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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Ulta Beauty Inc | NASDAQ:ULTA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 403.96 | 403.86 | 404.96 | 0 | 01:00:00 |
Net Sales of $1.2 billion compared to $1.7 billion in the year-ago quarter Comparable Sales decreased (26.7%) Sales from e-commerce operations increased more than 200% Net income of $8.1 million or $0.14 per dilutive share Adjusted net income of $41.5 million or $0.73 adjusted per dilutive share
Ulta Beauty, Inc. (NASDAQ: ULTA) today announced financial results for the thirteen-week period (“Second Quarter”) and twenty-six-week period (“First Six Months”) ended August 1, 2020 compared to the same periods ended August 3, 2019. During the second quarter of fiscal 2020, the Company recorded store impairment and closure related costs that reduced reported net income by $33.5 million or $0.59 per diluted share. A reconciliation of non-GAAP financial measures to the respective GAAP measures is included in this release.
“We have navigated the disruption and uncertainty of COVID-19 with our associates and guests at the heart of every decision. After closing our stores in the first quarter, we reopened our fleet in the second quarter with Shop Safe Standards and new operating procedures in place to protect the health and safety of all. I remain thankful and proud of our teams for their response and leadership throughout this challenging time and for their grace, agility and commitment to serving our guests,” said Mary Dillon, chief executive officer. “While the pandemic continues to impact our business, we are encouraged by improving trends. Comparable sales trends improved significantly throughout the quarter, from decreasing 37% in early May, as we began reopening stores, to decreasing 10% in July, when most of our stores were re-opened. Notably, sales trends have continued to improve, with comparable sales down in the mid-single digit range for the first three weeks of August.”
“We believe the near-term operating environment will continue to be dynamic and challenging, but I remain optimistic and excited about the long-term opportunity for Ulta Beauty. We know beauty enthusiasts remain passionate and engaged with the category, and we have great talent, a strong culture, a differentiated operating model, and the right strategy to drive growth,” continued Dillon. “As we transition into the new normal, I am confident the Ulta Beauty team will continue to innovate, move with agility and efficiency, and grow as the largest and most admired beauty retailer in the U.S.”
COVID-19 Response and Impact
On March 19, 2020, Ulta Beauty temporarily closed all of its stores in response to the spread of COVID-19. On April 19, 2020, the Company introduced curbside pickup in select stores, and on May 11, 2020, the Company started a phased store reopening process. By the end of June, more than 90% of stores were open for retail, and by July 20, 2020, the full fleet of Ulta Beauty stores were operational. As of August 1, 2020, salon services were available in approximately 88% of stores, and brow services were offered in approximately 85% of stores. Reflecting operational limitations related to COVID-19 and the partial resumption of services, the Company has reactivated approximately 17,000 furloughed associates.
The Company continues to take actions to manage the business in response to COVID-19, including:
For the Second Quarter of Fiscal 2020
For the First Six Months of Fiscal 2020
Balance Sheet
The Company ended the second quarter of fiscal 2020 with $1.2 billion in cash and cash equivalents. During the first quarter of fiscal 2020, as a precautionary measure during the economic uncertainty due to COVID-19 and to enhance financial flexibility, the Company drew down $800 million under its $1.0 billion credit facility.
Merchandise inventories, net at the end of the second quarter of fiscal 2020 totaled $1.4 billion compared to $1.3 billion at the end of the second quarter of fiscal 2019. The increase in total inventory was primarily driven by 51 net new stores opened since August 3, 2019. Average inventory per store decreased slightly compared to the second quarter of fiscal 2019.
Store Expansion
New store activity was temporarily paused during the quarter due to COVID-19. The Company ended the second quarter of fiscal 2020 with 1,264 stores and square footage of 13,294,607, representing a 4.2% increase in square footage compared to the second quarter of fiscal 2019. In addition, during the second quarter of fiscal 2020, the Company announced that it would permanently close 19 stores. These previously announced store closures will occur during the third quarter of fiscal 2020.
