01—Abstract
Summary
Summary of the 10-Q filed May 30, 2024. Cited figures are marked; the original filing is the authoritative source.
Ulta Beauty, Inc. reported net sales of $2,725,848 thousanda ($2.7 billion) for the 13 weeks ended May 4, 2024, up from $2,634,263 thousand in the prior-year quarter, with the filing stating an increase of $91.6 million or 3.5%.
Comparable sales rose 1.6%, driven by a 1.3% increase in transactions and a 0.3% increase in average ticket. Gross profit increased to $1.07 billionb, but gross margin declined to 39.2% of net sales from 40.0%, which the company attributed primarily to lower merchandise margins and higher inventory shrink. Profitability declined year over year.
SG&A expenses rose $53.8 millionc, or 8.8%, to $665.9 million, reflecting higher corporate overhead for strategic investments, higher store payroll and benefits, and higher store expenses. Operating income fell to $400,948 thousand from $442,070 thousand, and net income decreased to $313.1 million from $347.1 million. Diluted earnings per share were $6.47 versus $6.88 a year earlier.
Cash generated from operations fell to $159.3 milliond from $304.9 million, and cash and cash equivalents ended the quarter at $524.6 million. The company repurchased 588,004 shares for a total cost of $287.4 million during the quarter and, in March 2024, authorized a new $2.0 billion share repurchase program, with $1.8 billion remaining as of May 4, 2024.
The revolving credit facility, amended in March 2024 and maturing in 2029, had no outstanding borrowings. The store count reached 1,395, up from 1,359 a year earlier.
02—Key points
Key Highlights
- Net sales of $2.73 billion, up $91.6 million or 3.5% from $2.63 billion in the prior-year quarter.
- Comparable sales increased 1.6%, driven by a 1.3% increase in transactions and a 0.3% increase in average ticket.
- Gross profit margin fell to 39.2% from 40.0%, mainly due to lower merchandise margins and higher inventory shrink.
- SG&A expenses rose 8.8% to $665.9 million, reflecting higher corporate overhead for strategic investments, store payroll and benefits, and store expenses.
- Net income declined to $313.1 million from $347.1 million; diluted EPS was $6.47 versus $6.88.
- Operating cash flow was $159.3 million, down from $304.9 million, while merchandise inventories rose to $1.9 billion.
- Repurchased 588,004 shares for $287.4 million; a new $2.0 billion repurchase program was authorized in March 2024, with $1.8 billion remaining.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, Ulta Beauty kept $0.11.
- Revenue$2.73B100.0%
- Cost of revenue−$1.66B60.8%
- Gross profit$1.07B39.2%
- Operating costs−$668.8M24.5%
- Operating income$400.9M14.7%
- Interest, other & tax−$87.8M3.2%
- Net income$313.1M11.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed May 30, 2024Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $2.73B$2.63B | +3.5% |
| Cost of Revenue | $1.66B$1.58B | +4.9% |
| Gross Profit | $1.07B$1.05B | +1.4% |
| SG&A Expenses | $665.91M$612.13M | +8.8% |
| Operating Income | $400.95M$442.07M | −9.3% |
| Net Income | $313.11M$347.05M | −9.8% |
| EPS (Basic) | $6.51$6.92 | −5.9% |
| EPS (Diluted) | $6.47$6.88 | −6.0% |
| Shares Outstanding (Basic) | 48.13M50.15M | −4.0% |
| Shares Outstanding (Diluted) | 48.38M50.47M | −4.1% |
05—Questions
Frequently Asked Questions
How did Ulta Beauty perform in the first quarter of fiscal 2024?
Net sales grew 3.5% to $2.73 billion and comparable sales rose 1.6%. However, net income fell to $313.1 million from $347.1 million, as SG&A expense growth and a lower gross margin outpaced sales growth.
What drove the decline in gross margin?
The filing attributes the decline from 40.0% to 39.2% of net sales primarily to lower merchandise margins and higher inventory shrink, partially offset by growth in other revenue.
Why did operating expenses increase?
SG&A expenses increased $53.8 million, or 8.8%, primarily due to higher corporate overhead for strategic investments, higher store payroll and benefits, and higher store expenses.
How is the company returning capital to shareholders?
During the quarter, Ulta repurchased 588,004 shares for $287.4 million. The Board authorized a new program in March 2024 allowing up to $2.0 billion in repurchases, with $1.8 billion remaining as of May 4, 2024. The company does not currently pay a regular dividend.
What is the company's liquidity position?
Ulta ended the quarter with $524.6 million in cash and cash equivalents and no borrowings under its credit facility. The Loan Agreement, amended in March 2024, matures in March 2029 and provides maximum revolving loans of up to $800.0 million, subject to a borrowing base.
06—Continue