Exhibit 99.1
| Company Contacts: Scott Settersten Chief Financial Officer (630) 410-4807
| ||
| Laurel Lefebvre Vice President, Investor Relations (630) 410-5230
Media Contact: DKC Juliet Horn (212) 981-5221 |
ULTA BEAUTY ANNOUNCES SECOND QUARTER 2013 RESULTS
Total Sales Increased 24.8%
Comparable Store Sales Increased 8.4%
Diluted EPS Increased 29.6% to $0.70
Bolingbrook, IL – September 12, 2013 – Ulta Beauty [NASDAQ:ULTA] today announced financial results for the thirteen week period (“Second Quarter”) and twenty-six week period (“First Six Months”) ended August 3, 2013, which compares to the same periods ended July 28, 2012.
“The Ulta Beauty team delivered a very strong quarter while moving our growth strategy forward,” stated Mary Dillon, Chief Executive Officer. “Ulta Beauty added several new brands to its stores; we further expanded the number of Clinique and Lancôme boutiques; we drove rapid growth in our e-commerce business; and we achieved record membership in our loyalty program. I am incredibly excited about the future potential of Ulta Beauty, and I look forward to working with the team to build on the solid foundation they have built.”
For the Second Quarter:
| • | Net sales increased 24.8% to $601.0 million from $481.7 million in the second quarter of fiscal 2012; |
| • | Comparable store sales (sales for stores open at least 14 months) increased 8.4% compared to an increase of 9.7% in the second quarter of fiscal 2012, including the impact of e-commerce sales; |
| • | Gross profit increased 50 basis points to 35.3% from 34.8% in the second quarter of fiscal 2012; |
| • | Selling, general and administrative (SG&A) expense as a percentage of net sales increased 40 basis points to 22.4% compared to 22.0% in the second quarter of fiscal 2012; |
| • | Preopening expenses increased to $4.8 million, compared to $4.1 million in the second quarter of fiscal 2012. Real estate activity in the second quarter of fiscal 2013 included 33 new stores, 1 relocation and 1 remodel compared to 22 new stores, 1 relocation and 9 remodels in the second quarter of fiscal 2012; |
| • | Operating income increased 26.8% to $72.9 million, or 12.1% of net sales, compared to $57.5 million, or 11.9% of net sales, in the second quarter of fiscal 2012; |
| • | Net income increased 28.3% to $44.9 million compared to $35.0 million in the second quarter of fiscal 2012; and |
| • | Income per diluted share increased 29.6% to $0.70 compared to $0.54 in the second quarter of fiscal 2012. |
| • | The Company added 39 Clinique boutiques to end the second quarter with 90 stores featuring Clinique, and expects to add 10 more Clinique boutiques during fiscal 2013. Five Lancôme boutiques were added, bringing the total number of stores offering Lancome products to 85, with 20 additional boutiques underway. |
| • | The Company continued to add new products and brands, including the recent launches of IT Cosmetics, Jane Cosmetics, Mally Girl, and Meaningful Beauty. |
| • | The Company’s loyalty program membership grew to 12 million active members, an increase of 19% compared to the second quarter of fiscal 2012. |
| • | Ulta.com achieved sales growth of 72%, representing 130 basis points of the total company same store sales increase of 8.4%. |
For the First Six Months:
| • | Net sales increased 23.8% to $1,183.7 million from $955.8 million in the first six months of fiscal 2012; |
| • | Comparable store sales (sales for stores open at least 14 months) increased 7.6% compared to an increase of 10.1% in the first six months of fiscal 2012, including the impact of e-commerce sales; |
| • | Gross profit decreased 30 basis points to 35.1% from 35.4% in the first six months fiscal 2012; |
| • | SG&A expense as a percentage of net sales decreased 10 basis points to 22.6% compared to 22.7% in the first six months in fiscal 2012; |
| • | Pre-opening expense increased to $8.0 million compared to $6.6 million in the second quarter of fiscal 2012. Real estate activity in the first six months of 2013 included 61 new stores, 1 relocation and 1 remodel compared to 40 new stores, 2 relocations and 9 remodels in the first six months fiscal 2012; |
| • | Operating income increased 22.3% to $140.6 million, or 11.9% of net sales, compared to $114.9 million, or 12.0% of net sales, in the first six months of fiscal 2012; |
| • | Net income increased 24.1% to $86.7 million compared to $69.9 million in the first six months of fiscal 2012; and |
| • | Income per diluted share increased 23.9% to $1.35 compared to $1.09 in the first six months of fiscal 2012. |
Balance Sheet and Cash Flow
Merchandise inventories at the end of the second quarter of fiscal 2013 totaled $461.2 million, compared to $316.7 million at the end of the second quarter of fiscal 2012, representing an increase of $144.5 million. The increase in inventory is primarily due to the addition of 120 net new stores opened since July 28, 2012. Average inventory per store increased 16.9% for the second quarter of fiscal 2013 compared to the second quarter of fiscal 2012. This increase is primarily due to incremental inventory related to the recently added prestige brand boutiques, new brand additions and the expansion of e-commerce fulfillment to the Chambersburg, PA distribution center.
