Ulta Beauty, Inc 10-Q for FY2023 Q2

Ulta Beauty, Inc. (ULTA)

10-Q 2022-08-25 For: 2022-07-30

Added on April 04, 2026

About this 10-Q

Ulta Beauty, Inc filed this 10-Q on August 25, 2022, covering the quarter ended July 30, 2022 (FY2023 Q2).

Headline figures

Quarter ended July 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.3B; up 16.8% from $1.97B a year earlier
Net income: $295.68M; up 17.8% from net income of $250.89M a year earlier
Diluted EPS: $5.70; up 25.0% from $4.56 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		15

Item 3. Quantitative and Qualitative Disclosures about Market Risk		24

Item 4. Controls and Procedures		25

Part II - Other Information		25

Item 1. Legal Proceedings		25

Item 1A. Risk Factors		25

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		25

Item 3. Defaults Upon Senior Securities		26

Item 4. Mine Safety Disclosures		26

Item 5. Other Information		26

Item 6. Exhibits		27

SIGNATURES		28


	July 30,		January 29,		July 31,
(In thousands, except per share data)	2022		2022		2021
Assets		(Unaudited)				(Unaudited)
Current assets:
Cash and cash equivalents	$	434,226	$	431,560	$	770,144
Receivables, net		180,514		233,682		154,416
Merchandise inventories, net		1,666,130		1,499,218		1,443,685
Prepaid expenses and other current assets		123,014		110,814		108,145
Prepaid income taxes		39,029		5,909		18,544
Total current assets		2,442,913		2,281,183		2,494,934

Property and equipment, net		912,017		914,476		909,507
Operating lease assets		1,509,246		1,482,256		1,470,166
Goodwill		10,870		10,870		10,870
Other intangible assets, net		1,075		1,538		2,001
Deferred compensation plan assets		33,393		38,409		36,396
Other long-term assets		36,480		35,647		30,711
Total assets	$	4,945,994	$	4,764,379	$	4,954,585

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	586,851	$	552,730	$	535,257
Accrued liabilities		323,939		364,797		313,372
Deferred revenue		316,571		353,579		265,462
Current operating lease liabilities		274,693		274,118		267,442
Accrued income taxes		—		12,786		—
Total current liabilities		1,502,054		1,558,010		1,381,533

Non-current operating lease liabilities		1,582,003		1,572,638		1,585,539
Deferred income taxes		40,029		39,693		64,535
Other long-term liabilities		52,840		58,665		43,165
Total liabilities		3,176,926		3,229,006		3,074,772

Commitments and contingencies (Note 6)

Stockholders' equity:
Common stock, $0.01 par value, 400,000 shares authorized; 52,087, 53,049, and 55,160 shares issued; 51,332, 52,311, and 54,446 shares outstanding; at July 30, 2022 (unaudited), January 29, 2022, and July 31, 2021 (unaudited), respectively		521		530		551
Treasury stock-common, at cost		(59,803)		(53,478)		(44,775)
Additional paid-in capital		982,339		934,945		889,206
Retained earnings		846,011		653,376		1,034,831
Total stockholders’ equity		1,769,068		1,535,373		1,879,813
Total liabilities and stockholders’ equity	$	4,945,994	$	4,764,379	$	4,954,585


	13 Weeks Ended				26 Weeks Ended
	July 30,		July 31,		July 30,		July 31,
(In thousands, except per share data)	2022		2021		2022		2021
Net sales	$	2,297,113	$	1,967,207	$	4,643,014	$	3,905,726
Cost of sales		1,368,949		1,169,244		2,773,824		2,353,975
Gross profit		928,164		797,963		1,869,190		1,551,751

Selling, general and administrative expenses		534,459		464,299		1,035,429		908,174
Pre-opening expenses		2,277		1,357		4,625		5,946
Operating income		391,428		332,307		829,136		637,631
Interest expense (income), net		(108)		425		293		783
Income before income taxes		391,536		331,882		828,843		636,848
Income tax expense		95,859		80,989		201,771		155,666
Net income	$	295,677	$	250,893	$	627,072	$	481,182

