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Ulta Beauty Annual Report, Year Ended Feb 1, 2020

Filing Date
Filed March 27, 2020
Period End
February 1, 2020
Security
ULTA
One revenue dollarkept$0.10
In the record · 2016–202610-K1110-Q328-K92

ULTA filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 92 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Aug ’17Aug ’17
  2. Leadership change8-K · Feb ’22Feb ’22
  3. Leadership change8-K · Aug ’26Aug ’26

01—Abstract

Summary

Summary of the 10-K filed March 27, 2020. Cited figures are marked; the original filing is the authoritative source.

Ulta Beauty, Inc. reported net sales of $7.40 billiona for fiscal 2019 (ended February 1, 2020), up from $6.72 billion in fiscal 2018, driven by 80 net new stores (1,254 stores across 50 states at year-end), a 5.0% comparable sales increase, and $23.4 million of higher other revenue.

Gross profit rose to $2.68 billionb, with gross margin improving to 36.2% from 35.9%, while SG&A increased to 23.8% of net sales from 22.9%, reflecting investments in growth and the Efficiencies for Growth program. Net income was $705.9 million, or $12.15 per diluted share, compared with $658.6 million in fiscal 2018. The balance sheet was strengthened by $392.3 million in cash and cash equivalents and $110.0 million in short-term investments, with no borrowings outstanding under the credit facility at year-end.

Operating cash flow was $1.10 billionc, and the company repurchased $681.0 million of common stock during the year. Adoption of ASC 842 added $1.54 billion of operating lease assets and $1.94 billion of lease liabilities to the balance sheet. The filing is dominated by COVID-19 disclosures.

On March 17, 2020, Ulta announced the temporary closure of all U.S. stores, and management stated that the impact is too early to quantify. Management withdrew fiscal 2020 guidance, approved a new $1.6 billiond share repurchase program, amended its credit facility to $1.0 billion maturing in 2025, and drew down $800 million under the facility as a precautionary measure. The company also noted that the cosmetics category in the overall U.S. market experienced mid-single digit declines through fiscal 2019.

02—Key points

Key Highlights

  1. Net sales rose 10.1% to $7,398.1 million in fiscal 2019, driven by 80 net new stores and a 5.0% comparable sales increase.
  2. Gross margin improved 30 basis points to 36.2%, while SG&A rose 90 basis points to 23.8% of net sales due to growth investments.
  3. Net income increased 7.2% to $705.9 million; diluted EPS was $12.15 versus $10.94 in fiscal 2018.
  4. Ended the year with 1,254 stores in 50 states, and management sees a long-term potential of 1,500 to 1,700 U.S. stores.
  5. Announced temporary closure of all U.S. stores on March 17, 2020, withdrew fiscal 2020 guidance, and drew down $800 million under the credit facility.
  6. Repurchased $681.0 million of common stock in fiscal 2019 and authorized a new $1.6 billion repurchase program on March 10, 2020.
  7. Loyalty program members (about 34 million active) generated more than 95% of total net sales in fiscal 2019.

03—One dollar

Follow one dollar

Of each $1.00 of revenue in FY2020, Ulta Beauty kept $0.10.

  1. Revenue$7.40B100.0%
  2. Cost of revenue−$4.72B63.8%
  3. Gross profit$2.68B36.2%
  4. Operating costs−$1.78B24.1%
  5. Operating income$901.1M12.2%
  6. Interest, other & tax−$195.1M2.6%
  7. Net income$705.9M9.5%
Computed from 10-KFY2020filed March 27, 2020Computed from this filing’s revenue, gross profit, operating income and net income · right columngrey figure: share of revenue

Where FY2020 revenue went

$7.40B
  • Cost of revenue: $4.72B, 64% of revenue
  • SG&A: $1.76B, 24% of revenue
  • Net income: $705.9M, 9.5% of revenue
  • Interest, other & tax: $195.1M, 2.6% of revenue

Kept 9.5% as net income

Full revenue history →

04—Financials

Financial Highlights

Figures from 10-KFY2020filed March 27, 2020
Revenue$7.40B36.2% Gross MarginNet Income$705.95M9.5% Net MarginEPS (Diluted)$12.15Total Assets$4.86BCash & Equivalents$392.32MFree Cash Flow$802.76M

Financial Statements

FY2020 against FY2019

Line itemFY2020FY2019Change
Revenue$7.40B$6.72B+10.1%
Cost of Revenue$4.72B$4.31B+9.5%
Gross Profit$2.68B$2.41B+11.3%
SG&A Expenses$1.76B$1.54B+14.7%
Operating Income$901.09M$854.08M+5.5%
Net Income$705.95M$658.56M+7.2%
EPS (Basic)$12.21$11.00+11.0%
EPS (Diluted)$12.15$10.94+11.1%
Shares Outstanding (Basic)57.84M59.86M−3.4%
Shares Outstanding (Diluted)58.10M60.18M−3.4%

05—Questions

Frequently Asked Questions

  1. How did COVID-19 affect Ulta Beauty's outlook as of the filing date?

    Ulta announced on March 17, 2020 that it would temporarily close all U.S. stores. Management said the impact was too early to quantify but would be negative, and it withdrew fiscal 2020 guidance. The company drew down $800 million under its credit facility as a precautionary measure.

  2. What drove the growth in fiscal 2019 net sales?

    Net sales increased $681.5 million, or 10.1%, due to 80 net new stores, a 5.0% comparable sales increase (3.3% from transactions and 1.7% from average ticket), and a $23.4 million increase in other revenue.

  3. How strong is Ulta's balance sheet and liquidity?

    At February 1, 2020, the company had $392.3 million in cash and cash equivalents and $110.0 million in short-term investments, with no outstanding borrowings under its credit facility. Operating cash flow was $1,101.3 million for fiscal 2019.

  4. How much did Ulta return to shareholders?

    Ulta repurchased $681.0 million of common stock in fiscal 2019. On March 12, 2020, it announced a new 2020 share repurchase program of up to $1.6 billion, which revoked the $214.6 million remaining under the 2019 program.

  5. What is Ulta's store growth outlook?

    The company operated 1,254 stores at year-end, up from 1,174, after opening 86 and closing 6 stores in fiscal 2019. It believes it could eventually grow to between 1,500 and 1,700 U.S. stores and announced its first international market entry, Canada.

06—Continue

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