Ulta Beauty, Inc. (ULTA) SEC Filing 10-Q Quarterly report for the period ending Saturday, November 3, 2018

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Exhibit 99.1

ULTA_logo_rgb-gry_drk

 

 

 

 

Company Contacts:

 

Scott Settersten

 

Chief Financial Officer

 

(630) 410‑4807

 

 

 

Laurel Lefebvre

 

Vice President, Investor Relations

 

(630) 410‑5230

 

 

 

Karen May

 

Director, Public Relations

 

(630) 410‑5457

 

 

 

 

ULTA BEAUTY ANNOUNCES THIRD QUARTER FISCAL 2018 RESULTS

Net Sales Increased 16.2%

Comparable Sales Increased 7.8%

Diluted EPS Increased 28.2% to $2.18

Company Reiterates FY 2018 Guidance for Diluted EPS Growth in the Low Twenties Percentage Range

 

Bolingbrook, IL – December 6, 2018 – Ulta Beauty, Inc. (NASDAQ: ULTA) today announced financial results for the thirteen week period (“Third Quarter”) and thirty-nine week period (“First Nine Months”) ended November 3, 2018, which compares to the same periods ended October 28, 2017. 

 

“Ulta Beauty’s strong performance in the third quarter reflects continued market share gains across all major categories, acceleration in our overall comp driven by healthy traffic, excellent new store productivity, and robust e-commerce growth,” said Mary Dillon, Chief Executive Officer. 

 

 

 

 

 

 

 

 


