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TheStreet Open House

Ulta Beauty Announces Third Quarter 2013 Results

The Company plans to continue its practice of providing specific sales and earnings guidance on its fourth quarter conference call in March each year. Considering square footage growth anticipated in the 15% range in fiscal 2014, the current consumer and promotional environment, and the investments needed to sustain its growth plans, the Company expects earnings per share growth in fiscal 2014 to be in a similar range as the current year. On a longer-term basis, the Company is currently evaluating its long-range financial and strategic plan, and will share details of the outcome of this analysis and update its long-term targets during the course of 2014.

“Since I joined Ulta Beauty in July, I have been impressed by the strength of our business model and confident in our ability to offer a differentiated experience for our customers now and in the future,” said Mary Dillon. “We have long runway for new store growth, strong potential to develop higher brand awareness, and a significant opportunity to evolve our digital presence both on-line and in-store. In order to support a thriving 1,200 store chain with a successful, growing e-commerce business, we will need to upgrade our capabilities with investments in people, systems and supply chain. We expect to remain a high-performance, high-growth company while building an even stronger foundation for the future.”

Conference Call Information

A conference call to discuss third quarter results is scheduled for today, December 5, 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 December 19, 2013 and can be accessed by dialing (877) 870-5176 and entering conference ID number 13572954.

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, hair care, skincare, bath and body products and salon styling tools, as well as salon hair care products. Ulta Beauty also offers a full-service salon in all of its stores. As of November 2, 2013, Ulta operates 664 retail stores across 46 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; our ability to successfully execute and implement our common stock repurchase program; our ability to sustain our growth plans and successfully develop and implement our long-range financial and strategic plan; 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 February 2, 2013. 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.
Consolidated Statements of Income
(In thousands, except per share amounts)
 
    13 Weeks Ended     13 Weeks Ended
November 2, October 27,
2013 2012
(Unaudited) (Unaudited)
Net sales $ 618,781 100.0 % $ 505,640 100.0 %
Cost of sales   387,120   62.6 %   320,147 63.3 %
Gross profit 231,661 37.4 % 185,493 36.7 %
 
Selling, general and administrative expense 151,306 24.5 % 117,934 23.3 %
Pre-opening expenses   7,468   1.2 %   6,252 1.2 %

Operating income

72,887 11.8 % 61,307 12.1 %
Interest (income) expense   (7 ) 0.0 %   39 0.0 %
Income before income taxes 72,894 11.8 % 61,268 12.1 %
Income tax expense   27,464   4.4 %   23,117 4.6 %
Net income $ 45,430   7.3 % $ 38,151 7.5 %
 
Net income per common share:
Basic $ 0.71 $ 0.60
Diluted $ 0.70 $ 0.59
 
Weighted average common shares outstanding:
Basic 64,061 63,484
Diluted 64,538 64,483
 

Exhibit 2

Ulta Salon, Cosmetics & Fragrance, Inc.
Consolidated Statements of Income
(In thousands, except per share amounts)
 
    39 Weeks Ended     39 Weeks Ended
November 2, October 27,
2013 2012
(Unaudited) (Unaudited)
Net sales $ 1,802,491 100.0 % $ 1,461,421 100.0 %
Cost of sales   1,154,804   64.1 %   937,391 64.1 %
Gross profit 647,687 35.9 % 524,030 35.9 %
 
Selling, general and administrative expense 418,754 23.2 % 334,917 22.9 %
Pre-opening expenses   15,483   0.9 %   12,901 0.9 %
Operating income 213,450 11.8 % 176,212 12.1 %
Interest (income) expense   (49 ) 0.0 %   164 0.0 %
Income before income taxes 213,499 11.8 % 176,048 12.0 %
Income tax expense   81,332   4.5 %   68,031 4.7 %
Net income $ 132,167   7.3 % $ 108,017 7.4 %
 
