Ulta Beauty Announces Second Quarter Fiscal 2024 Results

Net Sales of $2.6 Billion Compared to $2.5 Billion in the Year-Ago Quarter

Comparable Sales Decreased 1.2%

Net Income of $252.6 Million or $5.30 Per Diluted 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 3, 2024 compared to the same periods ended July 29, 2023.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

 

26 Weeks Ended

 

 

August 3,

 

July 29,

 

 

August 3,

 

July 29,

(Dollars in millions, except per share data)

2024

 

2023

 

 

2024

 

2023

Net sales

 

$

2,552.1

 

$

2,529.8

 

 

$

5,277.9

 

$

5,164.1

Comparable sales (1)

 

 

(1.2%)

 

 

8.0%

 

 

 

0.2%

 

 

8.7%

Gross profit (as a percentage of net sales)

 

 

38.3%

 

 

39.3%

 

 

 

38.8%

 

 

39.7%

Selling, general and administrative expenses

 

$

644.8

 

$

600.7

 

 

$

1,310.7

 

$

1,212.8

Operating income (as a percentage of net sales)

 

 

12.9%

 

 

15.5%

 

 

 

13.8%

 

 

16.1%

Diluted earnings per share

 

$

5.30

 

$

6.02

 

 

$

11.78

 

$

12.90

New store openings, net

 

 

16

 

 

3

 

 

 

26

 

 

7

_____________

(1) Comparable sales are calculated based on the comparable 13 and 26 calendar weeks in the current and prior year.

“While we are encouraged by many positive indicators across our business, our second quarter performance did not meet our expectations, driven primarily by a decline in comparable store sales. We are clear about the factors that adversely impacted our store performance, and we have actions underway to address the trends,” said Dave Kimbell, chief executive officer. “We are focused on driving stronger sales and traffic and continuing to exercise financial discipline. In light of our first half trends and a more cautious outlook, we have updated our full year expectations. I remain confident in the power of our differentiated model, the strength of our financial foundation, and our ability to deliver value for our shareholders over the long term.”

Second Quarter of Fiscal 2024 Compared to Second Quarter of Fiscal 2023

• Net sales increased 0.9% to $2.6 billion compared to $2.5 billion, primarily due to new store contribution and growth in other revenue.
• Comparable sales (sales for stores open at least 14 months and e-commerce sales) decreased 1.2% compared to an increase of 8.0%, driven by a 1.8% decrease in transactions and a 0.6% increase in average ticket.
• Gross profit was $978.2 million compared to $993.6 million. As a percentage of net sales, gross profit decreased to 38.3% compared to 39.3%, primarily due to lower merchandise margins and deleverage of store fixed costs, partially offset by growth in other revenue and lower inventory shrink.
• Selling, general and administrative (SG&A) expenses were $644.8 million compared to $600.7 million. As a percentage of net sales, SG&A expenses increased to 25.3% compared to 23.7%, primarily due to deleverage of store payroll and benefits, corporate overhead primarily due to strategic investments, store expenses, and marketing expenses, partially offset by lower incentive compensation.
• Operating income was $329.2 million, or 12.9% of net sales, compared to $391.6 million, or 15.5% of net sales.
• The tax rate was 24.3% compared to 24.2%.
• Net income was $252.6 million compared to $300.1 million.
• Diluted earnings per share was $5.30 compared to $6.02.

