Ulta Beauty, Inc 10-Q for FY2024 Q3

Ulta Beauty, Inc. (ULTA)

10-Q 2023-11-30 For: 2023-10-28

Added on April 04, 2026

About this 10-Q

Ulta Beauty, Inc filed this 10-Q on November 30, 2023, covering the quarter ended October 28, 2023 (FY2024 Q3).

Headline figures

Quarter ended October 28, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.49B; up 6.4% from $2.34B a year earlier
Net income: $249.48M; down 9.1% from net income of $274.59M a year earlier
Diluted EPS: $5.07; down 5.1% from $5.34 a year earlier

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Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ULTA	The NASDAQ Global Select Market


Part I - Financial Information

Item 1. Financial Statements
Consolidated Balance Sheets		3
Consolidated Statements of Income		4
Consolidated Statements of Cash Flows		5
Consolidated Statements of Stockholders’ Equity		6
Notes to Consolidated Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

Item 3. Quantitative and Qualitative Disclosures about Market Risk		23

Item 4. Controls and Procedures		24

Part II - Other Information		24

Item 1. Legal Proceedings		24

Item 1A. Risk Factors		24

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		24

Item 3. Defaults Upon Senior Securities		25

Item 4. Mine Safety Disclosures		25

Item 5. Other Information		25

Item 6. Exhibits		25

SIGNATURES		27


	October 28,		January 28,		October 29,
(In thousands, except per share data)	2023		2023		2022
Assets		(Unaudited)				(Unaudited)
Current assets:
Cash and cash equivalents	$	121,811	$	737,877	$	250,628
Receivables, net		202,868		199,422		200,304
Merchandise inventories, net		2,321,306		1,603,451		2,114,669
Prepaid expenses and other current assets		117,282		130,246		137,642
Prepaid income taxes		28,773		38,308		42,572
Total current assets		2,792,040		2,709,304		2,745,815

Property and equipment, net		1,117,874		1,009,273		967,039
Operating lease assets		1,578,316		1,561,263		1,556,940
Goodwill		10,870		10,870		10,870
Other intangible assets, net		591		1,312		844
Deferred compensation plan assets		38,371		35,382		31,529
Other long-term assets		56,946		43,007		18,512
Total assets	$	5,595,008	$	5,370,411	$	5,331,549

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	597,373	$	559,527	$	647,117
Accrued liabilities		405,443		444,278		462,773
Deferred revenue		350,937		394,677		312,132
Current operating lease liabilities		287,786		283,293		275,749
Short-term debt		195,400		—		—
Total current liabilities		1,836,939		1,681,775		1,697,771

Non-current operating lease liabilities		1,616,747		1,619,883		1,621,252
Deferred income taxes		56,874		55,346		38,627
Other long-term liabilities		55,906		53,596		51,644
Total liabilities		3,566,466		3,410,600		3,409,294

Commitments and contingencies (Note 6)

Stockholders' equity:
Common stock, $0.01 par value, 400,000 shares authorized; 49,458, 51,120, and 51,785 shares issued; 48,659, 50,364, and 51,029 shares outstanding; at October 28, 2023 (unaudited), January 28, 2023, and October 29, 2022 (unaudited), respectively		495		511		517
Treasury stock-common, at cost		(82,798)		(60,470)		(60,218)
Additional paid-in capital		1,058,969		1,023,997		998,816
Retained earnings		1,051,876		995,773		983,140
Total stockholders’ equity		2,028,542		1,959,811		1,922,255
Total liabilities and stockholders’ equity	$	5,595,008	$	5,370,411	$	5,331,549


	13 Weeks Ended				39 Weeks Ended
	October 28,		October 29,		October 28,		October 29,
(In thousands, except per share data)	2023		2022		2023		2022
Net sales	$	2,488,933	$	2,338,793	$	7,653,005	$	6,981,807
Cost of sales		1,496,866		1,375,976		4,612,469		4,149,800
Gross profit		992,067		962,817		3,040,536		2,832,007

