Exhibit 99.1
Company Contact:
Gregg Bodnar
Chief Financial Officer
(630) 410-4633
Investors/Media Contacts:
ICR, Inc.
Allison Malkin/Alecia Pulman
(203) 682-8225/(203) 682-8224
ULTA ANNOUNCES FIRST QUARTER 2010 RESULTS
First Quarter Comparable Store Sales Increase 10.8%
First Quarter Diluted EPS of $0.23, a 187% Increase
Expects 2Q Comparable Store Sales Increase of 7% to 9%
Bolingbrook, IL June 3, 2010 Ulta Salon, Cosmetics & Fragrance, Inc. [NASDAQ:ULTA],
today announced financial results for the thirteen week period (First Quarter) ended May 1, 2010,
which compares to the same period ended May 2, 2009.
For the First Quarter:
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Net sales increased 19.1% to $320.2 million from $268.8 million in the first quarter
of fiscal 2009; |
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Comparable store sales (sales for stores open at least 14 months) increased 10.8%
compared to a decrease of 2.3% in the first quarter of fiscal 2009; |
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Pre-opening expenses decreased $0.7 million to $0.5 million in the first quarter
fiscal 2010 due to the planned decrease in the Companys first quarter new store
openings; |
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Operating income increased 160.6% to $23.3 million compared to $9.0 million in the
first quarter of fiscal 2009; |
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Net income increased 177.7% to $13.7 million compared to $4.9 million in the first
quarter of fiscal 2009; |
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Income per diluted share increased to $0.23, compared to $0.08 in the first quarter
of fiscal 2009. |
Lyn Kirby, CEO of Ulta stated: We are very pleased to report an excellent start to fiscal 2010.
Our first quarter performance, which included a 10.8% comparable store sales increase and a 19.1%
total sales increase, accelerated from our strong fourth quarter growth and exceeded our
expectations. We attribute our ongoing strength to the success of our strategies including
increasing profitable market share by capitalizing on the advantages of our business model with
dynamic marketing, compelling brands and providing our customers with the preferred beauty shopping
experience. Our sales growth was balanced across all major categories and our comparable store
sales included increases in both customer counts and average ticket. We also accomplished this with
a 70 basis point increase in merchandise margin and 40 basis points of leverage in marketing. These
operating improvements, along with our continued discipline in managing our cost structure, led to
a more than doubling in our operating earnings and a nearly three-fold increase in earnings per
share for the quarter.
In
the second quarter, as outlined in our guidance, we expect to continue to see strong customer response to our topline strategies and expect to continue to deliver strong earnings growth," Ms Kirby continued. During the second quarter, we will introduce the Philosophy skincare line, as we continue
to expand our prestige offerings. Our new store expansion and remodel program for 2010 remains on
track. Further, our expense and balance sheet management initiatives position us to continue to
generate free cash flow while investing in support of our long term
growth. Following quarter end, Chuck Rubin joined Ulta as President
and COO. We are delighted to have Chuck on board and
are progressing toward his transition to CEO over the next few months. We continue to believe we
have developed a solid foundation to achieve sustained long term growth and believe fiscal 2010
will represent another strong year for Ulta, delivering increased value for our shareholders.
Balance Sheet and Cash Flow
Merchandise inventories at the end of the first quarter totaled $228.1 million, compared to
$230.3 million at the end of first quarter fiscal 2009, representing a decrease of $2.2 million.
The decrease is due to an 8.7% decrease in average inventory per store driven by management
initiatives offset by the addition of 27 net new stores opened since May 2, 2009.
The Company did not utilize its credit facility during the quarter and ended the quarter with
no borrowings outstanding.
Store Expansion
During the first quarter, the Company opened 2 stores located in Port Orange, FL and
Yorkville, IL and relocated 1 store in South Aurora, CO. In addition, the Company closed 1 store.
The Company ended the first quarter with 347 stores and square footage of 3,632,021, which
represents a 9% increase compared to the first quarter of fiscal 2009.
Outlook
For the second quarter of fiscal 2010, the Company currently expects net sales in the range of
$311 million to $317 million, compared to actual net sales of $273.5 million in the second quarter
of fiscal 2009. This assumes comparable stores sales increase 7% to 9%, compared to a decrease of
1.7% in the second quarter last year.
Income per diluted share for the second quarter of fiscal 2010 is estimated to be in the range
of $0.16 to $0.18, which includes $0.03 per share of incremental compensation expense related to the recently
announced addition of the Companys President and COO. Adjusted income per diluted share, which
excludes the incremental compensation expense, is estimated in the range of $0.19 to $0.21. This
compares to income per diluted share for second quarter fiscal 2009 of $0.10.