Fiscal 2020 Outlook
“We are encouraged by the recent improvement in sales trends, but we believe it will take time to fully return to pre-COVID levels. Given continued disruption from the pandemic, new operational protocols, and near-term employment and economic uncertainty, we expect sales will continue to be challenged for the rest of the year,” continued Dillon. “Longer-term, we are confident that Beauty will recover and thrive, given continued strong engagement and emotional connection with the category.”
The Company withdrew its guidance for fiscal 2020 on March 17, 2020 and is not providing an earnings outlook at this time. However, the Company is providing the following updated assumptions for fiscal 2020:
Non-GAAP Financial Information
In this press release, the Company provides information regarding adjusted operating income (loss), adjusted net income (loss), and adjusted diluted earnings (loss) per share, which are not recognized terms under U.S. generally accepted accounting principles (GAAP) and do not purport to be alternatives to operating income (loss), net income (loss), and diluted earnings (loss) per share as a measure of operating performance. A reconciliation of adjusted operating income (loss), adjusted net income (loss), and adjusted diluted earnings (loss) per share is provided in this release. The Company believes that the presentation of these non-GAAP financial measures provides additional information on comparisons between periods by excluding certain items that affect overall comparability and provides investors with enhanced visibility into its results with respect to the impact of certain costs. Non-GAAP financial measures should be considered in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP.
Conference Call Information
A conference call to discuss second quarter of fiscal 2020 results is scheduled for today, August 27, 2020, at 5:00 p.m. Eastern Time / 4:00 p.m. Central Time. Investors and analysts interested in participating in the call are invited to dial (877) 705‑6003. The conference call will also be webcast live at http://ir.ultabeauty.com. A replay of the webcast will remain available for 90 days. A replay of the conference call will be available until 11:59 p.m. ET on September 10, 2020 and can be accessed by dialing (844) 512‑2921 and entering conference ID number 13707860.
About Ulta Beauty
At Ulta Beauty (NASDAQ: ULTA), the possibilities are beautiful. Ulta Beauty is the largest 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 has grown to become the top national retailer offering the complete beauty experience.
Ulta Beauty brings possibilities to life through the power of beauty each and every day in our stores and online with more than 25,000 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, brow, and make-up services.
Ulta Beauty is recognized for its commitment to personalized service, fun and inviting stores and our industry-leading Ultamate Rewards loyalty program. Ulta Beauty operates 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:
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 Operations
(In thousands, except per share data)
13 Weeks Ended
August 1,
August 3,
2020
2019
(Unaudited)
(Unaudited)
Net sales
$
1,228,009
100.0
%
$
1,666,607
100.0
%
Cost of sales
899,002
73.2
%
1,060,708
63.6
%
Gross profit
329,007
26.8
%
605,899
36.4
%
Selling, general and administrative expenses
271,587
22.1
%
392,843
23.6
%
Impairment charges, store closures and other costs
40,758
3.3
%
—
0.0
%
Pre-opening expenses
3,907
0.3
%
5,038
0.3
%
Operating income
12,755
1.1
%
208,018
12.5
%
Interest expense (income), net
2,617
(0.2
%)
(1,671
)
0.1
%
Income before income taxes
10,138
0.9
%
209,689
12.6
%
Income tax expense
2,086
0.2
%
48,431
2.9
%
Net income
$
8,052
0.7
%
$
161,258
9.7
%
Net income per common share:
Basic
$
0.14
$
2.77
Diluted
$
0.14
$
2.76
Weighted average common shares outstanding:
Basic
56,318
58,171
Diluted
56,497
58,446
Exhibit 2
Ulta Beauty, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
26 Weeks Ended
August 1,
August 3,
2020
2019
(Unaudited)
(Unaudited)
Net sales
$
2,401,219
100.0
%
$