First Six Months of Fiscal 2024 Compared to First Six Months of Fiscal 2023

• Net sales increased 2.2% to $5.3 billion compared to $5.2 billion, primarily due to new store contribution and growth in other revenue.
• Comparable sales increased 0.2% compared to an increase of 8.7%, driven by a 0.4% increase in average ticket and a 0.2% decrease in transactions.
• Gross profit was flat at $2.0 billion. As a percentage of net sales, gross profit decreased to 38.8% compared to 39.7%, primarily due to lower merchandise margin and deleverage of store fixed costs, partially offset by growth in other revenue.
• SG&A expenses were $1.3 billion compared to $1.2 billion. As a percentage of net sales, SG&A expenses increased to 24.8% compared to 23.5%, primarily due to deleverage of corporate overhead primarily due to strategic investments, store payroll and benefits, store expenses, and marketing expenses, partially offset by lower incentive compensation.
• Operating income was $730.1 million, or 13.8% of net sales, compared to $833.7 million, or 16.1% of net sales.
• The tax rate was 23.7% compared to 23.5%.
• Net income was $565.7 million compared to $647.2 million.
• Diluted earnings per share was $11.78, including a $0.10 benefit due to income tax accounting for stock-based compensation, compared to $12.90, 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 second quarter of fiscal 2024 totaled $414.0 million.

Merchandise inventories, net at the end of the second quarter of fiscal 2024 increased 10.1% to $2.0 billion compared to $1.8 billion at the end of the second quarter of fiscal 2023. The increase was primarily due to inventory to support new brand launches, the opening of the new market fulfillment center in Greer, SC, and the addition of 49 net new stores since July 29, 2023.

Share Repurchase Program

During the second quarter of fiscal 2024, the Company repurchased 549,852 shares of its common stock at a cost of $212.3 million. During the first six months of fiscal 2024, the Company repurchased 1.1 million shares of its common stock at a cost of $497.5 million. As of August 3, 2024, $1.6 billion remained available under the $2.0 billion share repurchase program announced in March 2024.

Store Update

During the second quarter of fiscal 2024, the Company opened 17 new stores, relocated one store, remodeled nine stores, and closed one store. During the first six months of fiscal 2024, the Company opened 29 new stores, relocated two stores, remodeled nine stores, and closed three stores. At the end of the second quarter of fiscal 2024, the Company operated 1,411 stores totaling 14.8 million square feet.

Fiscal 2024 Outlook

For fiscal 2024, the Company plans to:

 

 

 

 

 

 

 

Prior FY24 Outlook

 

Updated FY24 Outlook

Net sales

 

 

$11.5 billion to $11.6 billion

 

$11.0 billion to $11.2 billion

Comparable sales

 

 

2% to 3%

 

(2%) to 0%

New stores, net

 

 

60-65

 

no change

Remodel and relocation projects

 

 

40-45

 

no change

Operating margin

 

 

13.7% to 14.0%

 

12.7% to 13.0%

Diluted earnings per share

 

 

$25.20 to $26.00

 

$22.60 to $23.50

Share repurchases

 

 

approximately $1 billion

 

no change

Interest income

 

 

approximately $13 million

 

no change

Effective tax rate

 

 

approximately 24%

 

no change

Capital expenditures

 

 

$415 million to $490 million

 

$400 million to $450 million

Depreciation and amortization expense

 

 

$270 million to $275 million

 

$265 million to $270 million

Conference Call Information

A conference call to discuss second quarter of fiscal 2024 results is scheduled for today, August 29, 2024 at 4:30 p.m. ET / 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 1,411 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

 

 

August 3,

 

July 29,

 

 

2024

 

2023

 

 

(Unaudited)

 

(Unaudited)

Net sales

 

$

2,552,087

 

 

100.0

%

 

$

2,529,809

 

 

100.0

%

Cost of sales

 

 

1,573,910

 

 

61.7

%

 

 

1,536,197

 

 

60.7

%

Gross profit

 

 

978,177

 

 

38.3

%

 

 

993,612

 

 

39.3

%

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

644,821

 

 

25.3

%

 

 

600,692

 

 

23.7

%

Pre-opening expenses

 

 

4,155

 

 

0.2

%

 

 

1,278

 

 

0.1

%

Operating income

 

 

329,201

 

 

12.9

%

 

 

391,642

 

 

15.5

%

Interest income, net

 

 

(4,526

)

 

(0.2

%)

 

 

(4,449

)

 

(0.2

%)

Income before income taxes

 

 

333,727

 

 

13.1

%

 

 

396,091

 

 

15.7

%

Income tax expense

 

 

81,171

 

 

3.2

%

 

 

95,989

 

 

3.8

%

Net income

 

$

252,556

 

 

9.9

%

 

$

300,102

 

 

11.9

%

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

5.32

 

 

 

 

$

6.05

 

 

 

Diluted

 

$

5.30

 

 

 

 

$

6.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

47,505

 

 

 

 

 

49,617

 

 

 

Diluted

 

 

47,667

 

 

 

 

 

49,849

 

 

 

Exhibit 2

Ulta Beauty, Inc.

