UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended October 30, 2021

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____________ to _____________

Commission File Number: 001-33764

ULTA BEAUTY, INC.

(Exact name of Registrant as specified in its charter)

incorporation or organization)

Identification No.)

Delaware

(State or other jurisdiction of
incorporation or organization)

38-4022268

(I.R.S. Employer
Identification No.)

1000 Remington Blvd., Suite 120

Bolingbrook, Illinois

(Address of principal executive offices)

60440

(Zip code)

Registrant’s telephone number, including area code: (630) 410-4800

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ULTA	The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding as of November 29, 2021 was 54,120,173 shares.

Table of Contents

ULTA BEAUTY, INC.

TABLE OF CONTENTS


Part I - Financial Information

Item 1. Financial Statements
Consolidated Balance Sheets		3
Consolidated Statements of Income		4
Consolidated Statements of Comprehensive Income		5
Consolidated Statements of Cash Flows		6
Consolidated Statements of Stockholders’ Equity		7
Notes to Consolidated Financial Statements		9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19

Item 3. Quantitative and Qualitative Disclosures about Market Risk		28

Item 4. Controls and Procedures		29

Part II - Other Information		29

Item 1. Legal Proceedings		29

Item 1A. Risk Factors		29

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		30

Item 3. Defaults Upon Senior Securities		30

Item 4. Mine Safety Disclosures		30

Item 5. Other Information		30

Item 6. Exhibits		31

SIGNATURES		32

Table of Contents

Part I - Financial Information

Item 1.Financial Statements

Ulta Beauty, Inc.

Consolidated Balance Sheets


	October 30,		January 30,		October 31,
(In thousands, except per share data)	2021		2021		2020
Assets		(Unaudited)				(Unaudited)
Current assets:
Cash and cash equivalents	$	605,053	$	1,046,051	$	560,902
Receivables, net		169,212		193,109		136,271
Merchandise inventories, net		1,916,343		1,168,215		1,439,098
Prepaid expenses and other current assets		105,584		107,402		99,810
Prepaid income taxes		37,501		—		8,928
Total current assets		2,833,693		2,514,777		2,245,009

Property and equipment, net		908,665		995,795		1,042,262
Operating lease assets		1,464,533		1,504,614		1,510,030
Goodwill		10,870		10,870		10,870
Other intangible assets, net		1,770		2,465		2,696
Deferred compensation plan assets		36,403		33,223		30,141
Other long-term assets		31,833		28,225		29,986
Total assets	$	5,287,767	$	5,089,969	$	4,870,994

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	747,451	$	477,052	$	478,501
Accrued liabilities		329,672		296,334		268,310
Deferred revenue		272,628		274,383		224,862
Current operating lease liabilities		274,365		253,415		252,171
Accrued income taxes		—		42,529		6,499
Total current liabilities		1,624,116		1,343,713		1,230,343

Non-current operating lease liabilities		1,565,921		1,643,386		1,661,750
Deferred income taxes		67,267		65,359		89,112
Other long-term liabilities		43,663		37,962		35,352
Total liabilities		3,300,967		3,090,420		3,016,557

Commitments and contingencies (Note 7)

Stockholders' equity:
Common stock, $0.01 par value, 400,000 shares authorized; 54,907, 56,952 and 57,024 shares issued; 54,170, 56,260 and 56,332 shares outstanding; at October 30, 2021 (unaudited), January 30, 2021, and October 31, 2020 (unaudited), respectively		549		569		570
Treasury stock-common, at cost		(53,312)		(37,801)		(37,704)
Additional paid-in capital		915,814		847,303		831,817
Retained earnings		1,123,749		1,189,422		1,059,840
Accumulated other comprehensive income (loss)		—		56		(86)
Total stockholders’ equity		1,986,800		1,999,549		1,854,437
Total liabilities and stockholders’ equity	$	5,287,767	$	5,089,969	$	4,870,994

See accompanying notes to consolidated financial statements.

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Ulta Beauty, Inc.

