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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 | |
---|---|---|---|---|---|---|---|---|---|---|
-5.20 | -1.27% | 404.84 | 402.02 | 404.84 | 412.04 | 402.00 | 410.04 | 904,758 | 22:59:20 |
Net Sales of $1.6 billion compared to $1.7 billion in the year-ago quarter
Comparable Sales decreased (8.9%)
Net income of $74.8 million or $1.32 per diluted share
Adjusted net income of $92.5 million or $1.64 adjusted per diluted share
Ulta Beauty, Inc. (NASDAQ: ULTA) today announced financial results for the thirteen-week period (“Third Quarter”) and thirty-nine-week period (“First Nine Months”) ended October 31, 2020 compared to the same periods ended November 2, 2019. During the third quarter of fiscal 2020, the Company recorded long-lived asset impairment and restructuring related costs, primarily related to the suspension of our Canadian expansion, which reduced reported net income by $17.7 million or $0.32 per diluted share. A reconciliation of non-GAAP financial measures to the respective GAAP measures is included in this release.
“Today, we reported financial results that exceeded our expectations as we continue to navigate a year of uncertainties with agility and strength,” said Mary Dillon, chief executive officer. “I am proud of how well our teams are responding and leading throughout this difficult period, and I want to thank all of our Ulta Beauty associates for their continued commitment to serving our guests and taking care of each other during this unprecedented time.”
“We know guests are changing how they shop beauty, but importantly, their engagement with the category remains strong,” continued Dillon. “As a well-loved brand curating all things beauty, all in one place, we take great pride in our responsibility to lead the industry and redefine beauty experiences for guests, inclusive of safety measures. As the prevalence of COVID-19 increases across the country, we will continue to monitor closely and adjust operations as needed to ensure the safe delivery of beauty essentials.”
COVID-19 Response and Impact
The Company’s financial results continue to be impacted by the COVID-19 pandemic and efforts to contain it.
On March 19, 2020, Ulta Beauty temporarily closed all stores in response to the spread of COVID-19. On April 19, 2020, the Company introduced curbside pickup, and on May 11, 2020, the Company started a phased store reopening process. By July 20, 2020, the full fleet of Ulta Beauty stores was operational. By October 31, 2020, salon and brow services had resumed in almost all stores. Reflecting operational limitations related to COVID-19 and the partial resumption of services, the Company has reactivated more than half of the furloughed associates. During the first nine months of fiscal 2020, the Company incurred incremental operating costs related to COVID-19 of approximately $160 million and recorded a $51 million reduction of selling, general and administrative (SG&A) expenses as a result of the employee retention credits made available under the Coronavirus Aid, Relief and Economic Security Act (CARES Act).
The Company began the fourth quarter with nearly all stores open for retail. However, as COVID-19 prevalence increases, market-specific government restrictions may also increase, resulting in reduced operating hours, limitations on in-store capacity, and in some cases, mandated store closures.
For the Third Quarter of Fiscal 2020
For the First Nine Months of Fiscal 2020
Balance Sheet
The Company ended the third quarter of fiscal 2020 with $560.9 million in cash and cash equivalents. During the first quarter of fiscal 2020, as a precautionary measure reflecting economic uncertainty due to COVID-19 and to enhance financial flexibility, the Company drew down $800 million under its $1.0 billion credit facility. The full amount of the drawdown was repaid in the third quarter of fiscal 2020.
Merchandise inventories, net at the end of the third quarter of fiscal 2020 totaled $1.4 billion compared to $1.6 billion at the end of the third quarter of fiscal 2019. The decrease in total inventory was primarily driven by the decline in sales due to COVID-19 and lower holiday receipts, partially offset by an increase due to 21 net new stores opened since November 2, 2019 and the opening of the Jacksonville, FL fast fulfillment center. Average inventory per store decreased 12.5% compared to the third quarter of fiscal 2019.
Share Repurchase Program
As of October 31, 2020, $1.58 billion remained available under the $1.6 billion share repurchase program announced in March 2020. On April 2, 2020, the Company announced its repurchase program had been suspended to preserve financial flexibility in the early stages of the COVID-19 pandemic. While no shares were repurchased in the third quarter, the Company may resume its stock repurchase program in the fourth quarter of fiscal 2020.
Store Update
During the third quarter of fiscal 2020, the Company opened 17 stores located in Camarillo, CA; Chester, NJ; Easton, MD; Farmingdale, NY; Flagstaff, AZ; Fort Worth, TX; Germantown, MD; Lewisville, TX; Mission Hills, CA; Nashville, TN; Newtown, PA; Southbury, CT; Springfield, MO; Stafford, VA; Toms River, NJ; Valparaiso, IN; and Wayne, NJ. The Company ended the third quarter of fiscal 2020 with 1,262 stores and square footage of 13,263,615. In addition, the Company closed 19 stores during the third quarter of fiscal 2020.