Store Expansion
During the second quarter, the Company opened 33 stores located in Alameda, CA; Benton Harbor, MI; Billings, MT; Canton, OH; Chicago, IL; Cincinnati, OH; Clarksville, TN; Delray Beach, FL; Eastvale, CA; El Centro, CA; Foxborough, MA; Gaylord, MI; Gilroy, CA; Grand Rapids, MI; Helena, MT; Leesburg, VA; Martinsburg, WV; Midlothian, VA; Morehead City, NC; Newport, KY; Norcross, GA; North Port, FL; Petaluma, CA; Philadelphia, PA; Pocatello, ID; Portland, OR; Rock Hill, SC; Royal Oak, MI; St. Joseph, MO; State College, PA; Tracy, CA; Vineland, NJ and Visalia, CA and relocated one store in Sacramento, CA. The Company ended the second quarter with 609 stores and square footage of 6,476,445, which represents a 25% increase in square footage compared to the second quarter of fiscal 2012.
Outlook
For the third quarter of fiscal 2013, the Company currently expects net sales in the range of $613 million to $623 million, compared to actual net sales of $505.6 million in the third quarter of fiscal 2012. Comparable store sales for the third quarter of 2013 are expected to increase 5% to 7%. The Company reported a comparable store sales increase of 8.4% in the third quarter of 2012.
Income per diluted share for the third quarter of fiscal 2013 is estimated to be in the range of $0.71 to $0.74. This compares to income per diluted share for the third quarter of fiscal 2012 of $0.59.
The Company is confirming its previously announced fiscal 2013 earnings guidance. The Company plans to:
| • | achieve comparable store sales growth of approximately 5% to 7%, including the impact of the e-commerce business; |
| • | expand square footage by 22% with the opening of 125 net new stores; |
| • | remodel 7 locations; |
| • | deliver earnings per share growth, on a 52 week adjusted basis, at the low end of the Company’s long term target of 25% - 30%, including the impact of approximately $0.13 of income per diluted share in incremental investments associated with the planned new store program, supply chain, warehouse systems, and e-commerce site investments, the expansion of prestige brand boutiques, and investments in store labor to support rapid growth in the prestige cosmetics and skincare categories; |
| • | incur capital expenditures of approximately $225 million in fiscal 2013, compared to $189 million in fiscal 2012; and |
| • | continue to generate free cash flow. |
Conference Call Information
A conference call to discuss second quarter results is scheduled for today, September 12, 2013, at 5:00 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 705-6003. 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 September 26, 2013 and can be accessed by dialing (877) 870-5176 and entering conference ID number 420117.
About Ulta Beauty
Ulta Beauty is the largest beauty retailer that provides one-stop shopping for prestige, mass and salon products and salon services in the United States. Ulta Beauty provides affordable indulgence to its customers by combining unmatched product breadth, value and convenience with the distinctive environment and experience of a specialty retailer. Ulta Beauty offers a unique combination of over 20,000 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 Beauty also offers a full-service salon in all of its stores. As of August 3, 2013, Ulta operates 609 retail stores across 46 states and also distributes its products through the Company’s 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, as amended, 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; our ability to attract and retain key executive personnel; our ability to successfully execute and
implement our common stock repurchase program; and other risk factors detailed in our public filings with the Securities and Exchange Commission (SEC), including risk factors contained in our Annual Report on Form 10-K for the fiscal year ended February 2, 2013. 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.
