01—Abstract
Summary
Summary of the 10-K filed March 30, 2011. Cited figures are marked; the original filing is the authoritative source.
Ulta Salon, Cosmetics & Fragrance, Inc. reported net sales of $1,454.8 milliona for fiscal 2010 (ended January 29, 2011), up from $1,222.8 million in fiscal 2009, with net sales increasing $232.0 million, or 19.0%.
Comparable store sales rose 11.0%, driven primarily by an 8.6% increase in store traffic. Gross profit increased 28.6% to $484.1 millionb, and gross margin rose to 33.3% of net sales from 30.8%. Operating income was $118.9 million compared with $68.2 million, and net income was $71.0 million, or $1.16 per diluted share, versus $39.4 million, or $0.66 per diluted share, in fiscal 2009.
The company opened 47 new stores during fiscal 2010, ending the year with 389 stores in 40 states, and noted it does not expect the 11.0% comparable store sales increase to continue, citing a long-term target of 3% to 5%. The company ended fiscal 2010 with cash and cash equivalents of $111.2 millionc, up from $4.0 million a year earlier, and no borrowings outstanding under its $200 million secured revolving credit facility, which it entered into with Wells Fargo on August 31, 2010. Net cash provided by operating activities was $176.5 million, and capital expenditures were $97.1 million.
The company's long-term growth targets include reaching over 1,000 U.S. stores and annual net income growth of 25%d to 30%, based on comparable store sales increases of 3% to 5%. The filing identifies risks including reduced consumer discretionary spending, dependence on vendors (the top ten vendors represent approximately 48% of net sales), reliance on two distribution facilities with a third planned for fiscal 2012, and a principal stockholder holding approximately 18% of outstanding common stock. Two California employment class actions were settled, and the filing states that the settlement amounts are not material.
02—Key points
Key Highlights
- Net sales rose 19.0% to $1,454.8 million in fiscal 2010, with comparable store sales up 11.0%.
- Gross profit increased 28.6% to $484.1 million, and gross profit margin expanded to 33.3% from 30.8%.
- Net income increased 80.5% to $71.0 million, or $1.16 per diluted share, compared with $39.4 million in fiscal 2009.
- The company opened 47 new stores in fiscal 2010, ending the year with 389 stores in 40 states.
- Cash and cash equivalents increased to $111.2 million from $4.0 million, and the company had no borrowings outstanding under its $200 million credit facility at year-end.
- Management does not expect the 11.0% comparable store sales increase to continue, and its long-term comparable store sales target is 3% to 5%.
- The top ten vendors accounted for approximately 48% of net sales, and the company has no long-term supply agreements with its vendors.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Ulta Beauty kept $0.05.
- Revenue$1.45B100.0%
- Cost of revenue−$970.8M66.7%
- Gross profit$484.1M33.3%
- Operating costs−$365.2M25.1%
- Operating income$118.9M8.2%
- Interest, other & tax−$47.9M3.3%
- Net income$71.0M4.9%
Where FY2011 revenue went
$1.45B- Cost of revenue: $970.8M, 67% of revenue
- SG&A: $358.1M, 25% of revenue
- Net income: $71.0M, 4.9% of revenue
- Interest, other & tax: $47.9M, 3.3% of revenue
Kept 4.9% as net incomeNet income $71.0M · 4.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed March 30, 2011Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $1.45B$1.22B | +19.0% |
| Cost of Revenue | $970.75M$846.20M | +14.7% |
| Gross Profit | $484.08M$376.57M | +28.6% |
| SG&A Expenses | $358.11M$302.41M | +18.4% |
| Operating Income | $118.88M$68.15M | +74.4% |
| Interest Expense | $755K$2.20M | −65.7% |
| Net Income | $71.03M$39.36M | +80.5% |
| EPS (Basic) | $1.20$0.68 | +76.5% |
| EPS (Diluted) | $1.16$0.66 | +75.8% |
| Shares Outstanding (Basic) | 58.96M57.91M | +1.8% |
| Shares Outstanding (Diluted) | 61.29M59.24M | +3.5% |
05—Questions
Frequently Asked Questions
How did Ulta perform financially in fiscal 2010?
Net sales increased 19.0% to $1,454.8 million, operating income rose to $118.9 million from $68.2 million, and net income was $71.0 million, or $1.16 per diluted share, compared with $0.66 per diluted share in fiscal 2009.
What drove the increase in net sales?
The company attributed the increase to opening 43 net new stores and an 11.0% increase in comparable store sales, which was primarily due to an 8.6% increase in store traffic. Non-comparable stores contributed $102.3 million of the increase, and comparable stores contributed $129.7 million.
Does the company have debt?
No. The company had no borrowings outstanding under its $200 million secured revolving credit facility at January 29, 2011. The facility, entered into on August 31, 2010 with Wells Fargo, bears interest at the prime rate or Libor plus 2.00%.
What are the company's growth targets?
The company's long-term goals include growing its store base to over 1,000 stores in the United States, a long-term annual comparable store sales increase target of 3% to 5%, and a long-term annual net income growth target of 25% to 30%.
What are the main risks highlighted in the filing?
Key risks include weak consumer discretionary spending, competition in highly competitive markets, dependence on key vendors (top ten vendors represent approximately 48% of net sales), reliance on two distribution facilities, the potential strain of opening new stores, and a principal stockholder who holds approximately 18% of common stock and has significant influence over the company.
06—Continue