01—Abstract
Summary
Summary of the 8-K filed December 5, 2024. Cited figures are marked; the original filing is the authoritative source.
Ulta Beauty, Inc. reported third-quarter fiscal 2024 results for the 13 weeks ended November 2, 2024, furnishing its December 5, 2024 press release as Exhibit 99.1.
Net sales rose to $2.53 billiona from $2.49 billion, mainly from new store contribution, partly offset by lower other revenue. Comparable sales increased 0.6%, compared with 4.5% in the prior-year quarter, with transactions up 0.5% and average ticket up 0.1%. Operating income was $318.5 million, or 12.6% of net sales, versus $327.2 million, or 13.1%, and diluted EPS was $5.14 compared with $5.07.
Gross margin declined to 39.7% from 39.9%, and SG&A rose to 27.0% of net sales from 26.6%, driven by store payroll, corporate overhead tied to strategic investments, and lower incentive compensation. For the first nine months of fiscal 2024, net sales were $7.8 billionb, up 2.0% from $7.7 billion, while comparable sales increased 0.3% versus 7.3% a year earlier. Net income was $807.8 million compared with $896.6 million, and diluted EPS was $16.93, including a $0.10 benefit from income tax accounting for stock-based compensation, versus $17.99 a year earlier.
Ulta repurchased $267.0 millionc of stock in the quarter and $764.5 million year to date, leaving $2.9 billion available under its $3.0 billion program announced in October 2024. Management raised parts of its fiscal 2024 outlook. Diluted EPS guidance is now $23.20 to $23.75, up from $22.60 to $23.50, and operating margin is now 12.9% to 13.1%, up from 12.7% to 13.0%.
Net sales guidance was narrowed to $11.1 billion to $11.2 billiond from $11.0 billion to $11.2 billion, comparable sales guidance is now (1%) to 0% from (2%) to 0%, and capital expenditure guidance is $400 million to $425 million, down from $400 million to $450 million. Cash at quarter end was $177.8 million, and short-term debt was $199.7 million as the company drew on its revolving credit facility.
02—Key points
Key Highlights
- Q3 net sales of $2.53 billion, up from $2.49 billion, with comparable sales up 0.6% versus 4.5% a year earlier
- Q3 operating margin of 12.6% versus 13.1%, with gross margin at 39.7% versus 39.9% and SG&A at 27.0% of net sales versus 26.6%
- Q3 diluted EPS of $5.14 versus $5.07; net income of $242.2 million versus $249.5 million
- Nine-month diluted EPS of $16.93 versus $17.99, including a $0.10 stock-based compensation tax benefit
- Fiscal 2024 diluted EPS outlook raised to $23.20 to $23.75 from $22.60 to $23.50; operating margin outlook raised to 12.9% to 13.1%
- Nine-month share repurchases of $764.5 million; $2.9 billion remaining under the $3.0 billion program
- Store base of 1,437 stores at quarter end, after 28 openings and 2 closings in Q3
03—Questions
Frequently Asked Questions
Why did Ulta's comparable sales growth slow sharply this quarter?
Comparable sales rose 0.6% in the third quarter, compared with 4.5% a year earlier. The filing attributes the quarter's growth to a 0.5% increase in transactions and a 0.1% increase in average ticket. The filing does not provide a detailed causal breakdown beyond these drivers.
What drove the decline in operating margin?
Operating margin was 12.6% versus 13.1%. Gross margin fell to 39.7% from 39.9%, mainly from deleverage of store and supply chain fixed costs and lower other revenue, partly offset by favorable channel mix and lower inventory shrink. SG&A rose to 27.0% of net sales from 26.6%, mainly from store payroll and benefits deleverage and corporate overhead tied to strategic investments, partly offset by lower incentive compensation.
How did management change its fiscal 2024 guidance?
Diluted EPS guidance was raised to $23.20 to $23.75 from $22.60 to $23.50. Operating margin guidance was raised to 12.9% to 13.1% from 12.7% to 13.0%. Net sales guidance was narrowed to $11.1 billion to $11.2 billion from $11.0 billion to $11.2 billion, comparable sales guidance moved to (1%) to 0% from (2%) to 0%, and capital expenditure guidance was lowered to $400 million to $425 million from $400 million to $450 million. Share repurchase guidance of approximately $1 billion was unchanged.
How is Ulta funding its share repurchases and how much capacity remains?
Ulta repurchased $267.0 million of stock in the third quarter and $764.5 million in the first nine months. The filing says that as of November 2, 2024, $2.9 billion remained available under the $3.0 billion program announced in October 2024. Short-term debt was $199.7 million at quarter end, as the company drew on its revolving credit facility to support capital allocation priorities, including share repurchases, capital expenditures, and inventory growth.
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