Exhibit 99.1
Company Contact:
Gregg Bodnar
Chief Financial Officer
(630) 410-4633
Investors/Media Contacts:
Integrated Corporate Relations
Allison Malkin/Alecia Pulman
(203) 682-8225/(646) 277-1220
ULTA ANNOUNCES FOURTH QUARTER AND FISCAL YEAR 2008 RESULTS
Fourth Quarter Net Sales Increases 10.4%
Fourth Quarter Diluted EPS of $0.21
Fiscal 2008 Net Sales Increases 18.9% to $1.085 Billion
Fiscal 2008 EPS of $0.43 Equal to Fiscal 2007 Adjusted EPS
Romeoville, IL March 19, 2009 Ulta Salon, Cosmetics & Fragrance, Inc. [NASDAQ:ULTA],
today announced financial results for the thirteen-week period (Fourth Quarter) and fifty-two
week period (Fiscal Year) ended January 31, 2009, which compare to the same periods ended
February 2, 2008.
For the Fourth Quarter:
|
|
|
Net sales increased 10.4% to $341.4 million from $309.3 million in the fourth
quarter of fiscal 2007; |
|
|
|
|
Comparable store sales (sales for stores open at least 14 months) decreased 5.5%
compared to an increase of 4.5% in the fourth quarter of fiscal 2007; |
|
|
|
|
Operating income decreased to $21.4 million, or 6.3% of net sales, compared to $23.9
million, or 7.7% of net sales in the fourth quarter of fiscal 2007; the decrease as a
percentage of net sales is mainly due to a 130 basis point increase in fixed store
costs primarily due to our new store opening program; |
|
|
|
|
Net income decreased to $12.3 million, compared to $13.6 million in the fourth
quarter of fiscal 2007; |
|
|
|
|
Income per diluted share decreased to $0.21, compared to $0.23 in the fourth quarter
of fiscal 2007. |
1
Lyn Kirby, Ultas President and Chief Executive Officer, stated: We reported solid fourth
quarter results and adjusted full year earnings and comparable store sales equal to last year,
despite the difficult economy. We chose not to participate in the promotional frenzy that emerged
across the retail industry in the key selling days leading up to Christmas. While this negatively
affected our comp store sales during the gift-giving season, as we believe consumers favored the
unprecedented discounts on apparel, we believe our balanced approach maintained the integrity of
our brand and value proposition. While we had to reduce our guidance
in response to the more difficult than expected holiday season, we
delivered $0.21 of earnings per share for the quarter.
Importantly,
our business returned to a slight comp increase in January despite significant
weather related store closures late in the month, as we emerged from the heavy discount-driven
holiday period. We are also pleased to end the year with a strong balance sheet position, Ms
Kirby continued. As we begin fiscal 2009, our priorities are focused on delivering free cash
flow, maximizing profitability and expanding market share.
We have implemented a number of strategies that we believe will position us to achieve free
cash flow in fiscal 2009. Our strategy includes a reduced level of capital expenditures from
scaling back new store growth to 35 stores in 2009, an 11% increase
in annual square footage, and cost and inventory reduction initiatives which are
expected to generate $15 million
in savings this year, Ms. Kirby continued.
Our comparable store sales
trend for the first six weeks of fiscal
2009 is a
decline of 2.0% which reflects a
rebound from the 5.5% comp decline we reported for fourth quarter. Despite the difficult economy,
we will continue to execute our core strategies including opening new stores, albeit at a slower
rate, adding new brands, and nimble marketing to continue our market
share gains, Ms. Kirby
concluded.
For the Fiscal Year 2008:
|
|
|
Net sales increased 18.9% to $1,084.6 million from $912.1 million in fiscal 2007; |
|
|
|
|
Comparable store sales (sales for stores open at least 14 months) increased 0.2% ,
compared to an increase of 6.4% in fiscal 2007; |
|
|
|
|
Operating income was $46.3 million, which included incremental pre-opening expenses
of $2.5 million. This compares to operating income of $46.7 million in fiscal 2007; |
|
|
|
|
Net income was $25.3 million, compared to $25.3 million in fiscal 2007; |
|
|
|
|
Income per diluted share decreased to $0.43, including $0.01 per share of severance
costs, compared to $0.48 in fiscal 2007; the severance costs were not included in the
Companys guidance for the fiscal year 2008; and |
|
|
|
|
Adjusted income per diluted share was $0.43, including $0.01 of severance costs,
compared to adjusted income per diluted share of $0.43 in fiscal 2007. Adjusted income
per diluted share excludes the effects of preferred stock dividends and equalizes the
dilutive effects of the preferred shares and IPO shares for 2007. See Exhibit 4 for a
complete description of adjusted income per basic and diluted share and reconciliation
to the GAAP equivalents. |
2
Balance Sheet
Merchandise inventories at the end of the fourth quarter totaled $213.6 million, compared to
$176.1 million at the end of fourth quarter fiscal 2007, representing an increase of $37.5 million
due to the addition of 62 net new stores opened since February 2, 2008. Average inventory per
store decreased 2.9%.
