Ulta Beauty Announces Record First Quarter Fiscal 2022 Results

·11 min read

Net Sales of $2.3 Billion Compared to $1.9 Billion in the Year-Ago Quarter

Comparable Sales Increased 18.0%

Net Income of $331.4 Million or $6.30 Per Diluted Share

Company Raises Outlook for Fiscal Year 2022

BOLINGBROOK, Ill., May 26, 2022--(BUSINESS WIRE)--Ulta Beauty, Inc. (NASDAQ: ULTA) today announced financial results for the first quarter ended April 30, 2022.

13 Weeks Ended

April 30,

May 1,

May 2,

(Dollars in millions)

2022

2021

2020

Net sales

$

2,345.9

$

1,938.5

$

1,173.2

Comparable sales

18.0%

65.9%

(35.3%)

Gross profit (as a percentage of net sales)

40.1%

38.9%

25.9%

Selling, general and administrative expenses

$

501.0

$

443.9

$

380.9

Operating income (loss) (as a percentage of net sales)

18.7%

15.8%

(8.7%)

Diluted earnings (loss) per share

$

6.30

$

4.10

$

(1.39)

New store openings, net

10

26

10

"The Ulta Beauty team delivered exceptional first quarter results, with better-than-expected sales and earnings growth, supported by double-digit comparable sales growth across all major categories," said Dave Kimbell, chief executive officer. "Solid execution of our strategies, paired with strong guest demand, fueled our financial performance and continued market share gains as we delighted our guests with exciting brand launches within our one-of-a-kind assortment and differentiated guest experiences."

For the First Quarter of Fiscal 2022

  • Net sales increased 21.0% to $2.3 billion compared to $1.9 billion in the first quarter of fiscal 2021 due to the favorable impact of fewer COVID-19 restrictions compared to the first quarter of fiscal 2021.

  • Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 18.0%, driven by a 10.0% increase in transactions and an 7.3% increase in average ticket.

  • Gross profit increased to $941.0 million compared to $753.8 million in the first quarter of fiscal 2021. As a percentage of net sales, gross profit increased to 40.1% compared to 38.9% in the first quarter of fiscal 2021, primarily due to leverage in fixed costs, strong growth in other revenue, and favorable channel mix shifts, partially offset by lower merchandise margin.

  • Selling, general and administrative ("SG&A") expenses increased to $501.0 million compared to $443.9 million in the first quarter of fiscal 2021. As a percentage of net sales, SG&A expenses decreased to 21.4% compared to 22.9% in the first quarter of fiscal 2021, primarily due to lower marketing expenses and leverage in store payroll and benefits due to higher sales, partially offset by deleverage in corporate overhead due to strategic investments.

  • Pre-opening expenses decreased to $2.3 million compared to $4.6 million for the first quarter of fiscal 2021.

  • Operating income increased to $437.7 million, or 18.7% of net sales, compared to $305.3 million, or 15.8% of net sales, in the first quarter of fiscal 2021.

  • Tax rate decreased to 24.2% compared to 24.5% in the first quarter of fiscal 2021.

  • Net income increased to $331.4 million compared to $230.3 million in the first quarter of fiscal 2021.

  • Diluted earnings per share increased to $6.30, including a $0.02 benefit due to income tax accounting for share-based compensation, compared to $4.10, including a $0.03 benefit due to income tax accounting for share-based compensation, in the first quarter of fiscal 2021.

Balance Sheet

Cash and cash equivalents at the end of the first quarter of fiscal 2022 totaled $654.5 million.

Merchandise inventories, net at the end of first quarter of fiscal 2022 increased to $1.57 billion compared to $1.35 billion at the end of the first quarter of fiscal 2021. The increase reflects the addition of 28 net new stores, inventory to support new brand launches, and the acceleration of inventory receipts to support expected demand and mitigate anticipated global supply chain disruptions.

Share Repurchase Program

During the first quarter of fiscal 2022, the Company repurchased 331,834 shares of its common stock at a cost of $132.8 million. As of April 30, 2022, $1.87 billion remained available under the $2.0 billion share repurchase program announced in March 2022.