Selling, general and administrative expenses		661,380		597,164		1,874,201		1,632,593
Pre-opening expenses		3,460		3,797		5,396		8,422
Operating income		327,227		361,856		1,160,939		1,190,992
Interest income, net		(2,497)		(849)		(14,294)		(556)
Income before income taxes		329,724		362,705		1,175,233		1,191,548
Income tax expense		80,241		88,120		278,597		289,891
Net income	$	249,483	$	274,585	$	896,636	$	901,657

Net income per common share:
Basic	$	5.09	$	5.37	$	18.08	$	17.45
Diluted	$	5.07	$	5.34	$	17.99	$	17.35

Weighted average common shares outstanding:
Basic		49,007		51,131		49,592		51,663
Diluted		49,226		51,418		49,846		51,962


	39 Weeks Ended
	October 28,		October 29,
(In thousands)	2023		2022
Operating activities
Net income	$	896,636	$	901,657
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		181,273		182,182
Non-cash lease expense		232,772		222,548
Deferred income taxes		1,528		(1,066)
Stock-based compensation expense		33,477		32,554
Loss on disposal of property and equipment		6,310		3,892
Change in operating assets and liabilities:
Receivables		(3,446)		33,378
Merchandise inventories		(717,855)		(615,451)
Prepaid expenses and other current assets		12,964		(26,828)
Income taxes		9,535		(49,446)
Accounts payable		41,817		94,214
Accrued liabilities		(34,955)		64,164
Deferred revenue		(43,740)		(41,447)
Operating lease liabilities		(248,469)		(246,988)
Other assets and liabilities		(9,836)		20,063
Net cash provided by operating activities		358,011		573,426

Investing activities
Capital expenditures		(311,030)		(203,961)
Other investments		(4,870)		(3,068)
Net cash used in investing activities		(315,900)		(207,029)

Financing activities
Borrowings from credit facility		195,400		—
Repurchase of common shares		(840,551)		(571,908)
Stock options exercised		9,302		31,319
Purchase of treasury shares		(22,328)		(6,740)
Net cash used in financing activities		(658,177)		(547,329)

Net decrease in cash and cash equivalents		(616,066)		(180,932)
Cash and cash equivalents at beginning of period		737,877		431,560
Cash and cash equivalents at end of period	$	121,811	$	250,628

Supplemental information
Income taxes paid, net of refunds	$	266,802	$	339,290
Non-cash capital expenditures		53,936		33,982


				Treasury -
	Common Stock			Common Stock			Additional				Total
	Issued			Treasury			Paid-In		Retained		Stockholders'
(In thousands)	Shares	Amount		Shares	Amount		Capital		Earnings		Equity
Balance – January 28, 2023	51,120	$	511	(756)	$	(60,470)	$	1,023,997	$	995,773	$	1,959,811
Net income	—		—	—		—		—		347,051		347,051
Stock-based compensation	—		—	—		—		9,721		—		9,721
Stock options exercised and other awards	150		1	—		—		8,926		—		8,927
Purchase of treasury shares	—		—	(41)		(21,659)		—		—		(21,659)
Repurchase of common shares, including excise tax	(541)		(5)	—		—		(2,266)		(283,512)		(285,783)
Balance – April 29, 2023	50,729	$	507	(797)	$	(82,129)	$	1,040,378	$	1,059,312	$	2,018,068
Net income	—		—	—		—		—		300,102		300,102
Stock-based compensation	—		—	—		—		11,818		—		11,818
Stock options exercised and other awards	4		—	—		—		220		—		220
Purchase of treasury shares	—		—	(1)		(100)		—		—		(100)
Repurchase of common shares, including excise tax	(594)		(6)	—		—		(2,737)		(275,488)		(278,231)
Balance – July 29, 2023	50,139	$	501	(798)	$	(82,229)	$	1,049,679	$	1,083,926	$	2,051,877
Net income	—		—	—		—		—		249,483		249,483
Stock-based compensation	—		—	—		—		11,938		—		11,938
Stock options exercised and other awards	5		1	—		—		154		—		155
Purchase of treasury shares	—		—	(1)		(569)		—		—		(569)
Repurchase of common shares, including excise tax	(686)		(7)	—		—		(2,802)		(281,533)		(284,342)
Balance – October 28, 2023	49,458	$	495	(799)	$	(82,798)	$	1,058,969	$	1,051,876	$	2,028,542


