Ulta Beauty Announces First Quarter Fiscal 2024 Results

BOLINGBROOK, Ill.--(BUSINESS WIRE)--Ulta Beauty, Inc. (NASDAQ: ULTA) today announced financial results for the thirteen-week period ("first quarter") ended May 4, 2024.

		13 Weeks Ended
		May 4,			April 29,
(Dollars in millions, except per share data)		2024			2023
Net sales		$	2,725.8		$	2,634.3
Comparable sales (1)			1.6%			9.3%
Gross profit (as a percentage of net sales)			39.2%			40.0%
Selling, general and administrative expenses		$	665.9		$	612.1
Operating income (as a percentage of net sales)			14.7%			16.8%
Diluted earnings per share		$	6.47		$	6.88
New store openings, net			10			4

(1)

Comparable sales are calculated based on the comparable 13 calendar weeks in the current and prior year.

"The Ulta Beauty team delivered net sales growth of 3.5% and comparable sales growth of 1.6% in a dynamic operating environment. I am proud of how our teams continued to execute our transformational agenda, adapt to a rapidly evolving marketplace, and thoughtfully manage expenses across the enterprise," said Dave Kimbell, chief executive officer. "We have a clear plan to accelerate our momentum and continue delivering a best-in-class assortment and engaging experiences for our guests. I remain confident in our differentiated model, the resilience of the beauty category, and our ability to execute against our plans, but we have adjusted our annual guidance as we anticipate the dynamics we faced in the first quarter to continue for the balance of the year."

First Quarter of Fiscal 2024 Compared to First Quarter of Fiscal 2023

• Net sales increased 3.5% to $2.7 billion compared to $2.6 billion, primarily due to increased comparable sales, new store contribution, and growth in other revenue.
• Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 1.6% compared to the first quarter of fiscal 2023, driven by a 1.3% increase in transactions and a 0.3% increase in average ticket.
• Gross profit increased 1.4% to $1.07 billion compared to $1.05 billion. As a percentage of net sales, gross profit decreased to 39.2% compared to 40.0%, primarily due to lower merchandise margins and higher inventory shrink, partially offset by growth in other revenue.
• Selling, general and administrative ("SG&A") expenses increased 8.8% to $665.9 million compared to $612.1 million. As a percentage of net sales, SG&A expenses increased to 24.4% compared to 23.2%, primarily due to higher corporate overhead for strategic investments, higher store payroll and benefits, and higher store expenses.
• Operating income was $400.9 million, or 14.7% of net sales, compared to $442.1 million, or 16.8% of net sales.
• The tax rate increased to 23.2% compared to 22.8% primarily due to a reduced benefit from income tax accounting for stock-based compensation.
• Net income was $313.1 million compared to $347.1 million.
• Diluted earnings per share was $6.47, including a $0.10 benefit due to income tax accounting for stock-based compensation, compared to $6.88, including a $0.14 benefit due to income tax accounting for stock-based compensation.

Balance Sheet

Cash and cash equivalents at the end of the first quarter of fiscal 2024 totaled $524.6 million.

Merchandise inventories, net at the end of first quarter of fiscal 2024 increased to $1.9 billion compared to $1.8 billion at the end of the first quarter of fiscal 2023. The increase was primarily due to inventory to support new brand launches, 36 net new stores, and an increase in distribution center inventory primarily due to the opening of the market fulfillment center in Greer, SC.

Share Repurchase Program

During the first quarter of fiscal 2024, the Company repurchased 588,004 shares of its common stock at a cost of $285.1 million. As of May 4, 2024, $1.8 billion remained available under the $2.0 billion share repurchase program announced in March 2024.

Store Update

During the first quarter of fiscal 2024, we opened 12 new stores, closed two stores, and relocated one store. At the end of the first quarter of fiscal 2024 the Company operated 1,395 stores totaling 14.6 million square feet.

Fiscal 2024 Outlook

The Company has updated its outlook for fiscal 2024.

			Prior FY24 Outlook		Updated FY24 Outlook
Net sales			$11.7 billion to $11.8 billion		$11.5 billion to $11.6 billion
Comparable sales			4% to 5%		2% to 3%
New stores, net			60-65		no change
Remodel and relocation projects			40-45		no change
Operating margin			14.0% to 14.3%		13.7% to 14.0%
Diluted earnings per share			$26.20 to $27.00		$25.20 to $26.00
Share repurchases			approximately $1 billion		no change
Interest income			approximately $11 million		approximately $13 million
Effective tax rate			approximately 24.3%		approximately 24%
Capital expenditures			$415 million to $490 million		no change
Depreciation and amortization expense			$275 million to $280 million		$270 million to $275 million

Conference Call Information

A conference call to discuss first quarter of fiscal 2024 results is scheduled for today, May 30, 2024, at 4:30 p.m. Eastern Time / 3:30 p.m. CT. Investors and analysts who are interested in participating in the call are invited to dial [phone]. Participants may also listen to a real-time audio webcast of the conference call by visiting the Investor Relations section of the Company's website located at https://www.ulta.com/investor. A replay will be made available online approximately two hours following the live call for a period of 30 days.

