News Release Details

Ulta Beauty Announces Record First Quarter Fiscal 2021 Results

05/27/21

Net Sales of $1.9 Billion Compared to $1.2 Billion in the Year-Ago Quarter

Comparable Sales Increased 65.9%

Net Income of $230.3 Million or $4.10 Per Diluted Share

Company Raises Outlook for Fiscal Year 2021

BOLINGBROOK, Ill.--(BUSINESS WIRE)-- Ulta Beauty, Inc. (NASDAQ: ULTA) today announced financial results for the first quarter ended May 1, 2021.

 

 

 

 

 

 

 

 

 

 

 

 

May 1,

 

May 2,

 

May 4,

(Dollars in millions)

 

2021

 

2020

 

2019

Net sales

 

$

1,938.5

 

$

1,173.2

 

$

1,743.0

Comparable sales

 

 

65.9%

 

 

(35.3)%

 

 

7.0%

Gross profit (as a percentage of net sales)

 

 

38.9%

 

 

25.9%

 

 

37.0%

Selling, general and administrative expenses

 

$

443.9

 

$

380.9

 

$

403.1

Operating income (as a percentage of net sales)

 

 

15.8%

 

 

(8.7)%

 

 

13.6%

Diluted earnings per share

 

$

4.10

 

$

(1.39)

 

$

3.26

New store openings, net

 

 

26

 

 

10

 

 

22

“The Ulta Beauty team delivered an outstanding start to the year, with sales and earnings exceeding fiscal 2020 and fiscal 2019 first quarter levels,” said Mary Dillon, chief executive officer. “I want to thank all our associates for their continued efforts to deliver great experiences and support our business in an environment that continues to be very dynamic.”

“We have emerged from 2020 with strong momentum in our sales trends, market share gains, and consumer sentiment,” said Dave Kimbell, president. “As increasing consumer confidence, the relaxation of restrictions, and a desire for newness drive increased engagement with the beauty category, our differentiated model, combined with our ongoing efforts to create meaningful guest connections, position us well to lead through the category recovery.”

For the First Quarter of Fiscal 2021

  • Net sales increased 65.2% to $1.9 billion compared to $1.2 billion in the first quarter of fiscal 2020. The net sales increase during the first quarter of fiscal 2021 was primarily due to the favorable impact in the U.S. from improving consumer confidence, government stimulus payments and the easing of COVID-19 restrictions.
  • Comparable sales (sales for stores open at least 14 months, including stores temporarily closed due to COVID-19, and e-commerce sales) increased 65.9% compared to a decrease of 35.3% in the first quarter of fiscal 2020, driven by a 52.5% increase in transactions and an 8.8% increase in average ticket. Compared to the first quarter of fiscal 2019, comparable sales increased 7.0%.
  • Gross profit increased to $753.8 million compared to $303.6 million in the first quarter of fiscal 2020. As a percentage of net sales, gross profit increased to 38.9% compared to 25.9% in the first quarter of fiscal 2020, primarily due to leverage in fixed costs due to higher sales; improvement in merchandise margins; lower salon expenses; and favorable channel mix shifts.
  • Selling, general and administrative (“SG&A”) expenses increased to $443.9 million compared to $380.9 million in the first quarter of fiscal 2020, primarily due to higher store payroll and benefits and higher advertising. As a percentage of net sales, SG&A expenses decreased to 22.9% compared to 32.5% in the first quarter of fiscal 2020, driven by an increase in net sales.
  • There were no impairment costs recognized in the first quarter of 2021 compared to $19.5 million in the first quarter of fiscal 2020.
  • Pre-opening expenses of $4.6 million were consistent with the first quarter of fiscal 2020.
  • Operating income was $305.3 million, or 15.8% of net sales, compared to operating loss of $101.5 million, or (8.7)% of net sales, in the first quarter of fiscal 2020. Adjusted operating loss for the first quarter of fiscal 2020 was $81.9 million, or (7.0)% of net sales.
  • Tax rate increased to 24.5% compared to 23.6% in the first quarter of fiscal 2020. The higher effective tax rate is primarily due to a decrease in the benefit of state tax credits.
  • Net income was $230.3 million compared to net loss of $78.5 million in the first quarter of fiscal 2020. Adjusted net loss for the first quarter of fiscal 2020 was $63.6 million.
  • Diluted earnings per share was $4.10, including a $0.03 benefit due to income tax accounting for share-based compensation, compared to diluted loss per share of $1.39 in the first quarter of fiscal 2020. Adjusted diluted loss per share for the first quarter of fiscal 2020 was $1.13.