Store Expansion
During the fourth quarter, the Company opened 7 stores, 1 each in Fort Smith, AR; Kissimmee,
FL; Miami Beach, FL; Manchester, MA; Natick, MA; Jacksonville, NC; and Toledo, OH. The Company
ended the fourth quarter with 311 stores and square footage of 3,240,579, which represents a 25%
increase compared to the fourth quarter of fiscal 2007.
Outlook
Given the limited visibility into future consumer spending levels for the full year, the
Company has chosen to focus its guidance on the current quarter. At the same time, in an effort to
provide insight into the full year, the Company will review several strategies to achieve free cash
flow and reduce operating costs.
For the first quarter of fiscal 2009, the Company currently expects net sales in the range of
$262 million to $271 million, compared to actual net sales of $239.3 million in the first
quarter of fiscal 2008. This assumes comparable stores sales decrease 2% to 5%, compared to an
increase of 3.9% in the first quarter last year.
Income per diluted share for the first quarter of fiscal 2009 is estimated to be in the range
of $0.04 to $0.06. This compares to income per diluted share for first quarter fiscal 2008 of
$0.07, including $0.01 per share of severance costs for the management change in March 2008.
For fiscal 2009:
|
|
|
The Company plans to generate free cash flow of at least $10 million, compared to a
$35.7 million net cash out flow in fiscal 2008; |
|
|
|
|
The Company plans expense reductions of approximately $15 million including supply
chain and store operating costs, and a corporate office headcount freeze; |
|
|
|
|
The Company currently plans to open approximately 35 new stores; |
|
|
|
|
Capital expenditures are expected to be in a range of $72 million to $74 million,
compared to $110.9 million in capital expenditures reported in fiscal 2008; |
|
|
|
|
Inventory is planned to decline 5% to 7% on an average per store basis by year end 2009. |
3
Conference Call Information
A conference call to discuss fourth quarter and fiscal 2008 results is scheduled for today,
March 19, 2009, 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 March 26, 2009 and
can be accessed by dialing (877) 660-6853 and entering account number 3055 and conference ID number
315721.
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 311 retail stores across 36 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 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 February 2, 2008. 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.
4
Exhibit 1
Ulta Salon, Cosmetics & Fragrance, Inc.
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
|
January 31, |
|
February 2, |
|
|
2009 |
|
2008 |
|
|
|
|
|
Net sales |
|
$ |
341,394 |
|
|
|
100.0 |
% |
|
$ |
309,344 |
|
|
|
100.0 |
% |
Cost of sales |
|
|
240,002 |
|
|
|
70.3 |
% |
|
|
212,322 |
|
|
|
68.6 |
% |
|
|
|
|
|
Gross profit |
|
|
101,392 |
|
|
|
29.7 |
% |
|
|
97,022 |
|
|
|
31.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense |
|
|
78,192 |
|
|
|
22.9 |
% |
|
|
70,388 |
|
|
|
22.8 |
% |
Pre-opening expenses |
|
|
1,796 |
|
|
|
0.5 |
% |
|
|
2,694 |
|
|
|
0.9 |
% |
|
|
|
|
|
Operating income |
|
|
21,404 |
|
|
|
6.3 |
% |
|
|
23,940 |
|
|
|
7.7 |
% |
Interest expense |
|
|
888 |
|
|
|
0.3 |
% |
|
|
1,077 |
|
|
|
0.3 |
% |
|
|
|
|
|
Income before income taxes |
|
|
20,516 |
|
|
|
6.0 |
% |
|
|
22,863 |
|
|
|
7.4 |
% |
Income tax expense |
|
|
8,228 |
|
|
|
2.4 |
% |
|
|
9,259 |
|
|
|
3.0 |
% |
|
|
|
|
|
Net income |
|
$ |
12,288 |
|
|
|
3.6 |
% |
|
$ |
13,604 |
|
|
|
4.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.21 |
|
|
|
|
|
|
$ |
0.24 |
|
|
|
|
|
Diluted |
|
$ |
0.21 |
|
|
|
|
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
57,715 |
|
|
|
|
|
|
|
56,773 |
|
|
|
|
|
Diluted |
|
|
58,853 |
|
|
|
|
|
|
|
59,252 |
|
|
|
|
|
5
Exhibit 2
Ulta Salon, Cosmetics & Fragrance, Inc.
