Ulta Beauty Announces Fourth Quarter 2012 Results Total Sales Increased 30.3% Comparable Store Sales Increased 8.0% EPS Increased 37.0% to $1.00 Business Wire BOLINGBROOK, Ill. -- March 14, 2013 Ulta Beauty (NASDAQ:ULTA) today announced financial results for the fourteen week period (“Fourth Quarter”) and fifty-three week period (“Fiscal Year”) ended February 2, 2013, which compares to the thirteen and fifty-two week periods ended January 28, 2012. For the Fourth Quarter: *Net sales, including the benefit of the 14th week in the quarter, increased 30.3% to $758.8 million from $582.5 million in the fourth quarter of fiscal 2011; *Comparable store sales (sales for stores open at least 14 months) increased 8.0% compared to an increase of 11.5% in the fourth quarter of fiscal 2011; *Gross profit increased 10 basis points to 34.2% from 34.1% in the fourth quarter of fiscal 2011; *Selling, general and administrative (SG&A) expense as a percentage of net sales decreased 100 basis points to 20.3% compared to 21.3% in the fourth quarter of fiscal 2011; *Preopening expenses increased to $1.9 million, compared to $1.0 million in the fourth quarter of fiscal 2011. Real estate activity in the fourth quarter included 13 new stores and 1 remodel compared to 7 new stores in the fourth quarter of fiscal 2011; *Operating income increased 41.7% to $103.8 million, or 13.7% of net sales, compared to $73.2 million, or 12.6% of net sales, in the fourth quarter of fiscal 2011; *The tax rate was 37.8% compared to 36.7% in the fourth quarter of fiscal 2011; *Net income increased 39.4% to $64.5 million compared to $46.3 million in the fourth quarter of fiscal 2011; and *Income per diluted share increased 37.0% to $1.00 compared to $0.73 in the fourth quarter of fiscal 2011. Excluding the $0.05 earnings per share benefit of the 14^th week, income per diluted share increased 30.1%. Dennis Eck, Interim Chief Executive Officer, stated, “The Ulta team achieved strong fourth quarter results to complete an exceptional year in 2012. Excellent execution of our multi-year growth strategy was evident in the milestones achieved during the year: we increased square footage by 23% with the addition of 101 net new stores, we greatly enhanced our offering with newness across the board, we implemented a new Customer Relationship Management platform, broadened our marketing reach and brand awareness, and improved our digital capabilities including rapid growth in our e-commerce business.” “We believe that Ulta will continue to drive rapid sales and earnings growth, while continuing to invest inthe infrastructure needed to sustain the growth of our retail and digital businesses. We are on track to open 125 stores this year, and continue to see a strong pipeline of new brands, products and services to enhance our offering. We are excited to announce that we will be continuing the expansion of Clinique boutiques this year, in addition to the 43 boutiques rolled out at the end of 2012. To provide a solid foundation for Ulta’s growth in the years ahead, we plan to invest in several areas of the business. This will include upgrading our warehouse management systems, preparing for an additional distribution center in 2014, redesigning our e-commerce site, and building the additional Clinique boutiques as well as investing in labor to support the growth of our prestige categories. We are confident that Ulta will continue to gain market share and grow its position as a beauty and trend authority. We have a strong, tenured team in place to drive outstanding results in the quarters and years to come.” For the Fiscal Year 2012: *Net sales, including the benefit of the 53rd week, increased 25.0% to $2,220.3 million from $1,776.2 million in fiscal 2011; *Comparable store sales (sales for stores open at least 14 months) increased 8.8% compared to an increase of 10.9% in fiscal 2011; *Gross profit increased 60 basis points to 35.3% from 34.7% in fiscal 2011; *SG&A expense as a percentage of net sales decreased 110 basis points to 22.0% compared to 23.1% in fiscal 2011; *Pre-opening expense increased to $14.8 million, compared to $10.0 million in fiscal 2011. Real estate activity for fiscal 2012 included 102 new stores, three relocations and 21 