Balance Sheet

Cash and cash equivalents at the end of the first quarter of fiscal 2021 totaled $947.5 million.

Merchandise inventories, net at the end of first quarter of fiscal 2021 increased $13.0 million to $1.4 billion compared to $1.3 billion at the end of the first quarter of fiscal 2020. The increase in inventory was primarily driven by 26 net new stores and the opening of the Jacksonville, FL fast fulfillment center, partially offset by lower inventory due to higher than expected sales.

Share Repurchase Program

During the first quarter of fiscal 2021, the Company repurchased 1,243,209 shares of its common stock at a cost of $392.3 million. As of May 1, 2021, $1.1 billion remained available under the $1.6 billion share repurchase program announced in March 2020.

Store Update

Real estate activity in the first quarter of fiscal 2021 included 28 new stores located in Acworth, GA; Albertville, AL; Ames, IA; Bakersfield, CA; Beaumont, CA; Bradenton, FL; Canoga Park, CA; Cincinnati, OH; Easley, SC; Hadley, MA; Houston, TX; Ledgewood, NJ; Miami, FL; Mount Pleasant, MI; New York, NY; Novato, CA; Orange, CA; Panama City, FL; Salem, NH; Shallotte, NC; St. Johns, FL; Sumter, SC; Tampa, FL; Washington, PA; Watertown, MA; West Chester, OH; West Hartford, CT; and Wilmington, NC. In addition, the Company relocated one store and closed two stores.

The first quarter of fiscal 2021 ended with 1,290 stores totaling 13.6 million square feet, representing a 2.3% increase in square footage compared to the first quarter of fiscal 2020.

Fiscal 2021 Outlook

The Company has updated its outlook for fiscal 2021.

 

 

 

 

 

Prior FY21 Outlook

 

Updated FY21 Outlook

Net sales

$7.2 billion to $7.3 billion

 

$7.7 billion to $7.8 billion

Comparable sales

15% to 17%

 

23% to 25%

New stores, net

40

 

no change

Remodel and relocation projects

21

 

19

Operating margin

approximately 9%

 

approximately 11%

Diluted earnings per share

$8.85 to $9.30

 

$11.50 to $11.95

Share repurchases

approximately $850 million

 

no change

Effective tax rate

24.8%

 

no change

Capital expenditures

$200 million to $250 million

 

$225 million to $250 million

Depreciation and amortization expense

$270 million to $280 million

 

no change

The Company’s outlook for fiscal 2021 assumes no material increases in the federal minimum wage and does not include assumptions for any impact related to a resurgence of COVID-19.

Non-GAAP Financial Information

In this press release, the Company provides information regarding adjusted operating loss, adjusted net loss, and adjusted diluted 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 loss, net loss, and diluted loss per share as measures of operating performance. A reconciliation of adjusted operating loss, adjusted net loss, and adjusted diluted loss 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 first quarter of fiscal 2021 results is scheduled for today, May 27, 2021, at 4:30 p.m. Eastern Time / 3:30 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 June 10, 2021 and can be accessed by dialing (844) 512‑2921 and entering conference ID number 13718914.

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 operates 1,290 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.

Ulta Beauty was recently added to the Bloomberg Gender Equality Index, which tracks the financial performance of public companies committed to supporting gender equality through policy development, representation and transparency. More information about Ulta Beauty’s corporate responsibility efforts can be found at http://ir.ultabeauty.com/Corporate-Responsibility/.

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 negative impacts the COVID-19 pandemic has had, and will continue to have, on the company’s business, financial condition, profitability, cash flows and supply chain, as well as consumer spending (including future uncertain impacts);
  • epidemics, pandemics like COVID-19 or natural disasters that have and could continue to negatively impact the company’s sales;
  • changes in the overall level of consumer spending and volatility in the economy, including as a result of the COVID-19 pandemic and/or government aid programs;
  • a decline in operating results that has and may continue to lead to asset impairment and store closures charges;
  • the company’s ability to sustain its growth plans and successfully implement its long-range strategic and financial plan;
  • the company’s ability to gauge beauty trends and react to changing consumer preferences in a timely manner;
  • the possibility that the company may be unable to compete effectively in its highly competitive markets;
  • the company’s ability to execute its Efficiencies for Growth cost optimization program;
  • the possibility that cybersecurity breaches and other disruptions could compromise the company’s information or result in the unauthorized disclosure of confidential information;
  • the possibility of material disruptions to the company’s information systems;
  • the possibility that the capacity of the company’s distribution and order fulfillment infrastructure and the performance of its distribution centers and fast fulfillment centers may not be adequate to support its recent growth and expected future growth plans;
  • changes in the wholesale cost of the company’s products;
  • the possibility that new store openings and existing locations may be impacted by developer or co-tenant issues;
  • the company’s ability to attract and retain key executive personnel;
  • the company’s ability to successfully execute its common stock repurchase program or implement future common stock repurchase programs; 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 January 30, 2021, 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 Operations