About Ulta Beauty

At Ulta Beauty (NASDAQ: ULTA), the possibilities are beautiful. Ulta Beauty is the largest specialty U.S. beauty retailer and the premier beauty destination for cosmetics, fragrance, skin care products, hair care products and salon services. In 1990, the Company reinvented the beauty retail experience by offering a new way to shop for beauty - bringing together All Things Beauty. All in One Place^®. Today, Ulta Beauty operates 1,395 retail stores across 50 states and also distributes its products through its website, which includes a collection of tips, tutorials, and social content. For more information, visit www.ulta.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 the company's current views with respect to, among other things, future events and financial performance. These statements can be identified by the use of forward-looking words such as "outlook," "believes," "expects," "plans," "estimates," "targets," "strategies" or other comparable words. Any forward-looking statements contained in this press release are based upon the company's historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the company or any other person that the future plans, estimates, targets, strategies or expectations contemplated by the company will be achieved. Such forward-looking statements are subject to various risks and uncertainties, which include, without limitation:

• macroeconomic conditions, including inflation, elevated interest rates and recessionary concerns, as well as continuing labor cost pressures, and transportation and shipping cost pressures, have had, and may continue to have, a negative impact on our business, financial condition, profitability, and cash flows (including future uncertain impacts);
• changes in the overall level of consumer spending and volatility in the economy, including as a result of macroeconomic conditions and geopolitical events;
• our ability to sustain our growth plans and successfully implement our long-range strategic and financial plan;
• the ability to execute our operational excellence priorities, including continuous improvement, Project SOAR (the replacement of our enterprise resource planning platform), and supply chain optimization;
• our ability to gauge beauty trends and react to changing consumer preferences in a timely manner;
• the possibility that we may be unable to compete effectively in our highly competitive markets;
• the possibility of significant interruptions in the operations of our distribution centers, fast fulfillment centers, and market fulfillment centers;
• the possibility that cybersecurity or information security breaches and other disruptions could compromise our information or result in the unauthorized disclosure of confidential information;
• the possibility of material disruptions to our information systems, including our Ulta.com website and mobile applications;
• the failure to maintain satisfactory compliance with applicable privacy and data protection laws and regulations;
• changes in the good relationships we have with our brand partners, our ability to continue to obtain sufficient merchandise from our brand partners, and/or our ability to continue to offer permanent or temporary exclusive products of our brand partners;
• our ability to effectively manage our inventory and protect against inventory shrink;
• changes in the wholesale cost of our products and/or interruptions at our brand partners' or third-party vendors' operations;
• epidemics, pandemics or natural disasters, which could negatively impact sales;
• the possibility that new store openings and existing locations may be impacted by developer or co-tenant issues;
• our ability to attract and retain key executive personnel;
• the impact of climate change on our business operations and/or supply chain;
• our ability to successfully execute our common stock repurchase program or implement future common stock repurchase programs;
• a decline in operating results which could lead to asset impairment and store closure charges; and
• other risk factors detailed in the Company's public filings with the Securities and Exchange Commission (the SEC), including risk factors contained in its Annual Report on Form 10-K for the fiscal year ended February 3, 2024, as such may be amended or supplemented in its subsequently filed Quarterly Reports on Form 10-Q.

The Company's filings with the SEC are available at www.sec.gov. Except to the extent required by the federal securities laws, 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 Beauty, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
		13 Weeks Ended
		May 4,							April 29,
		2024							2023
		(Unaudited)							(Unaudited)
Net sales		$	2,725,848			100.0	%		$	2,634,263			100.0	%
Cost of sales			1,656,068			60.8	%			1,579,406			60.0	%
Gross profit			1,069,780			39.2	%			1,054,857			40.0	%
Selling, general and administrative expenses			665,913			24.4	%			612,129			23.2	%
Pre-opening expenses			2,919			0.1	%			658			0.0	%
Operating income			400,948			14.7	%			442,070			16.8	%
Interest income, net			(6,900	)		(0.3	%)			(7,348	)		(0.3	%)
Income before income taxes			407,848			15.0	%			449,418			17.1	%
Income tax expense			94,735			3.5	%			102,367			3.9	%
Net income		$	313,113			11.5	%		$	347,051			13.2	%
Net income per common share:
Basic		$	6.51						$	6.92
Diluted		$	6.47						$	6.88
Weighted average common shares outstanding:
Basic			48,125							50,153
Diluted			48,381							50,469