The following information was filed by Ulta Beauty, Inc. on Thursday, December 6, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Click a sentiment analysis snippet below from Ulta Beauty, Inc.'s Management Discussions to find these positive and negative remarks within their 10-Q Quarterly report:
  • 18487871_102
    Financial - Shares / Equity
    Our primary cash needs are for rent, capital expenditures for new, remodeled, relocated, and refreshed stores, increased merchandise inventories related to store expansion and new brand additions, in-store boutiques (sets of custom-designed fixtures configured to prominently display certain prestige brands within our stores), supply chain improvements, share repurchases, and for continued improvement in our information technology systems.
  • 18487871_133
    Other - Other
    The Loan Agreement matures on August 23, 2022, provides maximum revolving loans equal to the lesser of $400.0 million or a percentage of eligible owned inventory (which borrowing base may, at the election of the Company and satisfaction of certain conditions, include a percentage of eligible owned receivables and qualified cash), contains a $20.0 million subfacility for letters of credit and allows the Company to increase the revolving facility by an additional $50.0 million, subject to the consent by each lender and other conditions.
  • 18487871_15
    Revenue - Product
    The continued growth of our business and any future increases in net sales, net income, and cash flows is dependent on our ability to execute our strategic imperatives: 1) drive growth across beauty enthusiast segments, 2) deepen Ulta Beauty love and loyalty, 3) deliver a one of a kind, world class beauty assortment, 4) lead the in-store and beauty services experience transformation, 5) reinvent beauty digital engagement, 6) deliver operational excellence and drive efficiencies, and 7) invest in talent that drives a winning culture: guest and associate centric, values-based, high performance.
  • 18487871_38
    Financial - Expense
    Cost of sales includes: the cost of merchandise sold (retail stores and e-commerce), including substantially all vendor allowances, which are treated as a reduction of merchandise costs; distribution costs including labor and related benefits, freight, rent, depreciation and amortization, real estate taxes, utilities and insurance; shipping and handling costs; retail stores occupancy costs including rent, depreciation and amortization, real estate taxes, utilities, repairs and maintenance, insurance, licenses and cleaning expenses; salon services payroll and benefits; and shrink and inventory valuation reserves.
  • 18487871_21
    Financial - Earnings
    Operating profit is expected to increase as a result of our ability to expand merchandise margin and leverage our fixed store costs with comparable sales increases and operating efficiencies, offset by incremental investments in people, systems, and supply chain required to support a 1,500 to 1,700 store chain with successful e-commerce and competitive omni-channel capabilities.
  • 18487871_127
    Financial - Shares / Equity
    23 On March 15, 2018, we announced that the Board of Directors authorized a new share repurchase program (the 2018 Share Repurchase Program) pursuant to which the Company may repurchase up to $625.0 million of the Company?s common stock.
  • 18487871_48
    Financial - Expense
    Our credit facility interest is based on a variable interest rate structure, which can result in increased cost in periods of rising interest rates.
  • 18487871_122
    Revenue - Product
    The zero outstanding borrowings position is due to a combination of factors including strong sales growth and overall performance of management initiatives including expense control.
  • 18487871_60
    Revenue - Product
    The total comparable sales increase included a 5.3% increase in transactions and a 2.5% increase in average ticket.
  • 18487871_84
    Revenue - Product
    The total comparable sales increase included a 4.5% increase in transactions and a 3.0% increase in average ticket.
  • 18487871_23
    Revenue - Product
    Revenue from e-commerce merchandise sales is recognized upon shipment of the merchandise to the guest based on meeting the transfer of control criteria, net of estimated returns.
  • 18487871_37
    Revenue - Product
    Several factors could positively or negatively impact our comparable sales results: the general national, regional, and local economic conditions and corresponding impact on guest spending levels; the introduction of new products or brands; the location of new stores in existing store markets; competition; our ability to respond on a timely basis to changes in consumer preferences; the effectiveness of our various merchandising and marketing activities; and the number of new stores opened and the impact on the average age of all of our comparable stores.
  • 18487871_89
    Financial - Expense
    SG&A; expenses increased $190.6 million or 21.5%, to $1,078.2 million for the 39 weeks ended November 3, 2018, compared to $887.6 million for the 39 weeks ended October 28, 2017.
  • 18487871_74
    Financial - Income
    Income tax expense of $39.4 million for the 13 weeks ended November 3, 2018 represents an effective tax rate of 23.1%, compared to $58.3 million of tax expense representing an effective tax rate of 35.8% for the 13 weeks ended October 28, 2017.