For fiscal 2010, the Company continues to plan to:
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open approximately 46 new stores, remodel 13 stores and relocate 6 stores; |
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incur capital expenditures of approximately $100 million, compared to $68.1 million in
fiscal 2009; |
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reduce inventory by approximately 5% on an average per store basis by year end 2010 |
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permanently reduce expenses by $5 million; and |
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generate free cash flow. |
Conference Call Information
A conference call to discuss third quarter results is scheduled for today, June 3, 2010, at
5:00 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited
to dial (877) 407-0784 approximately ten minutes prior to the start of the call. The conference
call will also be web-cast live at http://ir.ulta.com and remain available for 90 days. A replay
of this call will be available until 11:59 p.m. (ET) on June 10, 2010 and can be accessed by
dialing (877) 660-6853 and entering account number 3055 and
conference ID number 350912.
About Ulta
Ulta is the largest beauty retailer that provides one-stop shopping for prestige, mass and
salon products and salon services in the United States. Ulta provides affordable indulgence to its
customers by combining the product breadth, value and convenience of a beauty superstore with the
distinctive environment and experience of a specialty retailer. Ulta offers a unique combination
of over 21,000 prestige and mass beauty products across the categories of cosmetics, fragrance,
haircare, skincare, bath and body products and salon styling tools, as well as salon haircare
products. Ulta also offers a full-service salon in all of its stores. The Company currently
operates 350 retail stores across 38 states and also distributes its products through the Companys
website: wellnessformetoday.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934 and the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, which reflect our current views with respect to, among other things,
future events and financial performance. You can identify these forward-looking statements by the
use of forward-looking words such as outlook, believes, expects, plans, estimates, or
other comparable words. Any forward-looking statements contained in this press release are based
upon our historical performance and on current plans, estimates and expectations. The inclusion of
this forward-looking information should not be regarded as a representation by us or any other
person that the future plans, estimates or expectations contemplated by us will be achieved. Such
forward-looking statements are subject to various risks and uncertainties, which include, without
limitation: the impact of weakness in the economy; changes in the overall level of consumer
spending; changes in the wholesale cost of our products; the possibility that we may be unable to
compete effectively in our highly competitive markets; the possibility that our continued opening
of new stores could strain our resources and have a material adverse effect on our business and
financial performance; the possibility that new store openings and existing locations may be
impacted by developer or co-tenant issues; the possibility that the capacity of our distribution
and order fulfillment infrastructure may not be adequate to support our recent growth and expected
future growth plans; the possibility of material disruptions to our information systems; weather
conditions that could negatively impact sales and other risk factors detailed in our public filings
with the Securities and Exchange Commission (the SEC), including risk factors contained in our
Annual Report on Form 10-K for the year ended
January 30, 2010 and our Quarterly Report on Form 10-Q for the
quarterly period ended May 1, 2010. Our filings with the SEC are
available at www.sec.gov. 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 Salon, Cosmetics & Fragrance, Inc.
Statements of Income
(In thousands, except per share amounts)
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13 Weeks Ended |
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13 Weeks Ended |
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May 1, |
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May 2, |
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2010 |
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2009 |
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(Unaudited) |
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(Unaudited) |
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Net sales |
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$ |
320,196 |
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100.0 |
% |
|
$ |
268,825 |
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100.0 |
% |
Cost of sales |
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215,661 |
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67.4 |
% |
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189,283 |
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70.4 |
% |
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Gross profit |
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104,535 |
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32.6 |
% |
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79,542 |
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29.6 |
% |
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Selling, general and administrative expense |
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80,729 |
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25.2 |
% |
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69,393 |
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25.8 |
% |
Pre-opening expenses |
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474 |
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0.1 |
% |
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1,195 |
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0.4 |
% |
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Operating income |
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23,332 |
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7.3 |
% |
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8,954 |
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3.3 |
% |
Interest expense |
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118 |
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0.0 |
% |
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671 |
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0.2 |
% |
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Income before income taxes |
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23,214 |
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7.2 |
% |
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8,283 |
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3.1 |
% |
Income tax expense |
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9,553 |
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3.0 |
% |
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3,363 |
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1.3 |
% |
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Net income |
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$ |
13,661 |
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4.3 |
% |
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$ |
4,920 |
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1.8 |
% |
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Net income per common share: |
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Basic |
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$ |
0.23 |
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$ |
0.09 |
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Diluted |
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$ |
0.23 |
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$ |
0.08 |
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Weighted average common shares outstanding: |
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Basic |
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58,306 |
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57,743 |
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Diluted |
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60,276 |
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58,750 |
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Exhibit 2
Ulta Salon, Cosmetics & Fragrance, Inc.