Consolidated Statements of Income

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

26 Weeks Ended

 

 

August 3,

 

July 29,

 

 

2024

 

2023

 

 

(Unaudited)

 

(Unaudited)

Net sales

 

$

5,277,935

 

 

100.0

%

 

$

5,164,072

 

 

100.0

%

Cost of sales

 

 

3,229,978

 

 

61.2

%

 

 

3,115,603

 

 

60.3

%

Gross profit

 

 

2,047,957

 

 

38.8

%

 

 

2,048,469

 

 

39.7

%

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

1,310,734

 

 

24.8

%

 

 

1,212,821

 

 

23.5

%

Pre-opening expenses

 

 

7,074

 

 

0.1

%

 

 

1,936

 

 

0.0

%

Operating income

 

 

730,149

 

 

13.8

%

 

 

833,712

 

 

16.1

%

Interest income, net

 

 

(11,426

)

 

(0.2

%)

 

 

(11,797

)

 

(0.2

%)

Income before income taxes

 

 

741,575

 

 

14.1

%

 

 

845,509

 

 

16.4

%

Income tax expense

 

 

175,906

 

 

3.3

%

 

 

198,356

 

 

3.8

%

Net income

 

$

565,669

 

 

10.7

%

 

$

647,153

 

 

12.5

%

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

11.83

 

 

 

 

$

12.97

 

 

 

Diluted

 

$

11.78

 

 

 

 

$

12.90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

47,815

 

 

 

 

 

49,885

 

 

 

Diluted

 

 

48,022

 

 

 

 

 

50,157

 

 

 

Exhibit 3

Ulta Beauty, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

August 3,

 

February 3,

 

July 29,

 

 

2024

 

2024

 

2023

 

 

(Unaudited)

 

 

 

 

(Unaudited)

Assets

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

413,962

 

$

766,594

 

$

388,627

Receivables, net

 

 

200,863

 

 

207,939

 

 

174,444

Merchandise inventories, net

 

 

1,998,286

 

 

1,742,136

 

 

1,815,539

Prepaid expenses and other current assets

 

 

132,023

 

 

115,598

 

 

110,524

Prepaid income taxes

 

 

53,607

 

 

4,251

 

 

30,114

Total current assets

 

 

2,798,741

 

 

2,836,518

 

 

2,519,248

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

1,225,850

 

 

1,182,335

 

 

1,073,144

Operating lease assets

 

 

1,599,735

 

 

1,574,530

 

 

1,549,146

Goodwill

 

 

10,870

 

 

10,870

 

 

10,870

Other intangible assets, net

 

 

357

 

 

510

 

 

718

Deferred compensation plan assets

 

 

46,280

 

 

43,516

 

 

40,087

Other long-term assets

 

 

55,575

 

 

58,732

 

 

55,547

Total assets

 

$

5,737,408

 

$

5,707,011

 

$

5,248,760

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

566,904

 

$

544,001

 

$

521,315

Accrued liabilities

 

 

348,042

 

 

382,468

 

 

328,247

Deferred revenue

 

 

394,987

 

 

436,591

 

 

354,253

Current operating lease liabilities

 

 

281,301

 

 

283,821

 

 

287,359

Accrued income taxes

 

 

—

 

 

11,310

 

 

—

Total current liabilities

 

 

1,591,234

 

 

1,658,191

 

 

1,491,174

 

 

 

 

 

 

 

 