  • 18487871_98
    Financial - Income
    Income tax expense of $132.8 million for the 39 weeks ended November 3, 2018 represents an effective tax rate of 23.0%, compared to $185.0 million of tax expense representing an effective tax rate of 34.8% for the 39 weeks ended October 28, 2017.
  • 18487871_65
    Financial - Expense
    Selling, general and administrative (SG&A;) expenses increased $74.7 million or 23.3%, to $395.5 million for the 13 weeks ended November 3, 2018, compared to $320.7 million for the 13 weeks ended October 28, 2017.
  • 18487871_61
    Revenue - Product
    We attribute the increase in comparable sales to our successful marketing and merchandising strategies.
  • 18487871_85
    Revenue - Product
    We attribute the increase in comparable sales to our successful marketing and merchandising strategies.
  • 18487871_88
    Financial - Earnings
    The decrease in gross profit margin was due to deleverage from category and channel mix shifts and investments in our salon services and supply chain operations, partially offset by leverage in fixed store costs and the impact of new revenue recognition accounting.
  • 18487871_56
    Revenue - Product
    Salon service sales increased $7.1 million or 10.7%, to $74.0 million compared to $66.9 million in the third quarter of 2017.
  • 18487871_80
    Revenue - Product
    Salon service sales increased $20.0 million or 9.8%, to $223.7 million compared to $203.7 million in the first 39 weeks of fiscal 2017.
  • 18487871_58
    Revenue - Product
    The 7.8% comparable sales increase consisted of a 4.4% increase in retail stores and salon services and a 42.5% increase in e-commerce sales.
  • 18487871_82
    Revenue - Product
    The 7.5% comparable sales increase consisted of a 4.3% increase in retail stores and salon services and a 42.9% increase in e-commerce sales.
  • 18487871_59
    Revenue - Product
    The inclusion of e-commerce sales resulted in an increase of approximately 340 basis points to the Company?s consolidated same store sales calculation for the 13 weeks ended November 3, 2018, compared to 370 basis points for 13 weeks ended October 28, 2017.
  • 18487871_83
    Revenue - Product
    The inclusion of e-commerce sales resulted in an increase of approximately 320 basis points to the Company?s consolidated same store sales calculation for the 39 weeks ended November 3, 2018, compared to 350 basis points for the 39 weeks ended October 28, 2017.
  • 18487871_87
    Financial - Earnings
    Gross profit as a percentage of net sales decreased 10 basis points to 36.3% for the 39 weeks ended November 3, 2018, compared to 36.4% for the 39 weeks ended October 28, 2017.
  • 18487871_68
    Financial - Expense
    Pre-opening expenses decreased $2.1 million to $7.6 million for the 13 weeks ended November 3, 2018, compared to $9.7 million for the 13 weeks ended October 28, 2017.
  • 18487871_92
    Financial - Expense
    Pre-opening expenses decreased $2.6 million to $17.4 million for the 39 weeks ended November 3, 2018, compared to $20.0 million for the 39 weeks ended October 28, 2017.
  • 18487871_39
    Financial - Expense
    Our cost of sales may be negatively impacted as we open an increasing number of stores.
  • 18487871_109
    Other - Other
    Merchandise inventories were $1,484.6 million at November 3, 2018, compared to $1,349.7 million at October 28, 2017, representing an increase of $134.9 million or 10.0%.
  • 18487871_120
    Financial - Shares / Equity
    Purchases of treasury shares represent the fair value of common shares repurchased from plan participants in connection with shares withheld to satisfy minimum statutory tax obligations upon the vesting of restricted stock.
  • 18487871_57
    Revenue - Product
    The net sales increases are due to comparable stores driving an increase of $103.6 million, non-comparable store increases of $103.8 million, and other revenue increases of $10.4 million compared to the third quarter of 2017.
  • 18487871_81
    Revenue - Product
    The net sales increases are due to comparable stores driving an increase of $293.1 million, non-comparable store increases of $319.4 million, and other revenue increases of $32.5 million compared to the first 39 weeks of fiscal 2017.
  • 18487871_55
    Revenue - Product
    E-commerce sales increased $50.9 million or 42.5%, to $170.7 million compared to $119.8 million in the third quarter of 2017.
  • 18487871_78
    Revenue - Product
    Net sales increased $645.0 million or 16.3%, to $4,591.9 million for the 39 weeks ended November 3, 2018, compared to $3,946.9 million for the 39 weeks ended October 28, 2017.
  • 18487871_79
    Revenue - Product
    E-commerce sales increased $137.5 million or 42.9%, to $457.9 million compared to $320.4 million in the first 39 weeks of fiscal 2017.
  • 18487871_137
    Other - Other
    As of November 3, 2018, February 3, 2018, and October 28, 2017, we had no borrowings outstanding under the credit facility and we were in compliance with all terms and covenants of the Loan Agreement.
  • 18487871_73
    Other - Other
    We did not have any outstanding borrowings on our credit facility as of November 3, 2018 and October 28, 2017.
  • 18487871_97
    Other - Other
    We did not have any outstanding borrowings on our credit facility as of November 3, 2018 and October 28, 2017.