Condensed Balance Sheets
(In thousands)
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May 1, |
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January 30, |
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May 2, |
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2010 |
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2010 |
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2009 |
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(Unaudited) |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
8,670 |
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$ |
4,017 |
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$ |
3,840 |
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Receivables, net |
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8,051 |
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|
13,477 |
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|
12,392 |
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Merchandise inventories, net |
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228,082 |
|
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|
206,948 |
|
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|
230,286 |
|
Prepaid expenses and other current assets |
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|
29,134 |
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|
30,272 |
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|
24,200 |
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Prepaid income taxes |
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5,890 |
|
Deferred income taxes |
|
|
8,060 |
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8,060 |
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|
8,195 |
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Total current assets |
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281,997 |
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262,774 |
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284,803 |
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Property and equipment, net |
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285,766 |
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|
290,861 |
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|
286,140 |
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Total assets |
|
$ |
567,763 |
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$ |
553,635 |
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$ |
570,943 |
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Liabilities and stockholders equity |
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Current liabilities: |
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Current portion notes payable |
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$ |
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$ |
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$ |
12,534 |
|
Accounts payable |
|
|
60,693 |
|
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|
56,387 |
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|
|
53,500 |
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Accrued liabilities |
|
|
54,789 |
|
|
|
59,189 |
|
|
|
43,757 |
|
Accrued income taxes |
|
|
6,740 |
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|
10,781 |
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|
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Total current liabilities |
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|
122,222 |
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|
126,357 |
|
|
|
109,791 |
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Notes payable less current portion |
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|
88,047 |
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Deferred rent |
|
|
114,051 |
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|
113,718 |
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|
104,168 |
|
Deferred income taxes |
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|
20,952 |
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|
20,952 |
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|
17,616 |
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Total liabilities |
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|
257,225 |
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|
261,027 |
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|
|
319,622 |
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Commitments and contingencies |
|
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Total stockholders equity |
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|
310,538 |
|
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|
292,608 |
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|
|
251,321 |
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Total liabilities and stockholders equity |
|
$ |
567,763 |
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|
$ |
553,635 |
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|
$ |
570,943 |
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Exhibit 3
Ulta Salon, Cosmetics & Fragrance, Inc.
Statements of Cash Flows
(In thousands)
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13 Weeks Ended |
|
|
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May 1, |
|
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May 2, |
|
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2010 |
|
|
2009 |
|
|
|
(Unaudited) |
|
Operating activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
13,661 |
|
|
$ |
4,920 |
|
Adjustments to reconcile net income to net cash
provided by operating activities: |
|
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Depreciation and amortization |
|
|
15,918 |
|
|
|
15,365 |
|
Non-cash stock compensation charges |
|
|
1,735 |
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|
1,295 |
|
Excess tax benefits from stock-based compensation |
|
|
(724 |
) |
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Loss on disposal of property and equipment |
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|
197 |
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|
39 |
|
Change in operating assets and liabilities: |
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|
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Receivables |
|
|
5,426 |
|
|
|
5,876 |
|
Merchandise inventories |
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|
(21,134 |
) |
|
|
(16,684 |
) |
Prepaid expenses and other assets |
|
|
1,138 |
|
|
|
94 |
|
Income taxes |
|
|
(3,317 |
) |
|
|
2,738 |
|
Accounts payable |
|
|
4,306 |
|
|
|
5,689 |
|
Accrued liabilities |
|
|
(7,722 |
) |
|
|
(4,255 |
) |
Deferred rent |
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|
333 |
|
|
|
2,880 |
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Net cash provided by operating activities |
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|
9,817 |
|
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|
17,957 |
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Investing activities |
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|
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|
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Purchases of property and equipment |
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|
(7,698 |
) |
|
|
(12,320 |
) |
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Net cash used in investing activities |
|
|
(7,698 |
) |
|
|
(12,320 |
) |
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|
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|
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Financing activities |
|
|
|
|
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Proceeds on long-term borrowings |
|
|
|
|
|
|
284,284 |
|
Payments on long-term borrowings |
|
|
|
|
|
|
(289,750 |
) |
Proceeds from issuance of common stock under stock
plans |
|
|
1,810 |
|
|
|
31 |
|
Excess tax benefits from stock-based compensation |
|
|
724 |
|
|
|
|
|
|
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Net cash provided by (used in) financing activities |
|
|
2,534 |
|
|
|
(5,435 |
) |
|
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|
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|
|
|
|
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Net increase in cash and cash equivalents |
|
|
4,653 |
|
|
|
202 |
|
Cash and cash equivalents at beginning of period |
|
|
4,017 |
|
|
|
3,638 |
|
|
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Cash and cash equivalents at end of period |
|
$ |
8,670 |
|
|
$ |
3,840 |
|
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Exhibit 4
2010 Store Expansion
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Total stores open |
|
Number of stores |
|
Number of stores |
|
Total stores open |
|
|
at beginning of the |
|
opened during the |
|
closed during the |
|
at end of the |
Fiscal 2010 |
|
quarter |
|
quarter |
|
quarter |
|
quarter |
|
1st Quarter
|
|
346
|
|
2
|
|
1
|
|
347 |
|
|
|
|
|
|
|
|
|
|
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|
|
Gross square feet |
|
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|
|
|
|
Total gross square |
|
for stores opened |
|
Gross square feet |
|
Total gross square |
|
|
feet at beginning |
|
or expanded during |
|
for stores closed |
|
feet at end of the |
Fiscal 2010 |
|
of the quarter |
|
the quarter |
|
during the quarter |
|
quarter |
|
1st Quarter
|
|
3,613,840
|
|
28,977
|
|
10,796
|
|
3,632,021 |