Consolidated Statements of Income
(In thousands, except per share amounts)
| 13 Weeks Ended | 13 Weeks Ended | |||||||||||||||
| August 3, | July 28, | |||||||||||||||
| 2013 | 2012 | |||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Net sales |
$ | 600,998 | 100.0 | % | $ | 481,683 | 100.0 | % | ||||||||
| Cost of sales |
388,921 | 64.7 | % | 314,058 | 65.2 | % | ||||||||||
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| Gross profit |
212,077 | 35.3 | % | 167,625 | 34.8 | % | ||||||||||
| Selling, general and administrative expense |
134,400 | 22.4 | % | 106,040 | 22.0 | % | ||||||||||
| Pre-opening expenses |
4,809 | 0.8 | % | 4,126 | 0.9 | % | ||||||||||
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| Operating income |
72,868 | 12.1 | % | 57,459 | 11.9 | % | ||||||||||
| Interest (income) expense |
(18 | ) | 0.0 | % | 104 | 0.0 | % | |||||||||
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| Income before income taxes |
72,886 | 12.1 | % | 57,355 | 11.9 | % | ||||||||||
| Income tax expense |
27,975 | 4.7 | % | 22,357 | 4.6 | % | ||||||||||
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| Net income |
$ | 44,911 | 7.5 | % | $ | 34,998 | 7.3 | % | ||||||||
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| Net income per common share: |
||||||||||||||||
| Basic |
$ | 0.70 | $ | 0.55 | ||||||||||||
| Diluted |
$ | 0.70 | $ | 0.54 | ||||||||||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
63,834 | 63,070 | ||||||||||||||
| Diluted |
64,331 | 64,293 | ||||||||||||||
Exhibit 2
Ulta Salon, Cosmetics & Fragrance, Inc.
Consolidated Statements of Income
(In thousands, except per share amounts)
| 26 Weeks Ended | 26 Weeks Ended | |||||||||||||||
| August 3, | July 28, | |||||||||||||||
| 2013 | 2012 | |||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Net sales |
$ | 1,183,710 | 100.0 | % | $ | 955,781 | 100.0 | % | ||||||||
| Cost of sales |
767,684 | 64.9 | % | 617,244 | 64.6 | % | ||||||||||
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| Gross profit |
416,026 | 35.1 | % | 338,537 | 35.4 | % | ||||||||||
| Selling, general and administrative expense |
267,448 | 22.6 | % | 216,983 | 22.7 | % | ||||||||||
| Pre-opening expenses |
8,015 | 0.7 | % | 6,649 | 0.7 | % | ||||||||||
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| Operating income |
140,563 | 11.9 | % | 114,905 | 12.0 | % | ||||||||||
| Interest (income) expense |
(42 | ) | 0.0 | % | 125 | 0.0 | % | |||||||||
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| Income before income taxes |
140,605 | 11.9 | % | 114,780 | 12.0 | % | ||||||||||
| Income tax expense |
53,868 | 4.6 | % | 44,914 | 4.7 | % | ||||||||||
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| Net income |
$ | 86,737 | 7.3 | % | $ | 69,866 | 7.3 | % | ||||||||
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| Net income per common share: |
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| Basic |
$ | 1.36 | $ | 1.11 | ||||||||||||
| Diluted |
$ | 1.35 | $ | 1.09 | ||||||||||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
63,838 | 62,782 | ||||||||||||||
| Diluted |
64,362 | 64,202 | ||||||||||||||
| Dividends declared per common share |
$ | — | $ | 1.00 | ||||||||||||
Exhibit 3
Ulta Salon, Cosmetics & Fragrance, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
| August 3, | February 2, | July 28, | ||||||||||
| 2013 | 2013 | 2012 | ||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Assets |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 286,210 | $ | 320,475 | $ | 197,401 | ||||||
| Receivables, net |
30,998 | 41,515 | 32,279 | |||||||||
| Merchandise inventories, net |
461,156 | 361,125 | 316,734 | |||||||||
| Prepaid expenses and other current assets |
51,992 | 50,452 | 46,345 | |||||||||
| Prepaid income taxes |
1,111 | — | 12,690 | |||||||||
| Deferred income taxes |
15,320 | 15,757 | 12,257 | |||||||||
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| Total current assets |
846,787 | 789,324 | 617,706 | |||||||||
| Property and equipment, net |
541,557 | 483,059 | 421,063 | |||||||||
| Deferred compensation plan assets |
3,648 | 2,866 | — | |||||||||