	Number of		Number of
Location	stores	Location	stores
Alabama	25	Montana	6
Alaska	3	Nebraska	5
Arizona	35	Nevada	16
Arkansas	11	New Hampshire	8
California	169	New Jersey	44
Colorado	27	New Mexico	7
Connecticut	19	New York	55
Delaware	4	North Carolina	44
Florida	94	North Dakota	4
Georgia	43	Ohio	46
Hawaii	4	Oklahoma	22
Idaho	9	Oregon	18
Illinois	55	Pennsylvania	45
Indiana	26	Rhode Island	4
Iowa	11	South Carolina	24
Kansas	13	South Dakota	3
Kentucky	16	Tennessee	31
Louisiana	18	Texas	129
Maine	3	Utah	15
Maryland	28	Vermont	1
Massachusetts	26	Virginia	33
Michigan	49	Washington	37
Minnesota	20	West Virginia	7
Mississippi	12	Wisconsin	21
Missouri	25	Wyoming	4
		Total	1,374


Period	Total number of shares purchased (1)	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under plans or programs (in thousands)
July 30, 2023 to August 26, 2023	157,996	$	445.62	157,960	$	471,262
August 27, 2023 to September 23, 2023	294,931		416.89	294,489		349,768
September 24, 2023 to October 28, 2023	235,191		389.25	234,240		259,417
13 weeks ended October 28, 2023	688,118		414.04	686,689		259,417


			Incorporated by Reference
Exhibit Number	Description of document	Filed Herewith	Form	Exhibit Number	File Number	Filing Date

3.1	Certificate of Incorporation of Ulta Beauty, Inc., as amended through June 1, 2023		8-K	3.1	001-33764	6/07/2023
3.2	Bylaws of Ulta Beauty, Inc., as amended through June 1, 2023		8-K	3.3	001-33764	6/07/2023
31.1	Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002	X
31.2	Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002	X
32	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101.INS	Inline XBRL Instance	X
101.SCH	Inline XBRL Taxonomy Extension Schema	X
101.CAL	Inline XBRL Taxonomy Extension Calculation	X
101.LAB	Inline XBRL Taxonomy Extension Labels	X
101.PRE	Inline XBRL Taxonomy Extension Presentation	X


	ULTA BEAUTY, INC.

	By:	/s/ David C. Kimbell
		David C. Kimbell Chief Executive Officer and Director

	By:	/s/ Scott M. Settersten
		Scott M. Settersten Chief Financial Officer, Treasurer and Assistant Secretary


Date: November 30, 2023	By:	/s/ David C. Kimbell

		David C. Kimbell Chief Executive Officer and Director


	13 Weeks Ended		39 Weeks Ended
	October 28,	October 29,	October 28,	October 29,
(Percentage of net sales)	2023	2022	2023	2022
Cosmetics	42%	44%	42%	43%
Haircare products and styling tools	19%	21%	20%	21%
Skincare	19%	16%	19%	17%
Fragrance and bath	13%	12%	12%	12%
Services	4%	4%	4%	4%
Accessories and other	3%	3%	3%	3%
	100%	100%	100%	100%


	13 Weeks Ended				39 Weeks Ended
	October 28,		October 29,		October 28,		October 29,
(In thousands)	2023		2022		2023		2022
Beginning balance	$	346,067	$	305,913	$	388,583	$	345,206
Additions to contract liabilities (1)		107,628		97,521		250,121		224,938
Deductions to contract liabilities (2)		(109,304)		(99,443)		(294,313)		(266,153)
Ending balance	$	344,391	$	303,991	$	344,391	$	303,991



	39 Weeks Ended
	October 28,	October 29,
	2023	2022
Volatility rate	45.0%	49.0%
Average risk-free interest rate	3.8%	2.4%
Average expected life (in years)	3.4	3.4
Dividend yield	—	—