

A conference call to discuss first quarter of fiscal 2024 results is scheduled for today, May 30, 2024, at 4:30 p.m. Eastern Time / 3:30 p.m. CT. Investors and analysts who are interested in participating in the call are invited to dial [phone]. 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 1,395 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 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 (the SEC), including risk factors contained in its Annual Report on Form 10‑K for the fiscal year ended February 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 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

 

 

May 4,

 

April 29,

 

 

2024

 

2023

 

 

(Unaudited)

 

(Unaudited)

Net sales

 

$

2,725,848

 

 

100.0

%

 

$

2,634,263

 

 

100.0

%

Cost of sales

 

 

1,656,068

 

 

60.8

%

 

 

1,579,406

 

 

60.0

%

Gross profit

 

 

1,069,780

 

 

39.2

%

 

 

1,054,857

 

 

40.0

%

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

665,913

 

 

24.4

%

 

 

612,129

 

 

23.2

%

Pre-opening expenses

 

 

2,919

 

 

0.1

%

 

 

658

 

 

0.0

%

Operating income

 

 

400,948

 

 

14.7

%

 

 

442,070

 

 

16.8

%

Interest income, net

 

 

(6,900

)

 

(0.3

%)

 

 

(7,348

)

 

(0.3

%)

Income before income taxes

 

 

407,848

 

 

15.0

%

 

 

449,418

 

 

17.1

%

Income tax expense

 

 

94,735

 

 

3.5

%

 

 

102,367

 

 

3.9

%

Net income

 

$

313,113

 

 

11.5

%

 

$

347,051

 

 

13.2

%

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

6.51

 

 

 

 

$

6.92

 

 

 

Diluted

 

$

6.47

 

 

 

 

$

6.88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

48,125

 

 

 

 

 

50,153

 

 

 

Diluted

 

 

48,381

 

 

 

 

 

50,469

 

 

 

Exhibit 2

Ulta Beauty, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

May 4,

 

February 3,

 

April 29,

 

 

2024

 

2024

 

2023

 

 

(Unaudited)

 

 

 

 

(Unaudited)

Assets

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

524,596

 

$

766,594

 

$

636,449

Receivables, net

 

 

203,463

 

 

207,939

 

 

190,282

Merchandise inventories, net

 

 

1,906,040

 

 

1,742,136

 

 

1,751,235

Prepaid expenses and other current assets

 

 

126,529

 

 

115,598

 

 

108,014

Prepaid income taxes

 

 

—

 

 

4,251

 

 

—

Total current assets

 

 

2,760,628

 

 

2,836,518

 

 

2,685,980

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

1,195,658

 

 

1,182,335

 

 

1,019,978

Operating lease assets

 

 

1,561,767

 

 

1,574,530

 

 

1,559,560

Goodwill

 

 

10,870

 

 

10,870

 

 

10,870

Other intangible assets, net

 

 

434

 

 

510

 

 

1,015

Deferred compensation plan assets

 

 

45,718

 

 

43,516

 

 

37,002

Other long-term assets

 

 

56,864

 

 

58,732

 

 

61,314

Total assets

 

$

5,631,939

 

$

5,707,011

 

$

5,375,719

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

463,777

 

$

544,001

 

$

621,272

Accrued liabilities

 

 

332,692

 

 

382,468

 

 

308,583

Deferred revenue

 

 

398,729

 

 

436,591

 

 

357,217

Current operating lease liabilities

 

 

284,815

 

 

283,821

 

 

288,133

Accrued income taxes

 

 

92,711

 

 

11,310

 

 

58,695

Total current liabilities

 

 

1,572,724

 

 

1,658,191

 

 

1,633,900

 

 

 

 

 

 

 

 

 

 

Non-current operating lease liabilities

 

 

1,607,953

 

 

1,627,271

 

 

1,610,256

Deferred income taxes

 

 

89,556

 

 

85,921

 

 

57,490

Other long-term liabilities

 

 

60,963

 

 

56,300

 

 

56,005

Total liabilities

 

 

3,331,196

 

 

3,427,683

 

 

3,357,651

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

2,300,743

 

 

2,279,328

 

 

2,018,068

Total liabilities and stockholders’ equity

 

$

5,631,939

 

$

5,707,011

 

$

5,375,719

Exhibit 3

Ulta Beauty, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

 

May 4,

 

April 29,

 

 

2024

 

2023

 

 

(Unaudited)

 

(Unaudited)

Operating activities

 

 

 

 

 

 

Net income

 

$

313,113

 

 

$

347,051

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

64,739

 

 

 

57,949

 

Non-cash lease expense

 

 

77,938

 

 

 

75,478

 

Deferred income taxes

 

 

3,635

 

 

 

2,144

 

Stock-based compensation expense

 

 

10,082

 

 

 

9,721

 

Loss on disposal of property and equipment

 

 

2,975

 

 

 

1,451

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Receivables

 

 

4,476

 

 

 

9,140

 

Merchandise inventories

 

 

(163,904

)

 

 

(147,784

)

Prepaid expenses and other current assets

 

 

(10,931

)

 

 

22,232

 

Income taxes

 

 

85,652

 

 

 

97,003

 

Accounts payable

 

 

(74,069

)

 

 

62,257

 

Accrued liabilities

 

 

(43,846

)

 

 

(98,515

)

Deferred revenue

 

 

(37,862

)

 

 

(37,460

)

Operating lease liabilities

 

 

(83,500

)

 

 

(78,562

)

Other assets and liabilities

 

 

10,842

 

 

 

(17,204

)

Net cash provided by operating activities

 

 

159,340

 

 

 

304,901

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Capital expenditures

 

 

(91,024

)

 

 

(109,766

)

Other investments

 

 

(2,563

)

 

 

(314

)

Net cash used in investing activities

 

 

(93,587

)

 

 

(110,080

)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Repurchase of common shares

 

 

(289,431

)

 

 

(283,517

)

Stock options exercised

 

 

8,913

 

 

 

8,927

 

Purchase of treasury shares

 

 

(23,283

)

 

 

(21,659

)

Debt issuance costs

 

 

(3,950

)

 

 

—

 

Net cash used in financing activities

 

 

(307,751

)

 

 

(296,249

)

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(241,998

)

 

 

(101,428

)

Cash and cash equivalents at beginning of period

 

 

766,594

 

 

 

737,877

 

Cash and cash equivalents at end of period

 

$

524,596

 

 

$

636,449

 

Exhibit 4

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 2024

 

quarter

 

quarter

 

quarter

 

end of the quarter

1st Quarter

 

1,385

 

12

 

2

 

1,395

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Exhibit 5

Ulta Beauty, Inc.

Sales by Category

 

The following table sets forth the approximate percentage of net sales by primary category:

 

 

 

 

 

 

 

13 Weeks Ended

 

 

May 4,

 

April 29,

 

2024

 

2023

Cosmetics

 

42

%

 

44

%

Skincare

 

23

%

 

22

%

Haircare

 

19

%

 

19

%

Fragrance

 

10

%

 

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/20240530418457/en/

Investor Contacts: Kiley Rawlins, CFA Vice President, Investor Relations [e-mail]

Media Contact: Crystal Carroll Senior Director, Public Relations [e-mail]