Store Update

Real estate activity in the first quarter of fiscal 2022 included 10 new stores located in Cranston, RI; Las Vegas, NV; Meriden, CT; North Hollywood, CA; Prince Frederick, MD; Riverside, CA; Stephenville, TX; Vienna, VA; Warrenton,VA; and Woodbridge, NJ. In addition, the Company relocated six stores.

At the end of the first quarter of fiscal 2022, the Company operated 1,318 stores totaling 13.9 million square feet.

Fiscal 2022 Outlook

The Company has updated its outlook for fiscal 2022.

Prior FY22 Outlook

Updated FY22 Outlook

Net sales

$9.05 billion to $9.15 billion

$9.35 billion to $9.55 billion

Comparable sales

3% to 4%

6% to 8%

New stores, net

50

no change

Remodel and relocation projects

35

no change

Operating margin

13.7% to 14.0%

14.1% to 14.4%

Diluted earnings per share

$18.20 to $18.70

$19.20 to $20.10

Share repurchases

approximately $900 million

no change

Effective tax rate

approximately 24.5%

no change

Capital expenditures

$375 million to $425 million

no change

Depreciation and amortization expense

$250 million to $255 million

no change

The Company’s outlook for fiscal 2022 assumes no material increases in the federal minimum wage.

Conference Call Information

A conference call to discuss first quarter of fiscal 2022 results is scheduled for today, May 26, 2022, at 4:30 p.m. Eastern Time / 3:30 p.m. Central Time. Investors and analysts interested in participating in the call are invited to dial (877) 704‑4453. The conference call will also be webcast live at https://www.ulta.com/investor. A replay of the webcast will remain available for 90 days. A replay of the conference call will be available until 11:59 p.m. ET on June 9, 2022 and can be accessed by dialing (844) 512‑2921 and entering conference ID number 13729192.

About Ulta Beauty

At Ulta Beauty (NASDAQ: ULTA), the possibilities are beautiful. Ulta Beauty is the largest 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 1,318 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.

Ulta Beauty was recently added to the Bloomberg Gender Equality Index, which tracks the financial performance of public companies committed to supporting gender equality through policy development, representation and transparency. More information about Ulta Beauty’s corporate responsibility efforts can be found at www.ulta.com/investor/ESG.

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:

  • changes in the overall level of consumer spending and volatility in the economy, including as a result of the COVID-19 pandemic and geo-political events;

  • the impact of current inflationary cost pressures on payroll, benefits, supply chain, and other operating costs;

  • 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 (our replacement 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 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;

  • the failure to maintain satisfactory compliance with applicable privacy and data protection laws and regulations;

  • the possibility that the capacity of our distribution and order fulfillment infrastructure and the performance of our distribution centers and fast fulfillment centers may not be adequate to support our expected future growth plans;

  • changes in the wholesale cost of our products;

  • a decline in operating results that has and may continue to lead to asset impairment and store closure charges;

  • 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; 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 January 29, 2022, 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

April 30,

May 1,

2022

2021

(Unaudited)

(Unaudited)

Net sales

$

2,345,901

100.0

%

$

1,938,519

100.0

%

Cost of sales

1,404,875

59.9

%

1,184,731

61.1

%

Gross profit

941,026

40.1

%

753,788

38.9

%

Selling, general and administrative expenses

500,970

21.4

%

443,875

22.9

%

Pre-opening expenses

2,348

0.1

%

4,589

0.2

%

Operating income

437,708

18.7

%

305,324

15.8

%

Interest expense, net

401

0.0

%

358

0.0

%

Income before income taxes

437,307

18.6

%

304,966

15.8

%

Income tax expense

105,912

4.5

%

74,677

3.9

%

Net income

$

331,395

14.1

%

$

230,289

11.9

%

Net income per common share:

Basic

$

6.34

$

4.13

Diluted

$

6.30

$

4.10

Weighted average common shares outstanding:

Basic

52,250

55,795

Diluted

52,582

56,172

Exhibit 2

Ulta Beauty, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

April 30,

January 29,

May 1,

2022

2022

2021

(Unaudited)

