01—Abstract
Summary
Summary of the 10-K filed March 30, 2016. Cited figures are marked; the original filing is the authoritative source.
Ulta Salon, Cosmetics & Fragrance, Inc. reported fiscal 2015 (ended January 30, 2016) net sales of $3,924.1 milliona, up from $3,241.4 million in fiscal 2014, with net income of $320.0 million, or $4.98 per diluted share, compared with $257.1 million in fiscal 2014.
Comparable sales rose 11.8%, driven by a 10.0% increase in retail and salon comparable sales and a 47.5% increase in e-commerce. The company opened 103 stores in fiscal 2015 (100 net of closings), ending the year with 874 stores in 48 states, and reported gross margin of 35.3% and operating income of $506.3 millionb. Cash flow from operations was $375.9 million, and capital expenditures were $299.2 million, with no borrowings outstanding under its $200 million credit facility.
The company expects to open about 100 new stores per year for the next several years and has a long-term goal of growing e-commerce to roughly 10% of total sales from about 6% today. Capital expenditures are budgeted at approximately $391 millionc for fiscal 2016, and a fifth distribution center in Dallas, Texas is expected to open in 2016. Shareholder returns were also a focus: the company repurchased $167.4 million of stock in fiscal 2015 and, on March 10, 2016, authorized a new $425 million repurchase program that includes a $200 million accelerated share repurchase agreement.
Key risks cited in the filing include exposure to discretionary consumer spending, competition from larger retailers with greater resources, reliance on distribution center performance and information systems, and dependence on vendor partners, whose top ten accounted for about 50%d of net sales. The company also noted that it has no long-term supply agreements with vendors and that its e-commerce growth could partly cannibalize store sales.
02—Key points
Key Highlights
- Net sales rose to $3,924.1 million in fiscal 2015 from $3,241.4 million in fiscal 2014.
- Net income was $320.0 million, or $4.98 per diluted share, versus $257.1 million, or $3.98 per diluted share, in fiscal 2014.
- Total comparable sales increased 11.8%, with retail and salon up 10.0% and e-commerce up 47.5%.
- Gross profit margin was 35.3% of net sales, up from 35.1% in fiscal 2014.
- The company operated 874 stores in 48 states at year-end after opening 103 stores in fiscal 2015.
- Cash and cash equivalents were $345.8 million, with no borrowings outstanding under the credit facility.
- A new $425 million share repurchase program was authorized on March 10, 2016, including a $200 million accelerated share repurchase agreement.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Ulta Beauty kept $0.08.
- Revenue$3.92B100.0%
- Cost of revenue−$2.54B64.7%
- Gross profit$1.38B35.3%
- Operating costs−$878.0M22.4%
- Operating income$506.3M12.9%
- Interest, other & tax−$186.3M4.7%
- Net income$320.0M8.2%
Where FY2016 revenue went
$3.92B- Cost of revenue: $2.54B, 65% of revenue
- SG&A: $863.4M, 22% of revenue
- Net income: $320.0M, 8.2% of revenue
- Interest, other & tax: $186.3M, 4.7% of revenue
Kept 8.2% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed March 30, 2016Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $3.92B$3.24B | +21.1% |
| Cost of Revenue | $2.54B$2.10B | +20.7% |
| Gross Profit | $1.38B$1.14B | +21.8% |
| SG&A Expenses | $863.35M$712.01M | +21.3% |
| Operating Income | $506.30M$410.42M | +23.4% |
| Net Income | $320.01M$257.13M | +24.5% |
| EPS (Basic) | $5.00$4.00 | +25.0% |
| EPS (Diluted) | $4.98$3.98 | +25.1% |
| Shares Outstanding (Basic) | 63.95M64.33M | −0.6% |
| Shares Outstanding (Diluted) | 64.28M64.65M | −0.6% |
05—Questions
Frequently Asked Questions
How did Ulta perform financially in fiscal 2015?
Net sales increased $682.7 million, or 21.1%, to $3,924.1 million, and operating income rose to $506.3 million from $410.4 million. Net income reached $320.0 million, up 24.5% from $257.1 million.
What are the company's growth plans?
Ulta expects to open approximately 100 new stores per year for the next several years and believes its store base could eventually exceed 1,200 stores in the United States. It also aims to grow e-commerce from about 6% of sales to about 10% of total sales over the next several years.
How much is the company spending on capital expenditures?
Capital expenditures were $299.2 million in fiscal 2015, and the company expects to spend approximately $391 million in fiscal 2016, including $159 million for new, remodeled and relocated stores and $91 million for merchandising.
What are the main risks to the business?
The filing cites weakness in the economy and consumer spending, intense competition from larger retailers, dependence on distribution center performance and information systems, cybersecurity threats, and reliance on vendor partners, whose top ten accounted for approximately 50% of fiscal 2015 net sales.
How is the company returning capital to shareholders?
Ulta repurchased $167.4 million of common stock in fiscal 2015 and paid no cash dividends in fiscal 2015 or 2014. On March 10, 2016, it authorized a new $425 million repurchase program, including a $200 million accelerated share repurchase agreement with Goldman, Sachs & Co.
06—Continue