remodels compared to 61 new stores, two relocations and 17 remodeled stores in fiscal 2011; *Operating income increased 42.7% to $280.0 million, or 12.6% of net sales, compared to $196.2 million, or 11.0% of net sales, in fiscal 2011; *The tax rate was 38.3% compared to 38.5% for fiscal 2011; *Net income increased 43.5% to $172.5 million compared to $120.3 million in fiscal 2011; and *Income per diluted share increased 41.1% to $2.68 compared to $1.90 in fiscal 2011. Excluding the $0.05 earnings per share benefit of the 53^rd week, income per diluted share increased 38.4%. Balance Sheet and Cash Flow Merchandise inventories at the end of the fourth quarter totaled $361.1 million, compared to $244.6 million at the end of the fourth quarter of fiscal 2011, representing an increase of $116.5 million. Average inventory per store increased 20.5% compared to prior year. The increase in total inventory was primarily due to the 101 net new stores opened since January 28, 2012, but also includes incremental inventory related to the recently added prestige brand boutiques, as well as the planned fourth quarter strategic inventory investments in core product categories to ensure strong in-stock levels throughout the holiday season and into early 2013. For the fiscal year 2012, the Company generated over $50 million of free cash flow and paid a $63 million special cash dividend. The Company did not utilize its credit facility during the fiscal year ended February 2, 2013. Store Expansion During the fourth quarter, the Company opened 13 stores located in Bangor, ME; Colma, CA; Coral Springs, FL; Fairview, TX; Florissant, MO; Glen Allen, VA; Harahan, LA; Houston, TX (River Oaks); Lisbon, CT; Newington, NH; Port Chester, NY; Roanoke, VA and San Ysidro, CA. The Company ended the fourth quarter with 550 stores and square footage of 5,847,393, which represents a 23% increase in square footage compared to the fourth quarter of fiscal 2011. Outlook For the first quarter of fiscal 2013, the Company currently expects net sales in the range of $568 million to $577 million, compared to actual net sales of $474.1 million in the first quarter of fiscal 2012. Starting in the first quarter of 2013, comparable store sales will be reported including the Company’s e-commerce business. This is expected to have a positive impact of less than 100 basis points on the reported comparable store sales increase. Comparable store sales for the first quarter of 2013 are expected to increase 4% to 6%. The Company reported a comparable store sales increase of 10.1% in the first quarter of 2012. Income per diluted share for the first quarter of fiscal 2013 is estimated to be in the range of $0.60 to $0.63. This compares to income per diluted share for first quarter of fiscal 2012 of $0.54. For fiscal 2013, the Company plans to: *achieve comparable store sales growth of approximately 4% to 6%, 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 fourth quarter results is scheduled for today, March 14, 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 March 21, 2013 and can be accessed by dialing (877) 870-5176 and entering conference ID number 409937. 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 February 2, 2013, Ulta operates 550 retail stores across 45 states and also distributes its products through the Company’s website: 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 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; 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 January 28, 2012. 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. Statements of Income (In thousands, except per share amounts) 14 Weeks Ended 13 Weeks Ended February 2, January 28, 2013 2012 (Unaudited) (Unaudited) Net sales $ 758,835 100.0 % $ 582,511 100.0 % Cost of sales 499,191 65.8 % 384,046 65.9 % Gross profit 259,644 34.2 % 198,465 34.1 % Selling, general and administrative 153,963 20.3 % 124,235 21.3 % expense Pre-opening expenses 1,915 0.3 % 983 0.2 % Operating income 103,766 13.7 % 73,247 12.6 % Interest expense 21 0.0 % 91 0.0 % Income before income taxes 103,745 13.7 % 73,156 12.6 % Income tax expense 39,213 5.2 % 26,861 4.6 % Net income $ 64,532 8.5 % $ 46,295 7.9 % Net income per common share: Basic $ 1.01 $ 0.75 Diluted $ 1.00 $ 0.73 Weighted average common shares outstanding: Basic 63,901 61,905 Diluted 64,675 63,681 Exhibit 2 Ulta Salon, Cosmetics & Fragrance, Inc. Statements of Income (In thousands, except per share amounts) 53 Weeks Ended 52 Weeks Ended February 2, January 28, 2013 2012 (Unaudited) Net sales $ 2,220,256 100.0 % $ 1,776,151 100.0 % Cost of sales 1,436,582 64.7 % 1,159,311 65.3 % Gross profit 783,674 35.3 % 616,840 34.7 % Selling, general and 488,880 22.0 % 410,658 23.1 % administrative expense Pre-opening expenses 14,816 0.7 % 9,987 0.6 % Operating income 279,978 12.6 % 196,195 11.0 % Interest expense 185 0.0 % 587 0.0 % Income before income taxes 279,793 12.6 % 195,608 11.0 % Income tax expense 107,244 4.8 % 75,344 4.2 % Net income $ 172,549 7.8 % $ 120,264 6.8 % Net income per common share: Basic $ 2.73 $ 1.96 Diluted $ 2.68 $ 1.90 Weighted average common shares outstanding: Basic 63,250 61,259 Diluted 64,396 63,334 Dividends declared per common $ 1.00 $ – share Exhibit 3 Ulta Salon, Cosmetics & Fragrance, Inc. Condensed Balance Sheets (In thousands) February 2, January 28, 2013 2012 (Unaudited) Assets Current assets: Cash and cash equivalents $ 320,475 $ 253,738 Receivables, net 41,515 26,153 Merchandise inventories, net 361,125 244,647 Prepaid expenses and other current assets 50,452 43,430 Deferred income taxes 15,757 12,264 Total current assets 789,324 580,232 Property and equipment, net 483,059 376,985 Deferred compensation plan assets 2,866 – Total assets $ 1,275,249 $ 957,217 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 118,886 $ 86,442 Accrued liabilities 92,127 74,411 Accrued income taxes 10,054 4,002 Total current liabilities 221,067 164,855 Deferred rent 208,003 163,463 Deferred income taxes 56,361 44,195 Other long-term liabilities 2,876 – Total liabilities 488,307 372,513 Commitments and contingencies Total stockholders’ equity 786,942 584,704 Total liabilities and stockholders’ equity $ 1,275,249 $ 957,217 Exhibit 4 Ulta Salon, Cosmetics & Fragrance, Inc. Statements of Cash Flows (In thousands) 53 Weeks Ended 52 Weeks Ended February 2, January 28, 2013 2012 (Unaudited) Operating activities Net income $ 172,549 $ 120,264 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 88,233 75,931 Deferred income taxes 8,673 10,827 Non-cash stock compensation charges 13,375 11,605 Excess tax benefits from stock-based (47,345) (25,899) compensation Loss on disposal of property and equipment 1,074 1,324 Change in operating assets and liabilities: Receivables (15,362) (3,861) Merchandise inventories (116,478) (26,131) Prepaid expenses and other current assets (9,888) (10,640) Income taxes 53,397 40,585 Accounts payable 32,444 (651) Accrued liabilities 13,789 (1,358) Deferred rent 44,540 28,891 Net cash provided by operating activities 239,001 220,887 Investing activities Purchases of property and equipment (188,578) (128,636) Net cash used in investing activities (188,578) (128,636) Financing activities Dividend paid (62,482) – Excess tax benefits from stock-based 47,345 25,899 compensation Stock options exercised 31,530 27,639 Common stock repurchased (79) (3,236) Net cash provided by financing activities 16,314 50,302 Net increase in cash and cash equivalents 66,737 142,553 Cash and cash equivalents at beginning of 253,738 111,185 period Cash and cash equivalents at end of period $ 320,475 $ 253,738 Exhibit 5 2012 Store Expansion Total stores Number of Total stores Fiscal open at Number of stores stores open at end 2012 beginning of opened during the closed of the the quarter quarter during the quarter quarter 1^st 449 18 0 467 Quarter 2^nd 467 22 0 489 Quarter 3^rd 489 49 1 537 Quarter 4^th 537 13 0 550 Quarter Gross square feet Gross square Total gross for stores opened feet for Total gross Fiscal square feet at or expanded stores square feet 2012 beginning of during the closed at end of the the quarter quarter during the quarter quarter 1^st 4,747,148 202,706 0 4,949,854 Quarter 2^nd 4,949,854 238,274 0 5,188,128 Quarter 3^rd 5,188,128 525,203 10,134 5,703,197 Quarter 4^th 5,703,197 144,196 0 5,847,393 Quarter Contact: Ulta Beauty 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 Fourth Quarter 2012 Results
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