Fiscal 2020 Outlook
“Ulta Beauty is well positioned for this gift giving season as consumers continue to seek moments of joy, connection and self-care, and we are encouraged with early holiday sales trends in November. However, the operating environment continues to be dynamic. While it is difficult to predict future impacts of the pandemic on demand this holiday season, we have increased our sales expectations for the fourth quarter and now anticipate comparable store sales will decline in the range of 12% to 14%,” continued Dillon. "We know this holiday season will be like no other, but our team is ready and excited to help our guests see the joy of the season.”
The Company withdrew 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, adjusted net income, and adjusted diluted earnings 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, net income, and diluted earnings per share as measures of operating performance. A reconciliation of adjusted operating income, adjusted net income, and adjusted diluted earnings per share is provided in this release. The Company believes 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 third quarter of fiscal 2020 results is scheduled for today, December 3, 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 December 17, 2020 and can be accessed by dialing (844) 512‑2921 and entering conference ID number 13712959.
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
October 31,
November 2,
2020
2019
(Unaudited)
(Unaudited)
Net sales
$
1,552,033
100.0
%
$
1,682,514
100.0
%
Cost of sales
1,006,514
64.9
%
1,059,081
62.9
%
Gross profit
545,519
35.1
%
623,433
37.1
%
Selling, general and administrative expenses
416,378
26.8
%
449,198
26.7
%
Impairment, restructuring and other costs
23,624
1.5
%
—
0.0
%
Pre-opening expenses
4,240
0.3
%
6,455
0.4
%
Operating income
101,277
6.5
%
167,780
10.0
%
Interest expense (income), net
1,383
0.1
%
(900
)
(0.1
%)
Income before income taxes
99,894
6.4
%
168,680
10.1
%
Income tax expense
25,096
1.6
%
38,933
2.3
%
Net income
$
74,798
4.8
%
$
129,747
7.7
%
Net income per common share:
Basic
$
1.33
$
2.25
Diluted
$
1.32
$
2.25
Weighted average common shares outstanding:
Basic
56,327
57,568
Diluted
56,546
57,763
Exhibit 2
Ulta Beauty, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
39 Weeks Ended
October 31,
November 2,
2020
2019
(Unaudited)
(Unaudited)
Net sales
$
3,953,252
100.0
%
$
5,092,150
100.0
%
Cost of sales
2,775,121
70.2
%
3,217,971
63.2
%
Gross profit
1,178,131
29.8
%
1,874,179
36.8
%
Selling, general and administrative expenses
1,068,877
27.1
%
1,245,174
24.5
%
Impairment, restructuring and other costs
83,924
2.1
%
—
0.0
%
Pre-opening expenses
12,782
0.3
%
15,667
0.3
%
Operating income
12,548
0.3
%
613,338
12.0
%
Interest expense (income), net
5,272
0.1
%
(4,617
)
(0.1
%)
Income before income taxes
7,276
0.2
%
617,955
12.1
%
Income tax expense
2,935
0.1
%
134,729
2.6
%
Net income
$
4,341
0.1
%
$
483,226
9.5
%
Net income per common share:
Basic
$
0.08
$
8.31
Diluted
$
0.08
$
8.27
Weighted average common shares outstanding:
Basic
56,355
58,123
Diluted
56,524
58,396
Exhibit 3
Ulta Beauty, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
October 31,
February 1,
November 2,
2020
2020
2019
(Unaudited)
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
560,902
$
392,325
$
208,843
Short-term investments
—
110,000
—
Receivables, net
136,271
139,337
112,888
Merchandise inventories, net
1,439,098
1,293,701
1,616,920
Prepaid expenses and other current assets
99,810
103,567
118,343
Prepaid income taxes
8,928
16,387
40,474
Total current assets
2,245,009
2,055,317
2,097,468
Property and equipment, net
1,042,262
1,205,524
1,233,412
Operating lease assets
1,510,030
1,537,565
1,529,524
Goodwill
10,870
10,870
10,870
Other intangible assets, net
2,696
3,391
3,622
Deferred compensation plan assets
30,141
27,849
26,269
Other long-term assets
29,986
23,356
27,683
Total assets
$
4,870,994
$
4,863,872
$
4,928,848
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
478,501
$
414,009
$
594,993
Accrued liabilities
268,310
246,088
249,112
Deferred revenue
224,862
237,535
190,188
Current operating lease liabilities
252,171
239,629
222,627
Accrued income taxes
6,499
—
—
Total current liabilities
1,230,343
1,137,261
1,256,920
Non-current operating lease liabilities
1,661,750
1,698,718
1,706,806
Deferred income taxes
89,112
89,367
83,856
Other long-term liabilities
35,352
36,432
34,110
Total liabilities
3,016,557
2,961,778
3,081,692
Commitments and contingencies
Total stockholders’ equity
1,854,437
1,902,094
1,847,156