Net income per common share:
Basic	$	5.73	$	4.59	$	12.08	$	8.71
Diluted	$	5.70	$	4.56	$	12.00	$	8.66

Weighted average common shares outstanding:
Basic		51,607		54,675		51,928		55,235
Diluted		51,900		55,014		52,237		55,592


	26 Weeks Ended
	July 30,		July 31,
(In thousands)	2022		2021
Operating activities
Net income	$	627,072	$	481,182
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		123,721		139,577
Non-cash lease expense		146,251		137,521
Deferred income taxes		336		(824)
Stock-based compensation expense		22,875		19,097
Loss on disposal of property and equipment		2,277		1,703
Change in operating assets and liabilities:
Receivables		53,168		38,693
Merchandise inventories		(166,912)		(275,470)
Prepaid expenses and other current assets		(12,200)		(741)
Income taxes		(45,906)		(61,074)
Accounts payable		40,051		59,360
Accrued liabilities		(49,364)		17,858
Deferred revenue		(37,008)		(8,921)
Operating lease liabilities		(163,302)		(146,892)
Other assets and liabilities		(392)		344
Net cash provided by operating activities		540,667		401,413

Investing activities
Capital expenditures		(120,500)		(57,305)
Other investments		(1,249)		—
Net cash used in investing activities		(121,749)		(57,305)

Financing activities
Repurchase of common shares		(434,448)		(635,793)
Stock options exercised		24,521		22,808
Purchase of treasury shares		(6,325)		(6,974)
Net cash used in financing activities		(416,252)		(619,959)

Effect of exchange rate changes on cash and cash equivalents		—		(56)
Net increase (decrease) in cash and cash equivalents		2,666		(275,907)
Cash and cash equivalents at beginning of period		431,560		1,046,051
Cash and cash equivalents at end of period	$	434,226	$	770,144

Supplemental information
Cash paid for interest	$	1,057	$	1,057
Income taxes paid, net of refunds		246,641		216,831
Non-cash capital expenditures		42,451		18,511


				Treasury -
	Common Stock			Common Stock			Additional				Total
	Issued			Treasury			Paid-In		Retained		Stockholders'
(In thousands)	Shares	Amount		Shares	Amount		Capital		Earnings		Equity
Balance – January 29, 2022	53,049	$	530	(738)	$	(53,478)	$	934,945	$	653,376	$	1,535,373
Net income	—		—	—		—		—		331,395		331,395
Stock-based compensation	—		—	—		—		10,356		—		10,356
Stock options exercised and other awards	73		1	—		—		6,501		—		6,502
Purchase of treasury shares	—		—	(14)		(5,172)		—		—		(5,172)
Repurchase of common shares	(332)		(3)	—		—		—		(132,831)		(132,834)
Balance – April 30, 2022	52,790	$	528	(752)	$	(58,650)	$	951,802	$	851,940	$	1,745,620
Net income	—		—	—		—		—		295,677		295,677
Stock-based compensation	—		—	—		—		12,519		—		12,519
Stock options exercised and other awards	95		1	—		—		18,018		—		18,019
Purchase of treasury shares	—		—	(3)		(1,153)		—		—		(1,153)
Repurchase of common shares	(798)		(8)	—		—		—		(301,606)		(301,614)
Balance – July 30, 2022	52,087	$	521	(755)	$	(59,803)	$	982,339	$	846,011	$	1,769,068