Consolidated Statements of Income
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52 Weeks Ended |
|
|
52 Weeks Ended |
|
|
|
January 31, |
|
|
February 2, |
|
|
|
2009 |
|
|
2008 |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
1,084,646 |
|
|
|
100.0 |
% |
|
$ |
912,141 |
|
|
|
100.0 |
% |
Cost of sales |
|
|
756,712 |
|
|
|
69.8 |
% |
|
|
628,495 |
|
|
|
68.9 |
% |
|
|
|
|
|
Gross profit |
|
|
327,934 |
|
|
|
30.2 |
% |
|
|
283,646 |
|
|
|
31.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense |
|
|
267,322 |
|
|
|
24.6 |
% |
|
|
225,167 |
|
|
|
24.7 |
% |
Pre-opening expenses |
|
|
14,311 |
|
|
|
1.3 |
% |
|
|
11,758 |
|
|
|
1.3 |
% |
|
|
|
|
|
Operating income |
|
|
46,301 |
|
|
|
4.3 |
% |
|
|
46,721 |
|
|
|
5.1 |
% |
Interest expense |
|
|
3,943 |
|
|
|
0.4 |
% |
|
|
4,542 |
|
|
|
0.5 |
% |
|
|
|
|
|
Income before income taxes |
|
|
42,358 |
|
|
|
3.9 |
% |
|
|
42,179 |
|
|
|
4.6 |
% |
Income tax expense |
|
|
17,090 |
|
|
|
1.6 |
% |
|
|
16,844 |
|
|
|
1.8 |
% |
|
|
|
|
|
Net income |
|
$ |
25,268 |
|
|
|
2.3 |
% |
|
$ |
25,335 |
|
|
|
2.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less preferred stock dividends |
|
|
|
|
|
|
|
|
|
|
11,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders |
|
$ |
25,268 |
|
|
|
|
|
|
$ |
14,116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.44 |
|
|
|
|
|
|
$ |
0.69 |
|
|
|
|
|
Diluted |
|
$ |
0.43 |
|
|
|
|
|
|
$ |
0.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
57,425 |
|
|
|
|
|
|
|
20,383 |
|
|
|
|
|
Diluted |
|
|
58,967 |
|
|
|
|
|
|
|
53,293 |
|
|
|
|
|
6
Exhibit 3
Ulta Salon, Cosmetics & Fragrance, Inc.
Condensed Consolidated Balance Sheets
(Subject to Reclassification)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
January 31, |
|
|
February 2, |
|
|
|
2009 |
|
|
2008 |
|
|
|
(Unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,638 |
|
|
$ |
3,789 |
|
Receivables, net |
|
|
18,268 |
|
|
|
20,643 |
|
Merchandise inventories, net |
|
|
213,602 |
|
|
|
176,109 |
|
Prepaid expenses and other current assets |
|
|
24,294 |
|
|
|
19,184 |
|
Prepaid income taxes |
|
|
8,628 |
|
|
|
|
|
Deferred income taxes |
|
|
8,278 |
|
|
|
9,219 |
|
|
|
|
Total current assets |
|
|
276,708 |
|
|
|
228,944 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
292,224 |
|
|
|
236,389 |
|
Deferred income taxes |
|
|
|
|
|
|
4,080 |
|
|
|
|
Total assets |
|
$ |
568,932 |
|
|
$ |
469,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Current portion notes payable (1) |
|
$ |
18,000 |
|
|
$ |
|
|
Accounts payable |
|
|
47,811 |
|
|
|
52,122 |
|
Accrued liabilities |
|
|
51,202 |
|
|
|
54,719 |
|
Accrued income taxes |
|
|
|
|
|
|
5,064 |
|
|
|
|
Total current liabilities |
|
|
117,013 |
|
|
|
111,905 |
|
|
|
|
|
|
|
|
|
|
Notes payable less current portion (1) |
|
|
88,047 |
|
|
|
74,770 |
|
Deferred rent |
|
|
101,288 |
|
|
|
71,235 |
|
Deferred income taxes |
|
|
17,616 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
323,964 |
|
|
|
257,910 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
244,968 |
|
|
|
211,503 |
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
568,932 |
|
|
$ |
469,413 |
|
|
|
|
|
|
|
(1) |
|
Notes Payable reflects outstanding indebtedness under our $200 million Revolving Credit
facility which is due May 31, 2011. The $18.0 million reflected as a current liability at January
31, 2009 represents the portion of the outstanding balance that the Company intends to repay during
fiscal 2009. |
7
Exhibit 4
Ulta Salon, Cosmetics & Fragrance, Inc.