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$

654,486

$

431,560

$

947,456

Receivables, net

192,754

233,682

154,342

Merchandise inventories, net

1,570,552

1,499,218

1,353,565

Prepaid expenses and other current assets

114,075

110,814

108,393

Prepaid income taxes

5,909

Total current assets

2,531,867

2,281,183

2,563,756

Property and equipment, net

909,543

914,476

960,440

Operating lease assets

1,488,040

1,482,256

1,487,616

Goodwill

10,870

10,870

10,870

Other intangible assets, net

1,307

1,538

2,233

Deferred compensation plan assets

35,978

38,409

34,279

Other long-term assets

34,431

35,647

28,350

Total assets

$

5,012,036

$

4,764,379

$

5,087,544

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

585,500

$

552,730

$

552,837

Accrued liabilities

305,000

364,797

322,676

Deferred revenue

324,694

353,579

270,090

Current operating lease liabilities

276,440

274,118

263,200

Accrued income taxes

108,113

12,786

113,960

Total current liabilities

1,599,747

1,558,010

1,522,763

Non-current operating lease liabilities

1,568,356

1,572,638

1,613,309

Deferred income taxes

40,702

39,693

66,483

Other long-term liabilities

57,611

58,665

40,272

Total liabilities

3,266,416

3,229,006

3,242,827

Commitments and contingencies

Total stockholders’ equity

1,745,620

1,535,373

1,844,717

Total liabilities and stockholders’ equity

$

5,012,036

$

4,764,379

$

5,087,544

Exhibit 3

Ulta Beauty, Inc.

Consolidated Statements of Cash Flows

(In thousands)

13 Weeks Ended

April 30,

May 1,

2022

2021

(Unaudited)

(Unaudited)

Operating activities

Net income

$

331,395

$

230,289

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

62,839

70,599

Non-cash lease expense

72,192

68,881

Deferred income taxes

1,009

1,124

Stock-based compensation expense

10,356

8,978

Loss on disposal of property and equipment

1,002

1,089

Change in operating assets and liabilities:

Receivables

40,928

38,767

Merchandise inventories

(71,334

)

(185,350

)

Prepaid expenses and other current assets

(3,261

)

(991

)

Income taxes

101,236

71,431

Accounts payable

42,586

76,580

Accrued liabilities

(57,214

)

23,209

Deferred revenue

(28,885

)

(4,293

)

Operating lease liabilities

(79,936

)

(72,175

)

Other assets and liabilities

3,390

1,929

Net cash provided by operating activities

426,303

330,067

Investing activities

Capital expenditures

(71,076

)

(34,563

)

Other investments

(797

)

Net cash used in investing activities

(71,873

)

(34,563

)

Financing activities

Repurchase of common shares

(132,834

)

(392,309

)

Stock options exercised

6,502

5,032

Purchase of treasury shares

(5,172

)

(6,766

)

Net cash used in financing activities

(131,504

)

(394,043

)

Effect of exchange rate changes on cash and cash equivalents

(56

)

Net increase (decrease) in cash and cash equivalents

222,926

(98,595

)

Cash and cash equivalents at beginning of period

431,560

1,046,051

Cash and cash equivalents at end of period

$

654,486

$

947,456

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 2022

quarter

quarter

quarter

end of the quarter

1st Quarter

1,308

10

0

1,318

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 2022

the quarter

quarter

during the quarter

quarter

1st Quarter

13,770,438

90,905

0

13,861,343

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

April 30,

May 1,

2022

2021

Cosmetics

44

%

45

%

Haircare products and styling tools

20

%

19

%

Skincare

18

%

19

%

Fragrance and bath

12

%

11

%

Services

3

%

3

%

Accessories and other

3

%

3

%

100

%

100

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20220526005523/en/

Contacts

Investor Contacts:
Kiley Rawlins, CFA
Vice President, Investor Relations
krawlins@ulta.com

Media Contact:
Eileen Ziesemer
Vice President, Public Relations
eziesemer@ulta.com
(708) 305-4479

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