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TheStreet Open House

Ulta Beauty Announces Fourth Quarter 2012 Results

Stocks in this article: ULTA

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 expense 153,963 20.3 % 124,235 21.3 %
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 administrative expense 488,880 22.0 % 410,658 23.1 %
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 share $ 1.00 $
 

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 compensation (47,345) (25,899)
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 compensation 47,345 25,899
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 period   253,738   111,185
Cash and cash equivalents at end of period $ 320,475 $ 253,738
 

Exhibit 5

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