Exhibit 2
Ulta Beauty, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
		May 4,			February 3,			April 29,
		2024			2024			2023
		(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	524,596		$	766,594		$	636,449
Receivables, net			203,463			207,939			190,282
Merchandise inventories, net			1,906,040			1,742,136			1,751,235
Prepaid expenses and other current assets			126,529			115,598			108,014
Prepaid income taxes			-			4,251			-
Total current assets			2,760,628			2,836,518			2,685,980
Property and equipment, net			1,195,658			1,182,335			1,019,978
Operating lease assets			1,561,767			1,574,530			1,559,560
Goodwill			10,870			10,870			10,870
Other intangible assets, net			434			510			1,015
Deferred compensation plan assets			45,718			43,516			37,002
Other long-term assets			56,864			58,732			61,314
Total assets		$	5,631,939		$	5,707,011		$	5,375,719
Liabilities and stockholders' equity
Current liabilities:
Accounts payable		$	463,777		$	544,001		$	621,272
Accrued liabilities			332,692			382,468			308,583
Deferred revenue			398,729			436,591			357,217
Current operating lease liabilities			284,815			283,821			288,133
Accrued income taxes			92,711			11,310			58,695
Total current liabilities			1,572,724			1,658,191			1,633,900
Non-current operating lease liabilities			1,607,953			1,627,271			1,610,256
Deferred income taxes			89,556			85,921			57,490
Other long-term liabilities			60,963			56,300			56,005
Total liabilities			3,331,196			3,427,683			3,357,651
Commitments and contingencies
Total stockholders' equity			2,300,743			2,279,328			2,018,068
Total liabilities and stockholders' equity		$	5,631,939		$	5,707,011		$	5,375,719

Exhibit 3
Ulta Beauty, Inc.
Consolidated Statements of Cash Flows
(In thousands)
		13 Weeks Ended
		May 4,				April 29,
		2024				2023
		(Unaudited)				(Unaudited)
Operating activities
Net income		$	313,113			$	347,051
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			64,739				57,949
Non-cash lease expense			77,938				75,478
Deferred income taxes			3,635				2,144
Stock-based compensation expense			10,082				9,721
Loss on disposal of property and equipment			2,975				1,451
Change in operating assets and liabilities:
Receivables			4,476				9,140
Merchandise inventories			(163,904	)			(147,784	)
Prepaid expenses and other current assets			(10,931	)			22,232
Income taxes			85,652				97,003
Accounts payable			(74,069	)			62,257
Accrued liabilities			(43,846	)			(98,515	)
Deferred revenue			(37,862	)			(37,460	)
Operating lease liabilities			(83,500	)			(78,562	)
Other assets and liabilities			10,842				(17,204	)
Net cash provided by operating activities			159,340				304,901
Investing activities
Capital expenditures			(91,024	)			(109,766	)
Other investments			(2,563	)			(314	)
Net cash used in investing activities			(93,587	)			(110,080	)
Financing activities
Repurchase of common shares			(289,431	)			(283,517	)
Stock options exercised			8,913				8,927
Purchase of treasury shares			(23,283	)			(21,659	)
Debt issuance costs			(3,950	)			-
Net cash used in financing activities			(307,751	)			(296,249	)
Net decrease in cash and cash equivalents			(241,998	)			(101,428	)
Cash and cash equivalents at beginning of period			766,594				737,877
Cash and cash equivalents at end of period		$	524,596			$	636,449

Exhibit 4
Ulta Beauty, Inc.
Store Update
		Total stores open		Number of stores		Number of stores		Total stores
		at beginning of the		opened during the		closed during the		open at
Fiscal 2024		quarter		quarter		quarter		end of the quarter
1st Quarter		1,385		12		2		1,395

				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 2024		the quarter		quarter		during the quarter		quarter
1st Quarter		14,515,593		114,786		15,615		14,614,764

Exhibit 5
Ulta Beauty, Inc.
Sales by Category
The following table sets forth the approximate percentage of net sales by primary category:
		13 Weeks Ended
		May 4,			April 29,
		2024			2023
Cosmetics		42	%		44	%
Skincare		23	%		22	%
Haircare		19	%		19	%
Fragrance		10	%		9	%
Services		4	%		4	%
Other		2	%		2	%
		100	%		100	%
Certain sales departments were reclassified between categories in the prior year to conform to current year presentation, including moving the bath category from Fragrance to Skincare.

Contacts

Investor Contacts:
Kiley Rawlins, CFA
Vice President, Investor Relations
[e-mail]

Media Contact:
Crystal Carroll
Senior Director, Public Relations
[e-mail]