Total liabilities and stockholders’ equity
$
4,870,994
$
4,863,872
$
4,928,848
Exhibit 4
Ulta Beauty, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
39 Weeks Ended
October 31,
November 2,
2020
2019
(Unaudited)
(Unaudited)
Operating activities
Net income
$
4,341
$
483,226
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
226,386
219,207
Non-cash lease expense
196,354
219,220
Long-lived asset impairment charge
69,932
—
Deferred income taxes
(255
)
(8
)
Stock-based compensation expense
22,979
19,108
Loss on disposal of property and equipment
5,219
4,821
Change in operating assets and liabilities:
Receivables
3,066
5,812
Merchandise inventories
(145,397
)
(402,591
)
Prepaid expenses and other current assets
3,007
(5,487
)
Income taxes
13,958
(23,477
)
Accounts payable
62,337
190,977
Accrued liabilities
24,582
23,109
Deferred revenue
(12,673
)
(8,866
)
Operating lease liabilities
(212,665
)
(198,181
)
Other assets and liabilities
(2,126
)
30,636
Net cash provided by operating activities
259,045
557,506
Investing activities
Short-term investments, net
110,000
—
Capital expenditures
(116,745
)
(241,136
)
Acquisitions, net of cash acquired
(1,220
)
—
Purchases of equity investments
(5,665
)
(43,757
)
Net cash used in investing activities
(13,630
)
(284,893
)
Financing activities
Proceeds from long-term debt
800,000
—
Payments on long-term debt
(800,000
)
—
Repurchase of common shares
(72,981
)
(506,868
)
Stock options exercised
1,346
43,211
Purchase of treasury shares
(3,256
)
(9,364
)
Debt issuance costs
(1,861
)
—
Net cash used in financing activities
(76,752
)
(473,021
)
Effect of exchange rate changes on cash and cash equivalents
(86
)
—
Net increase (decrease) in cash and cash equivalents
168,577
(200,408
)
Cash and cash equivalents at beginning of period
392,325
409,251
Cash and cash equivalents at end of period
$
560,902
$
208,843
Exhibit 5
Ulta Beauty, Inc.
2020 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 2020
quarter
quarter
quarter
end of the quarter
1st Quarter
1,254
11
1
1,264
2nd Quarter
1,264
0
0
1,264
3rd Quarter
1,264
17
19
1,262
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
3rd Quarter
13,294,607
173,077
204,069
13,263,615
Exhibit 6Ulta Beauty, Inc.
Reconciliation of GAAP basis to Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share
(In thousands, except per share data)
(Unaudited)
13 weeks ended
39 weeks ended
October 31,
November 2,
October 31,
November 2,
2020
2019
2020
2019
Operating income
$
101,277
$
167,780
$
12,548
$
613,338
Add: Store asset impairment
—
—
40,428
—
Add: Store closures and other costs1
2,030
—
23,302
—
Add: Suspension of Canadian expansion
15,886
—
15,886
—
Add: Severance
5,708
—
5,708
—
Adjusted operating income
$
124,901
$
167,780
$
97,872
$
613,338
Net income
$
74,798
$
129,747
$
4,341
$
483,226
Add: Store asset impairment
—
—
40,428
—
Less: Income tax benefit of store asset impairment
—
—
(9,905
)
—
Add: Store closures1
2,030
—
23,302
—
Less: Income tax benefit of store closures2
(510
)
—
(5,709
)
—
Add: Suspension of Canadian expansion
15,886
—
15,886
—
Less: Income tax benefit of suspension of Canadian expansion2
(3,987
)
—
(3,892
)
—
Add: Severance
5,708
—
5,708
—
Less: Income tax benefit of severance2
(1,433
)
—
(1,398
)
—
Less: Stock compensation and other tax credits
—
(1,138
)
—
(14,222
)
Adjusted net income
$
92,492
$
128,609
$
68,761
$
469,004
Diluted earnings per share
$
1.32
$
2.25
$
0.08
$
8.27
Add: Store asset impairment
—
—
0.72
—
Less: Income tax benefit of store asset impairment
—
—
(0.18
)
—
Add: Store closures and other costs1
0.04
—
0.41
—
Less: Income tax benefit of store closures and other costs2
(0.01
)
—
(0.10
)
—
Add: Suspension of Canadian expansion
0.28
—
0.28
—
Less: Income tax benefit of suspension of Canadian expansion2
(0.07
)
—
(0.07
)
—
Add: Severance
0.10
—
0.10
—
Less: Income tax benefit of severance2
(0.02
)
—
(0.02
)
—
Less: Stock compensation and other tax credits
—
(0.02
)
—
(0.24
)
Adjusted diluted earnings per share:
$
1.64
$
2.23
$
1.22
$
8.03
1
Store closures and other costs includes $1,400 related to inventory write-offs, for the 39 weeks ended October 31, 2020. There were no inventory write-offs included in store closures and other costs for the 13 weeks ended October 31, 2020.
2
The income tax benefit for non-GAAP adjustments was calculated using the Company's blended tax rate before discrete items.
View source version on businesswire.com: https://www.businesswire.com/news/home/20201203005983/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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