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

 

May 1,

 

May 2,

 

 

2021

 

2020

 

 

(Unaudited)

 

(Unaudited)

Net sales

 

$

1,938,519

 

100.0

%

 

$

1,173,210

 

 

100.0

%

Cost of sales

 

 

1,184,731

 

61.1

%

 

 

869,605

 

 

74.1

%

Gross profit

 

 

753,788

 

38.9

%

 

 

303,605

 

 

25.9

%

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

443,875

 

22.9

%

 

 

380,912

 

 

32.5

%

Impairment costs

 

 

 

0.0

%

 

 

19,542

 

 

1.7

%

Pre-opening expenses

 

 

4,589

 

0.2

%

 

 

4,635

 

 

0.4

%

Operating income (loss)

 

 

305,324

 

15.8

%

 

 

(101,484

)

 

(8.7

)%

Interest expense, net

 

 

358

 

0.0

%

 

 

1,272

 

 

0.1

%

Income (loss) before income taxes

 

 

304,966

 

15.8

%

 

 

(102,756

)

 

(8.8

)%

Income tax expense (benefit)

 

 

74,677

 

3.9

%

 

 

(24,247

)

 

(2.1

)%

Net income (loss)

 

$

230,289

 

11.9

%

 

$

(78,509

)

 

(6.7

)%

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

4.13

 

 

 

$

(1.39

)

 

 

Diluted

 

$

4.10

 

 

 

$

(1.39

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

55,795

 

 

 

 

56,419

 

 

 

Diluted

 

 

56,172

 

 

 

 

56,419

 

 

 

Exhibit 2

Ulta Beauty, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

May 1,

 

January 30,

 

May 2,

 

 

2021

 

2021

 

2020

 

 

(Unaudited)

 

 

 

 

(Unaudited)

Assets

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

947,456

 

$

1,046,051

 

$

1,043,540

Short-term investments

 

 

 

 

 

 

110,000

Receivables, net

 

 

154,342

 

 

193,109

 

 

88,691

Merchandise inventories, net

 

 

1,353,565

 

 

1,168,215

 

 

1,340,566

Prepaid expenses and other current assets

 

 

108,393

 

 

107,402

 

 

97,041

Prepaid income taxes

 

 

 

 

 

 

48,982

Total current assets

 

 

2,563,756

 

 

2,514,777

 

 

2,728,820

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

960,440

 

 

995,795

 

 

1,148,341

Operating lease assets

 

 

1,487,616

 

 

1,504,614

 

 

1,583,490

Goodwill

 

 

10,870

 

 

10,870

 

 

10,870

Other intangible assets, net

 

 

2,233

 

 

2,465

 

 

3,159

Deferred compensation plan assets

 

 

34,279

 

 

33,223

 

 

25,388

Other long-term assets

 

 

28,350

 

 

28,225

 

 

30,483

Total assets

 

$

5,087,544

 

$

5,089,969

 

$

5,530,551

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

552,837

 

$

477,052

 

$

466,043

Accrued liabilities

 

 

322,676

 

 

296,334

 

 

173,310

Deferred revenue

 

 

270,090

 

 

274,383

 

 

216,330

Current operating lease liabilities

 

 

263,200

 

 

253,415

 

 

240,496

Accrued income taxes

 

 

113,960

 

 

42,529

 

 

Total current liabilities

 

 

1,522,763

 

 

1,343,713

 

 

1,096,179

 

 

 

 

 

 

 

 

 

 

Non-current operating lease liabilities

 

 

1,613,309

 

 

1,643,386

 

 

1,748,245

Long-term debt

 

 

 

 

 

 

800,000

Deferred income taxes

 

 

66,483

 

 

65,359

 

 

95,276

Other long-term liabilities

 

 

40,272

 

 

37,962

 

 

36,892

Total liabilities

 

 

3,242,827

 

 

3,090,420

 

 

3,776,592

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

1,844,717

 

 

1,999,549

 

 

1,753,959

Total liabilities and stockholders’ equity

 

$

5,087,544

 

$

5,089,969

 

$

5,530,551

Exhibit 3

Ulta Beauty, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

 

May 1,

 