Net income per common share:
Basic $ 2.07 $ 1.71
Diluted $ 2.05 $ 1.68
 
Weighted average common shares outstanding:
Basic 63,912 63,016
Diluted 64,424 64,285
 
Dividends declared per common share $ - $ 1.00
 

Exhibit 3

Ulta Salon, Cosmetics & Fragrance, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
 
    November 2,     February 2,     October 27,
2013     2013     2012
(Unaudited) (Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 240,916 $ 320,475 $ 191,724
Receivables, net 46,911 41,515 36,649
Merchandise inventories, net 582,303 361,125 462,833
Prepaid expenses and other current assets 54,757 50,452 50,197
Prepaid income taxes 1,729 13,417
Deferred income taxes   14,686       15,757       11,261
Total current assets 941,302 789,324 766,081
 
Property and equipment, net 590,132 483,059 467,165
Deferred compensation plan assets   3,913       2,866      
Total assets $ 1,535,347     $ 1,275,249     $ 1,233,246
 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 190,193 $ 118,886 $ 185,177
Accrued liabilities 97,421 92,127 90,354
Accrued income taxes         10,054      
Total current liabilities 287,614 221,067 275,531
 
Deferred rent 259,217 208,003 202,265
Deferred income taxes 55,568 56,361 48,450
Other long-term liabilities   4,629       2,876      
Total liabilities 607,028 488,307 526,246
 
Commitments and contingencies
 
Total stockholders’ equity   928,319       786,942       707,000
Total liabilities and stockholders’ equity $ 1,535,347     $ 1,275,249     $ 1,233,246
 

Exhibit 4

Ulta Salon, Cosmetics & Fragrance, Inc.
Consolidated Statements of Cash Flows
(In thousands)
 
    39 Weeks Ended
November 2,     October 27,
2013     2012
(Unaudited)
Operating activities
Net income $ 132,167 $ 108,017
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 77,572 64,832
Deferred income taxes 278 5,258
Non-cash stock compensation charges 11,936 9,721
Excess tax benefits from stock-based compensation (13,352 ) (41,343 )
Loss on disposal of property and equipment 3,374 430
Change in operating assets and liabilities:
Receivables (5,396 ) (10,496 )
Merchandise inventories (221,178 ) (218,186 )
Prepaid expenses and other current assets (4,305 ) (6,767 )
Income taxes 1,569 23,924
Accounts payable 71,307 98,735
Accrued liabilities (5,759 ) 4,531
Deferred rent 51,214 38,802
Other assets and liabilities   706          
Net cash provided by operating activities 100,133 77,458
 
Investing activities
Purchases of property and equipment   (176,966 )       (144,030 )
Net cash used in investing activities (176,966 ) (144,030 )
 
Financing activities
Repurchase of common shares (37,337 )
Dividends paid - (62,482 )
Excess tax benefits from stock-based compensation 13,352 41,343
Stock options exercised 21,890 25,776
Purchase of treasury shares   (631 )       (79 )
Net cash (used in) provided by financing activities   (2,726 )       4,558  
 
Net decrease in cash and cash equivalents (79,559 ) (62,014 )
Cash and cash equivalents at beginning of period   320,475         253,738  
Cash and cash equivalents at end of period $ 240,916       $ 191,724  
 

Exhibit 5

2013 Store Expansion

 

 
Fiscal 2013  

Total stores open at beginning of the quarter

 

Number of stores opened during the quarter

 

Number of stores closed during the quarter

 

Total stores open at end of the quarter

1 st Quarter   550   28   2   576
2 nd Quarter 576 33 0 609
3 rd Quarter 609 55 0 664
 
Fiscal 2013  

Total gross square feet at beginning of the quarter

 

Gross square feet for stores opened or expanded during the quarter

 

Gross square feet for stores closed during the quarter

 

Total gross square feet at end of the quarter

1 st Quarter 5,847,393 298,083 24,077 6,121,399
2 nd Quarter 6,121,399 355,046 0 6,476,445
3 rd Quarter 6,476,445 569,555 0 7,046,000
 




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