 

 

Non-current operating lease liabilities

 

 

1,647,698

 

 

1,627,271

 

 

1,593,040

Deferred income taxes

 

 

88,461

 

 

85,921

 

 

56,012

Other long-term liabilities

 

 

61,855

 

 

56,300

 

 

56,657

Total liabilities

 

 

3,389,248

 

 

3,427,683

 

 

3,196,883

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

2,348,160

 

 

2,279,328

 

 

2,051,877

Total liabilities and stockholders’ equity

 

$

5,737,408

 

$

5,707,011

 

$

5,248,760

Exhibit 4

Ulta Beauty, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

 

 

 

 

 

 

 

 

 

26 Weeks Ended

 

 

August 3,

 

July 29,

 

 

2024

 

2023

 

 

(Unaudited)

 

(Unaudited)

Operating activities

 

 

 

 

 

 

Net income

 

$

565,669

 

 

$

647,153

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

130,053

 

 

 

119,862

 

Non-cash lease expense

 

 

163,481

 

 

 

152,867

 

Deferred income taxes

 

 

2,540

 

 

 

666

 

Stock-based compensation expense

 

 

19,272

 

 

 

21,539

 

Loss on disposal of property and equipment

 

 

5,204

 

 

 

3,878

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Receivables

 

 

7,076

 

 

 

24,978

 

Merchandise inventories

 

 

(256,150

)

 

 

(212,088

)

Prepaid expenses and other current assets

 

 

(16,425

)

 

 

19,722

 

Income taxes

 

 

(60,666

)

 

 

8,194

 

Accounts payable

 

 

29,715

 

 

 

(38,752

)

Accrued liabilities

 

 

(33,634

)

 

 

(102,763

)

Deferred revenue

 

 

(41,604

)

 

 

(40,424

)

Operating lease liabilities

 

 

(170,779

)

 

 

(163,527

)

Other assets and liabilities

 

 

15,127

 

 

 

(12,497

)

Net cash provided by operating activities

 

 

358,879

 

 

 

428,808

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Capital expenditures

 

 

(186,301

)

 

 

(204,748

)

Other investments

 

 

(5,091

)

 

 

(1,687

)

Net cash used in investing activities

 

 

(191,392

)

 

 

(206,435

)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Repurchase of common shares

 

 

(501,768

)

 

 

(559,011

)

Stock options exercised

 

 

9,196

 

 

 

9,147

 

Purchase of treasury shares

 

 

(23,459

)

 

 

(21,759

)

Debt issuance costs

 

 

(4,088

)

 

 

—

 

Net cash used in financing activities

 

 

(520,119

)

 

 

(571,623

)

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(352,632

)

 

 

(349,250

)

Cash and cash equivalents at beginning of period

 

 

766,594

 

 

 

737,877

 

Cash and cash equivalents at end of period

 

$

413,962

 

 

$

388,627

 

Exhibit 5

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

2nd Quarter

 

1,395

 

17

 

1

 

1,411

 

 

 

 

 

 

 

 

 

 

 

 

 

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

2nd Quarter

 

14,614,764

 

178,624

 

10,800

 

14,782,588

Exhibit 6

Ulta Beauty, Inc.

Sales by Category

 

The following tables set forth the approximate percentage of net sales by primary category:

 

 

 

 

 

 

 

13 Weeks Ended

 

 

August 3,

 

July 29,

 

2024

 

2023

Cosmetics

 

39%

 

40%

Skincare

 

24%

 

23%

Haircare

 

20%

 

22%

Fragrance

 

11%

 

9%

Services

 

4%

 

4%

Other

 

2%

 

2%

 

 

100%

 

100%

 

 

 

 

 

 

 

26 Weeks Ended

 

 

August 3,

 

July 29,

 

 

2024

 

2023

Cosmetics

 

40%

 

42%

Skincare

 

24%

 

22%

Haircare

 

19%

 

21%

Fragrance

 

11%

 

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/20240829270411/en/

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

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