May 2,

 

 

2021

 

2020

 

 

(Unaudited)

 

(Unaudited)

Operating activities

 

 

 

 

 

 

Net income (loss)

 

$

230,289

 

 

$

(78,509

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

70,599

 

 

 

76,626

 

Non-cash lease expense

 

 

68,881

 

 

 

70,863

 

Long-lived asset impairment charge

 

 

 

 

 

19,542

 

Deferred income taxes

 

 

1,124

 

 

 

5,909

 

Stock-based compensation expense

 

 

8,978

 

 

 

6,182

 

Loss on disposal of property and equipment

 

 

1,089

 

 

 

1,521

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Receivables

 

 

38,767

 

 

 

50,646

 

Merchandise inventories

 

 

(185,350

)

 

 

(46,865

)

Prepaid expenses and other current assets

 

 

(991

)

 

 

6,526

 

Income taxes

 

 

71,431

 

 

 

(32,595

)

Accounts payable

 

 

76,580

 

 

 

46,965

 

Accrued liabilities

 

 

23,209

 

 

 

(63,927

)

Deferred revenue

 

 

(4,293

)

 

 

(21,205

)

Operating lease liabilities

 

 

(72,175

)

 

 

(68,976

)

Other assets and liabilities

 

 

1,929

 

 

 

2,979

 

Net cash provided by (used in) operating activities

 

 

330,067

 

 

 

(24,318

)

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Capital expenditures

 

 

(34,563

)

 

 

(41,474

)

Purchases of equity investments

 

 

 

 

 

(5,386

)

Net cash used in investing activities

 

 

(34,563

)

 

 

(46,860

)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Proceeds from long-term debt

 

 

 

 

 

800,000

 

Repurchase of common shares

 

 

(392,309

)

 

 

(72,981

)

Stock options exercised

 

 

5,032

 

 

 

250

 

Purchase of treasury shares

 

 

(6,766

)

 

 

(3,002

)

Debt issuance costs

 

 

 

 

 

(1,799

)

Net cash provided by (used in) financing activities

 

 

(394,043

)

 

 

722,468

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(56

)

 

 

(75

)

Net increase (decrease) in cash and cash equivalents

 

 

(98,595

)

 

 

651,215

 

Cash and cash equivalents at beginning of period

 

 

1,046,051

 

 

 

392,325

 

Cash and cash equivalents at end of period

 

$

947,456

 

 

$

1,043,540

 

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 2021

 

quarter

 

quarter

 

quarter

 

end of the quarter

1st Quarter

 

1,264

 

28

 

2

 

1,290

 

 

 

 

 

 

 

 

 

 

 

 

 

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 2021

 

the quarter

 

quarter

 

during the quarter

 

quarter

1st Quarter

 

13,291,838

 

327,476

 

22,906

 

13,596,408

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 1,

 

May 2,

 

 

2021

 

2020

Cosmetics (1)

 

45%

 

50%

Skincare

 

19%

 

17%

Haircare products and styling tools

 

19%

 

18%

Fragrance and bath

 

11%

 

7%

Services

 

3%

 

4%

Accessories and other (1)

 

3%

 

4%

 

 

100%

 

100%

_______________________

(1)

Certain sales departments were reclassified between categories in the prior year to conform to current year presentation.

Exhibit 6

Ulta Beauty, Inc.

Reconciliation of GAAP basis to Adjusted operating loss, Adjusted net loss and

Adjusted diluted loss per share

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

13 weeks ended

 

 

May 2,

 

 

2020

Operating loss

 

$

(101,484

)

Add: Store asset impairment

 

 

19,542

 

Adjusted operating loss

 

$

(81,942

)

 

 

 

 

Net loss

 

$

(78,509

)

Add: Store asset impairment

 

 

19,542

 

Less: Income tax benefit of store asset impairment1

 

 

(4,612

)

Adjusted net loss

 

$

(63,579

)

 

 

 

 

Diluted loss per share

 

$

(1.39

)

Add: Store asset impairment

 

 

0.35

 

Less: Income tax benefit of store asset impairment1

 

 

(0.09

)

Adjusted diluted loss per share

 

$

(1.13

)

1 The income tax benefit for non-GAAP adjustments was calculated using the Company’s effective tax rate.

Investor Contacts:
Kiley Rawlins, CFA
Vice President, Investor Relations
krawlins@ulta.com
(331) 757-2206

Media Contact:
Eileen Ziesemer
Vice President, Public Relations
eziesemer@ulta.com
(708) 305-4479

Source: Ulta Beauty, Inc.