3,409,636
100.0
%
Cost of sales
1,768,607
73.7
%
2,158,890
63.3
%
Gross profit
632,612
26.3
%
1,250,746
36.7
%
Selling, general and administrative expenses
652,499
27.2
%
795,976
23.3
%
Impairment charges, store closures and other costs
60,300
2.5
%
—
0.0
%
Pre-opening expenses
8,542
0.3
%
9,212
0.3
%
Operating income (loss)
(88,729
)
(3.7
%)
445,558
13.1
%
Interest expense (income), net
3,889
(0.1
%)
(3,717
)
0.1
%
Income (loss) before income taxes
(92,618
)
(3.8
%)
449,275
13.2
%
Income tax expense (benefit)
(22,161
)
(0.9
%)
95,796
2.8
%
Net income (loss)
$
(70,457
)
(2.9
%)
$
353,479
10.4
%
Net income (loss) per common share:
Basic
$
(1.25
)
$
6.05
Diluted
$
(1.25
)
$
6.02
Weighted average common shares outstanding:
Basic
56,369
58,401
Diluted
56,369
58,718
Exhibit 3
Ulta Beauty, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
August 1,
February 1,
August 3,
2020
2020
2019
(Unaudited)
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
1,157,318
$
392,325
$
177,398
Short-term investments
—
110,000
150,000
Receivables, net
127,992
139,337
107,263
Merchandise inventories, net
1,368,543
1,293,701
1,315,999
Prepaid expenses and other current assets
102,713
103,567
131,171
Prepaid income taxes
42,622
16,387
38,769
Total current assets
2,799,188
2,055,317
1,920,600
Property and equipment, net
1,077,825
1,205,524
1,219,948
Operating lease assets
1,548,239
1,537,565
1,499,556
Goodwill
10,870
10,870
10,870
Other intangible assets, net
2,927
3,391
3,854
Deferred compensation plan assets
28,789
27,849
24,665
Other long-term assets
29,283
23,356
30,882
Total assets
$
5,497,121
$
4,863,872
$
4,710,375
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
398,011
$
414,009
$
450,117
Accrued liabilities
201,754
246,088
224,202
Deferred revenue
216,545
237,535
182,354
Current operating lease liabilities
245,019
239,629
208,261
Total current liabilities
1,061,329
1,137,261
1,064,934
Non-current operating lease liabilities
1,718,549
1,698,718
1,683,743
Long-term debt
800,000
—
—
Deferred income taxes
94,272
89,367
86,598
Other long-term liabilities
52,178
36,432
35,649
Total liabilities
3,726,328
2,961,778
2,870,924
Commitments and contingencies
Total stockholders’ equity
1,770,793
1,902,094
1,839,451
Total liabilities and stockholders’ equity
$
5,497,121
$
4,863,872
$
4,710,375
Exhibit 4
Ulta Beauty, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
26 Weeks Ended
August 1,
August 3,
2020
2019
(Unaudited)
(Unaudited)
Operating activities
Net income (loss)
$
(70,457
)
$
353,479
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
154,029
144,951
Non-cash lease expense
132,808
152,134
Impairment charges, store closures and other costs
59,997
—
Deferred income taxes
4,905
2,734
Stock-based compensation expense
14,595
12,766
Loss on disposal of property and equipment
2,273
3,215
Change in operating assets and liabilities:
Receivables
11,345
11,437
Merchandise inventories
(74,842
)
(101,670
)
Prepaid expenses and other current assets
854
(18,315
)
Income taxes
(26,235
)
(21,772
)
Accounts payable
(18,486
)
46,101
Accrued liabilities
(32,901
)
(2,629
)
Deferred revenue
(20,990
)
(16,700
)
Operating lease liabilities
(137,383
)
(138,557
)
Other assets and liabilities
16,477
20,162
Net cash provided by operating activities
15,989
447,336
Investing activities
Short-term investments, net
110,000
(150,000
)
Capital expenditures
(77,090
)
(151,213
)
Acquisitions, net of cash acquired
(1,220
)
—
Purchases of equity investments
(5,386
)
(33,339
)
Net cash provided by (used in) investing activities
26,304
(334,552
)
Financing activities
Proceeds from long-term debt
800,000
—
Repurchase of common shares
(72,981
)
(378,300
)
Stock options exercised
577
42,935
Purchase of treasury shares
(3,065
)
(9,272
)
Debt issuance costs
(1,861
)
—
Net cash provided by (used in) financing activities
722,670
(344,637
)
Effect of exchange rate changes on cash and cash equivalents
30
—
Net increase (decrease) in cash and cash equivalents
764,993
(231,853
)
Cash and cash equivalents at beginning of period
392,325
409,251
Cash and cash equivalents at end of period
$
1,157,318
$
177,398
Exhibit 5
Ulta Beauty, Inc.