Unaudited Non-GAAP Income per Basic and Diluted Share
(A Non-GAAP Financial Measure)
On October 30, 2007, the Company completed an initial public offering (IPO) in which it sold
7,666,667 shares of common stock. Also in connection with the IPO, the Company converted
41,524,002 preferred shares into common shares and paid in full approximately $93.0 million of
accumulated dividends in arrears on its preferred stock.
The Company has provided non-GAAP adjusted income per basic and diluted share for the fifty-two
weeks ended February 2, 2008 in this release, in addition to providing financial results in
accordance with GAAP. This information reflects, on a non-GAAP adjusted basis, the Companys net
income and income per basic and diluted share after adjusting for the effects of the Companys IPO.
Since the IPO occurred prior to the fourth quarter of 2007, these adjustments do not apply to the
thirteen-weeks ended February 2, 2008.
The As Adjusted net income per basic and diluted share reflects the following for all periods
presented: (i) elimination of preferred stock dividends and (ii) conversion of the preferred shares
and issuance of IPO shares as of the beginning of the period. The Company believes the non-GAAP
adjusted income per basic and diluted share provides useful information to investors by reflecting
income per share on a more representative basis with future operations. A reconciliation of this
non-GAAP information to the Companys actual results for the fifty-two weeks ended February 2, 2008
is as follows:
8
Exhibit 4
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except per share amounts) |
|
|
|
52 Weeks Ended |
|
|
52 Weeks Ended |
|
|
|
January 31, 2009 |
|
|
February 2, 2008 |
|
|
|
As Reported |
|
|
Adjustments |
|
|
As Adjusted |
|
|
As Reported |
|
|
Adjustments |
|
|
As Adjusted |
|
Net income |
|
$ |
25,268 |
|
|
$ |
|
|
|
$ |
25,268 |
|
|
$ |
25,335 |
|
|
$ |
|
|
|
$ |
25,335 |
|
Less preferred stock dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,219 |
|
|
|
11,219 |
(i) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders |
|
$ |
25,268 |
|
|
$ |
|
|
|
$ |
25,268 |
|
|
$ |
14,116 |
|
|
$ |
11,219 |
|
|
$ |
25,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.44 |
|
|
|
|
|
|
$ |
0.44 |
|
|
$ |
0.69 |
|
|
|
|
|
|
$ |
0.45 |
|
Diluted |
|
$ |
0.43 |
|
|
|
|
|
|
$ |
0.43 |
|
|
$ |
0.48 |
|
|
|
|
|
|
$ |
0.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
57,425 |
|
|
|
|
|
|
|
57,425 |
|
|
|
20,383 |
|
|
|
36,235 |
(ii) |
|
|
56,618 |
|
Diluted |
|
|
58,967 |
|
|
|
|
|
|
|
58,967 |
|
|
|
53,293 |
|
|
|
5,645 |
(ii) |
|
|
58,938 |
|
|
|
|
(i) |
|
Reflects the elimination of preferred stock dividend. |
|
(ii) |
|
Reflects preferred stock as if converted and 7,667 IPO shares as if outstanding for the entire period. |
|
Note: |
|
Since the IPO occurred prior to the fourth quarter of 2007, these adjustments do not apply to
the thirteen-weeks ended February 2, 2008. |
9
Exhibit 5
2008 Store Expansion
|
|
|
|
|
|
|
|
|
|
|
Total stores open |
|
Number of stores |
|
Number of stores |
|
|
|
|
at beginning of the |
|
opened during the |
|
closed during the |
|
Total stores open |
Fiscal 2008 |
|
quarter |
|
quarter |
|
quarter |
|
at end of the quarter |
|
1st Quarter |
|
249 |
|
17 |
|
1 |
|
265 |
2nd Quarter |
|
265 |
|
18 |
|
0 |
|
283 |
3rd Quarter |
|
283 |
|
21 |
|
0 |
|
304 |
4th Quarter |
|
304 |
|
7 |
|
0 |
|
311 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 2008 |
|
the quarter |
|
quarter |
|
during the quarter |
|
quarter |
|
1st Quarter |
|
2,589,244 |
|
170,599 |
|
9,596 |
|
2,750,247 |
2nd Quarter |
|
2,750,247 |
|
188,322 |
|
0 |
|
2,938,569 |
3rd Quarter |
|
2,938,569 |
|
223,214 |
|
0 |
|
3,161,783 |
4th Quarter |
|
3,161,783 |
|
78,796 |
|
0 |
|
3,240,579 |
10