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| Total assets |
$ | 1,391,992 | $ | 1,275,249 | $ | 1,038,769 | ||||||
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| Liabilities and stockholders’ equity |
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| Current liabilities: |
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| Accounts payable |
$ | 130,738 | $ | 118,886 | $ | 88,881 | ||||||
| Accrued liabilities |
102,007 | 92,127 | 80,507 | |||||||||
| Accrued income taxes |
— | 10,054 | — | |||||||||
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| Total current liabilities |
232,745 | 221,067 | 169,388 | |||||||||
| Deferred rent |
239,179 | 208,003 | 186,486 | |||||||||
| Deferred income taxes |
55,492 | 56,361 | 43,210 | |||||||||
| Other long-term liabilities |
4,114 | 2,876 | — | |||||||||
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| Total liabilities |
531,530 | 488,307 | 399,084 | |||||||||
| Commitments and contingencies |
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| Total stockholders’ equity |
860,462 | 786,942 | 639,685 | |||||||||
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| Total liabilities and stockholders’ equity |
$ | 1,391,992 | $ | 1,275,249 | $ | 1,038,769 | ||||||
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Exhibit 4
Ulta Salon, Cosmetics & Fragrance, Inc.
Consolidated Statements of Cash Flows
(In thousands)
| 26 Weeks Ended | ||||||||
| August 3, | July 28, | |||||||
| 2013 | 2012 | |||||||
| (Unaudited) | ||||||||
| Operating activities |
||||||||
| Net income |
$ | 86,737 | $ | 69,866 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
50,747 | 42,614 | ||||||
| Deferred income taxes |
(432 | ) | (978 | ) | ||||
| Non-cash stock compensation charges |
7,539 | 6,346 | ||||||
| Excess tax benefits from stock-based compensation |
(6,699 | ) | (27,788 | ) | ||||
| Loss on disposal of property and equipment |
2,030 | 447 | ||||||
| Change in operating assets and liabilities: |
||||||||
| Receivables |
10,517 | (6,126 | ) | |||||
| Merchandise inventories |
(100,031 | ) | (72,087 | ) | ||||
| Prepaid expenses and other current assets |
(1,540 | ) | (2,915 | ) | ||||
| Income taxes |
(4,466 | ) | 11,096 | |||||
| Accounts payable |
11,852 | 2,439 | ||||||
| Accrued liabilities |
(3,366 | ) | (9,705 | ) | ||||
| Deferred rent |
31,176 | 23,023 | ||||||
| Other assets and liabilities |
456 | — | ||||||
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| Net cash provided by operating activities |
84,520 | 36,232 | ||||||
| Investing activities |
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| Purchases of property and equipment |
(98,029 | ) | (71,338 | ) | ||||
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| Net cash used in investing activities |
(98,029 | ) | (71,338 | ) | ||||
| Financing activities |
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| Repurchase of common shares |
(37,337 | ) | — | |||||
| Dividends paid |
— | (62,482 | ) | |||||
| Excess tax benefits from stock-based compensation |
6,699 | 27,788 | ||||||
| Stock options exercised |
10,007 | 13,514 | ||||||
| Purchase of treasury shares |
(125 | ) | (51 | ) | ||||
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| Net cash used in financing activities |
(20,756 | ) | (21,231 | ) | ||||
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| Net decrease in cash and cash equivalents |
(34,265 | ) | (56,337 | ) | ||||
| Cash and cash equivalents at beginning of period |
320,475 | 253,738 | ||||||
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| Cash and cash equivalents at end of period |
$ | 286,210 | $ | 197,401 | ||||
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Exhibit 5
2013 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 2013 |
quarter |
quarter |
quarter |
at end of the quarter | ||||
| 1st Quarter |
550 | 28 | 2 | 576 | ||||
| 2nd Quarter |
576 | 33 | 0 | 609 | ||||
| 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 2013 |
the quarter |
quarter |
during the quarter |
quarter | ||||
| 1st Quarter |
5,847,393 | 298,083 | 24,077 | 6,121,399 | ||||
| 2nd Quarter |
6,121,399 | 355,046 | 0 | 6,476,445 | ||||