				Treasury -							Accumulated
	Common Stock			Common Stock			Additional				Other		Total
	Issued			Treasury			Paid-In		Retained		Comprehensive		Stockholders'
(In thousands)	Shares	Amount		Shares	Amount		Capital		Earnings		Income (Loss)		Equity
Balance – January 30, 2021	56,952	$	569	(692)	$	(37,801)	$	847,303	$	1,189,422	$	56	$	1,999,549
Net income	—		—	—		—		—		230,289		—		230,289
Stock-based compensation	—		—	—		—		8,978		—		—		8,978
Foreign currency translation adjustments	—		—	—		—		—		—		(56)		(56)
Stock options exercised and other awards	94		1	—		—		5,031		—		—		5,032
Purchase of treasury shares	—		—	(21)		(6,766)		—		—		—		(6,766)
Repurchase of common shares	(1,243)		(12)	—		—		—		(392,297)		—		(392,309)
Balance – May 1, 2021	55,803	$	558	(713)	$	(44,567)	$	861,312	$	1,027,414	$	—	$	1,844,717
Net income	—		—	—		—		—		250,893		—		250,893
Stock-based compensation	—		—	—		—		10,119		—		—		10,119
Stock options exercised and other awards	104		1	—		—		17,775		—		—		17,776
Purchase of treasury shares	—		—	(1)		(208)		—		—		—		(208)
Repurchase of common shares	(747)		(8)	—		—		—		(243,476)		—		(243,484)
Balance – July 31, 2021	55,160	$	551	(714)	$	(44,775)	$	889,206	$	1,034,831	$	—	$	1,879,813


	Number of		Number of
Location	stores	Location	stores
Alabama	24	Montana	6
Alaska	3	Nebraska	5
Arizona	31	Nevada	16
Arkansas	11	New Hampshire	8
California	165	New Jersey	44
Colorado	26	New Mexico	7
Connecticut	19	New York	52
Delaware	3	North Carolina	40
Florida	91	North Dakota	4
Georgia	43	Ohio	45
Hawaii	4	Oklahoma	21
Idaho	9	Oregon	16
Illinois	55	Pennsylvania	45
Indiana	24	Rhode Island	4
Iowa	11	South Carolina	24
Kansas	13	South Dakota	3
Kentucky	15	Tennessee	28
Louisiana	18	Texas	120
Maine	3	Utah	15
Maryland	28	Vermont	1
Massachusetts	23	Virginia	32
Michigan	49	Washington	36
Minnesota	19	West Virginia	7
Mississippi	11	Wisconsin	20
Missouri	25	Wyoming	3
		Total	1,325


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 (2)	Approximate dollar value of shares that may yet be purchased under plans or programs (in thousands) (2)
May 1, 2022 to May 28, 2022	444,399	$	363.85	443,886	$	1,705,670
May 29, 2022 to June 25, 2022	148,852		405.85	146,676		1,646,171
June 26, 2022 to July 30, 2022	207,537		388.65	207,432		1,565,552
13 weeks ended July 30, 2022	800,788		378.09	797,994		1,565,552


			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.		8-K	3.1	001-33764	1/30/2017
3.2	Bylaws of Ulta Beauty, Inc., as amended through June 3, 2020		8-K	3.2	001-33764	6/8/2020
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
101.DEF	Inline XBRL Taxonomy Extension Definition	X
104	Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).


	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: August 25, 2022	By:	/s/ David C. Kimbell

		David C. Kimbell Chief Executive Officer and Director


	13 Weeks Ended		26 Weeks Ended
	July 30,	July 31,	July 30,	July 31,
(Percentage of net sales)	2022	2021	2022	2021
Cosmetics	42%	43%	43%	44%
Haircare products and styling tools	22%	21%	21%	20%
Skincare	17%	17%	17%	18%
Fragrance and bath	12%	12%	12%	11%
Services	4%	4%	4%	4%
Accessories and other	3%	3%	3%	3%
	100%	100%	100%	100%


	13 Weeks Ended				26 Weeks Ended
	July 30,		July 31,		July 30,		July 31,
(In thousands)	2022		2021		2022		2021
Beginning balance	$	312,359	$	253,172	$	345,206	$	269,032
Additions to contract liabilities (1)		101,904		91,824		213,678		183,929
Deductions to contract liabilities (2)		(108,350)		(88,769)		(252,971)		(196,734)
Ending balance	$	305,913	$	256,227	$	305,913	$	256,227



	26 Weeks Ended
	July 30,	July 31,
	2022	2021
Volatility rate	49.0%	46.9%
Average risk-free interest rate	2.4%	0.4%
Average expected life (in years)	3.4	3.9
Dividend yield	None	None