  • 18487871_121
    Other - Other
    We had no borrowings outstanding under our credit facility as of November 3, 2018, February 3, 2018, and October 28, 2017.
  • 18487871_135
    Other - Other
    Substantially all of the Company?s assets are pledged as collateral for outstanding borrowings under the Loan Agreement.
  • 18487871_20
    Revenue - Product
    Over the long term, our growth strategy is to increase total net sales through increases in our comparable sales, opening new stores, and increasing e-commerce sales.
  • 18487871_62
    Financial - Earnings
    Gross profit increased $79.2 million or 16.1%, to $572.3 million for the 13 weeks ended November 3, 2018, compared to $493.1 million for the 13 weeks ended October 28, 2017.
  • 18487871_86
    Financial - Earnings
    Gross profit increased $230.0 million or 16.0%, to $1,668.5 million for the 39 weeks ended November 3, 2018, compared to $1,438.5 million for the 39 weeks ended October 28, 2017.
  • 18487871_108
    Financial - Cash Flow
    22 The following table presents a summary of our cash flows for the periods indicated: Operating activities consist of net income adjusted for certain non-cash items, including depreciation and amortization, non-cash stock-based compensation, realized gains or losses on disposal of property and equipment, and the effect of working capital changes.
  • 18487871_54
    Revenue - Product
    The following table presents the components of our consolidated results of operations for the periods indicated: 19 Net sales increased $217.8 million or 16.2%, to $1,560.0 million for the 13 weeks ended November 3, 2018, compared to $1,342.2 million for the 13 weeks ended October 28, 2017.
  • 18487871_146
    Revenue - Product
    Other than adoption of the new revenue accounting standard as discussed in Note 4 to our consolidated financial statements, ?Revenue?, there have been no significant changes to the critical accounting policies and estimates included in our Annual Report on Form 10 K for the fiscal year ended February 3, 2018.
  • 18487871_103
    Financial - Cash Flow
    Our primary sources of liquidity are cash and cash equivalents, short-term investments, cash flows from operations, including changes in working capital and tax reform, and borrowings under our credit facility.
  • 18487871_75
    Other - Other
    The lower tax rate is primarily due to tax reform.
  • 18487871_99
    Other - Other
    The lower tax rate is primarily due to tax reform.
  • 18487871_124
    Financial - Shares / Equity
    On March 9, 2017, we announced that the Board of Directors authorized a share repurchase program (the 2017 Share Repurchase Program) pursuant to which the Company could repurchase up to $425.0 million of the Company?s common stock.
  • 18487871_104
    Financial - Expense
    The most significant component of our working capital is merchandise inventories reduced by related accounts payable and accrued expenses.
  • 18487871_76
    Financial - Earnings
    Net income increased $26.5 million or 25.3%, to $131.2 million for the 13 weeks ended November 3, 2018, compared to $104.6 million for the 13 weeks ended October 28, 2017.
  • 18487871_100
    Financial - Earnings
    Net income increased $96.8 million or 27.9%, to $443.9 million for the 39 weeks ended November 3, 2018, compared to $347.1 million for the 39 weeks ended October 28, 2017.
  • 18487871_136
    Other - Other
    Outstanding borrowings will bear interest at either a base rate or the London Interbank Offered Rate plus 1.25%, and the unused line fee is 0.20% per annum.
  • 18487871_107
    Other - Other
    Based on past performance and current expectations, we believe that cash and cash equivalents, short-term investments, cash generated from operations, and borrowings under the credit facility will satisfy the Company?s working capital needs, capital expenditure needs, commitments, and other liquidity requirements through at least the next 12 months.
  • 18487871_19
    Revenue - Product
    A variety of factors affect our comparable sales, including general U.S. economic conditions, changes in merchandise strategy or mix, and timing and effectiveness of our marketing activities, among others.
  • 18487871_42
    Financial - Expense
    Selling, general and administrative expenses include: payroll, bonus, and benefit costs for retail stores and corporate employees; advertising and marketing costs; occupancy costs related to our corporate office facilities; stock-based compensation expense; depreciation and amortization for all assets, except those related to our retail stores and distribution operations, which are included in cost of sales; and legal, finance, information systems, and other corporate overhead costs.

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Exhibit 31.1 - RULE 13A-14(A)/15D-14(A) CERTIFICATION

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Exhibit 31.2 - RULE 13A-14(A)/15D-14(A) CERTIFICATION

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Exhibit 32 - SECTION 1350 CERTIFICATION

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  • Form Type: Quarterly
  • Number of times amended: 0
  • Accession Number: 0001558370-18-009611
  • Submitted to the SEC: Thursday, December 6, 2018 4:10:53 PM EST
  • Accepted by the SEC: Thursday, December 6, 2018
  • Period ending: November 2018
  • Industry: Retail Stores