2020 Store Expansion
Total stores open
Number of stores
Number of stores
Total stores
at beginning of the
opened during the
closed during the
open at
Fiscal 2020
quarter
quarter
quarter
end of the quarter
1st Quarter
1,254
11
1
1,264
2nd Quarter
1,264
0
0
1,264
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 2020
the quarter
quarter
during the quarter
quarter
1st Quarter
13,193,076
111,894
10,363
13,294,607
2nd Quarter
13,294,607
0
0
13,294,607
Exhibit 6
Ulta Beauty, Inc.
Reconciliation of GAAP basis to Adjusted operating income (loss), Adjusted net income (loss) and Adjusted diluted earnings (loss) per share
(In thousands, except per share)
(Unaudited)
13 weeks ended
26 weeks ended
August 1,
August 3,
August 1,
August 3,
2020
2019
2020
2019
Operating income (loss)
$
12,755
$
208,018
$
(88,729
)
$
445,558
Add: Store asset impairment
20,886
—
40,428
—
Add: Store closures and other costs1
21,272
—
21,272
—
Adjusted operating income (loss)
$
54,913
$
208,018
$
(27,029
)
$
445,558
Net income (loss)
$
8,052
$
161,258
$
(70,457
)
$
353,479
Add: Store asset impairment
20,886
—
40,428
—
Less: Income tax benefit of store asset impairment
(4,303
)
—
(9,662
)
—
Add: Store closures and other costs1
21,272
—
21,272
—
Less: Income tax benefit of store closures and other costs
(4,382
)
—
(5,084
)
—
Less: Stock compensation and other tax credits
—
(2,216
)
—
(12,597
)
Adjusted net income (loss)
$
41,525
$
159,042
$
(23,503
)
$
340,882
Diluted earnings (loss) per share
$
0.14
$
2.76
$
(1.25
)
$
6.02
Add: Store asset impairment
0.37
—
0.72
—
Less: Income tax benefit of store asset impairment
(0.08
)
—
(0.17
)
—
Add: Store closures and other costs1
0.38
—
0.38
—
Less: Income tax benefit of store closures and other costs
(0.08
)
—
(0.10
)
—
Less: Stock compensation and other tax credits
—
(0.04
)
—
(0.21
)
Adjusted diluted earnings (loss) per share:
$
0.73
$
2.72
$
(0.42
)
$
5.81
1 Store closures and other costs includes $1,400 related to inventory write-offs and $303 in severance charges due to the permanent closure of 19 stores.
View source version on businesswire.com: https://www.businesswire.com/news/home/20200827005678/en/
Investor Contacts: Kiley Rawlins, CFA Vice President, Investor Relations krawlins@ulta.com (331) 757-2206
Patrick Flaherty Senior Manager, Investor Relations pflaherty@ulta.com (331) 253-3521
Media Contact: Eileen Ziesemer Vice President, Public Relations eziesemer@ulta.com (708) 305-4479
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