01—Abstract
Summary
Summary of the 10-K filed March 26, 2024. Cited figures are marked; the original filing is the authoritative source.
Ulta Beauty, Inc. reported fiscal 2023 (the 53-week year ended February 3, 2024) with net sales of $11.21 billiona, up from $10.21 billion in fiscal 2022, and net income of $1.29 billion, compared with $1.24 billion a year earlier.
Comparable sales rose 5.7%b, driven by a 7.4% increase in transactions partly offset by a 1.5% decrease in average ticket. Gross profit margin declined to 39.1% from 39.6%, mainly due to 80 basis points of merchandise margin deleverage from higher promotional activity and category mix, and 40 basis points of inventory shrink deleverage. SG&A rose to 24.0% of net sales from 23.5%, reflecting corporate overhead investments and wage investments.
The company ended the year with $766.6 millionc in cash and cash equivalents, no outstanding borrowings under its credit facility, and $1.48 billion in operating cash flow. It repurchased $1.01 billion of common stock during the year, and as of February 3, 2024, $99.9 million remained under the 2022 repurchase authorization. On March 12, 2024, the Board authorized a new $2.0 billion repurchase program, and on March 13, 2024, the company amended its revolving credit facility to $800.0 million with a maturity of March 13, 2029.
Management expects fiscal 2024 capital expenditures of up to $490 milliond, primarily for new, remodeled and relocated stores and for information technology and supply chain investments. The company operated 1,385 stores across 50 states at year end, opened 33 stores and closed 3 during the year, and planned to open a second market fulfillment center in fiscal 2024. Management highlighted ongoing risks from inflation, elevated interest rates, labor and transportation cost pressures, and inventory shrink, which it said had been rising relative to historical levels.
02—Key points
Key Highlights
- Net sales of $11.21 billion in fiscal 2023, up from $10.21 billion, with comparable sales up 5.7% (versus 15.6% in fiscal 2022); the fiscal year included a 53rd week contributing approximately $181.9 million in net sales.
- Gross profit margin fell to 39.1% from 39.6%, driven by 80 basis points of merchandise margin deleverage and 40 basis points of inventory shrink deleverage, partially offset by other revenue leverage.
- Net income rose to $1.29 billion from $1.24 billion; diluted EPS was $26.03 versus $24.01 a year earlier.
- SG&A expenses increased to 24.0% of net sales from 23.5%, reflecting strategic investments in corporate overhead and wage investments in stores.
- The company returned capital through $1.01 billion of share repurchases in fiscal 2023 and authorized a new $2.0 billion repurchase program on March 12, 2024.
- Balance sheet remained strong with $766.6 million in cash, no borrowings under the credit facility, and $1.48 billion in operating cash flow.
- Store footprint grew to 1,385 stores with 33 openings in fiscal 2023, and management sees a long-term potential of 1,500 to 1,700 freestanding U.S. stores.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2024, Ulta Beauty kept $0.12.
- Revenue$11.21B100.0%
- Cost of revenue−$6.83B60.9%
- Gross profit$4.38B39.1%
- Operating costs−$2.70B24.1%
- Operating income$1.68B15.0%
- Interest, other & tax−$387.0M3.5%
- Net income$1.29B11.5%
Where FY2024 revenue went
$11.21B- Cost of revenue: $6.83B, 61% of revenue
- SG&A: $2.69B, 24% of revenue
- Net income: $1.29B, 12% of revenue
- Interest, other & tax: $387.0M, 3.5% of revenue
Kept 12% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2024filed March 26, 2024Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $11.21B$10.21B | +9.8% |
| Cost of Revenue | $6.83B$6.16B | +10.7% |
| Gross Profit | $4.38B$4.04B | +8.3% |
| SG&A Expenses | $2.69B$2.40B | +12.5% |
| Operating Income | $1.68B$1.64B | +2.4% |
| Net Income | $1.29B$1.24B | +3.9% |
| EPS (Basic) | $26.18$24.17 | +8.3% |
| EPS (Diluted) | $26.03$24.01 | +8.4% |
| Shares Outstanding (Basic) | 49.30M51.40M | −4.1% |
| Shares Outstanding (Diluted) | 49.60M51.74M | −4.1% |
05—Questions
Frequently Asked Questions
How did Ulta Beauty perform in fiscal 2023?
Net sales rose 9.8% to $11.21 billion, comparable sales increased 5.7%, and net income grew to $1.29 billion. Gross margin declined 50 basis points to 39.1% due to promotional activity, category mix and shrink, while SG&A deleveraged to 24.0% of sales.
What drove the change in comparable sales?
The 5.7% comparable sales increase reflected a 7.4% rise in transactions, partly offset by a 1.5% decrease in average ticket. Comparable sales had risen 15.6% in fiscal 2022.
How much capital is the company returning to shareholders?
Share repurchases totaled $1.01 billion in fiscal 2023. As of February 3, 2024, $99.9 million remained under the 2022 program, and on March 12, 2024 the Board authorized a new program of up to $2.0 billion with no expiration date.
What are management's key investment plans for fiscal 2024?
Management expects fiscal 2024 capital expenditures of up to $490 million, primarily for new, remodeled and relocated stores, information technology systems and supply chain optimization. The company also plans to open a second market fulfillment center and expects to operate in up to 800 Ulta Beauty at Target locations over time.
What risks does management highlight?
Management cites macroeconomic pressures including inflation, elevated interest rates, recessionary concerns, and labor and transportation cost increases. It also notes that inventory shrink has risen relative to historical levels and that competitive pressures and consumer spending volatility could affect results.
06—Continue