Consolidated Statements of Income

(Unaudited)


	13 Weeks Ended				39 Weeks Ended
	October 30,		October 31,		October 30,		October 31,
(In thousands, except per share data)	2021		2020		2021		2020
Net sales	$	1,995,775	$	1,552,033	$	5,901,501	$	3,953,252
Cost of sales		1,206,301		1,006,514		3,560,276		2,775,121
Gross profit		789,474		545,519		2,341,225		1,178,131

Selling, general and administrative expenses		503,403		416,378		1,411,577		1,068,877
Impairment, restructuring and other costs		—		23,624		—		83,924
Pre-opening expenses		1,832		4,240		7,778		12,782
Operating income		284,239		101,277		921,870		12,548
Interest expense, net		413		1,383		1,196		5,272
Income before income taxes		283,826		99,894		920,674		7,276
Income tax expense		68,537		25,096		224,203		2,935
Net income	$	215,289	$	74,798	$	696,471	$	4,341

Net income per common share:
Basic	$	3.97	$	1.33	$	12.68	$	0.08
Diluted	$	3.94	$	1.32	$	12.60	$	0.08

Weighted average common shares outstanding:
Basic		54,291		56,327		54,921		56,355
Diluted		54,660		56,546		55,280		56,524

See accompanying notes to consolidated financial statements.

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Ulta Beauty, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)


	13 Weeks Ended				39 Weeks Ended
	October 30,		October 31,		October 30,		October 31,
(In thousands)	2021		2020		2021		2020
Net income	$	215,289	$	74,798	$	696,471	$	4,341
Other comprehensive income:
Foreign currency translation adjustments		—		(116)		—		(86)
Comprehensive income	$	215,289	$	74,682	$	696,471	$	4,255

See accompanying notes to consolidated financial statements.

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Ulta Beauty, Inc.

Consolidated Statements of Cash Flows

(Unaudited)


	39 Weeks Ended
	October 30,		October 31,
(In thousands)	2021		2020
Operating activities
Net income	$	696,471	$	4,341
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		204,734		226,386
Non-cash lease expense		206,017		196,354
Long-lived asset impairment charge		—		69,932
Deferred income taxes		1,908		(255)
Stock-based compensation expense		38,217		22,979
Loss on disposal of property and equipment		3,357		5,219
Change in operating assets and liabilities:
Receivables		23,897		3,066
Merchandise inventories		(748,128)		(145,397)
Prepaid expenses and other current assets		1,818		3,007
Income taxes		(80,027)		13,958
Accounts payable		266,104		62,337
Accrued liabilities		24,482		24,582
Deferred revenue		(1,755)		(12,673)
Operating lease liabilities		(222,451)		(212,665)
Other assets and liabilities		213		(2,126)
Net cash provided by operating activities		414,857		259,045

Investing activities
Proceeds from short-term investments		—		110,000
Capital expenditures		(108,418)		(116,745)
Acquisitions, net of cash acquired		—		(1,220)
Purchases of equity investments		—		(5,665)
Net cash used in investing activities		(108,418)		(13,630)

Financing activities
Proceeds from long-term debt		—		800,000
Payments on long-term debt		—		(800,000)
Repurchase of common shares		(762,167)		(72,981)
Stock options exercised		30,297		1,346
Purchase of treasury shares		(15,511)		(3,256)
Debt issuance costs		—		(1,861)
Net cash used in financing activities		(747,381)		(76,752)

Effect of exchange rate changes on cash and cash equivalents		(56)		(86)
Net increase (decrease) in cash and cash equivalents		(440,998)		168,577
Cash and cash equivalents at beginning of period		1,046,051		392,325
Cash and cash equivalents at end of period	$	605,053	$	560,902

Supplemental information
Cash paid for interest	$	1,594	$	701
Income taxes paid, net of refunds		301,312		8,100
Non-cash capital expenditures		13,148		27,916

See accompanying notes to consolidated financial statements.

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Ulta Beauty, Inc.

Consolidated Statements of Stockholders’ Equity

(Unaudited)


				Treasury -							Accumulated
	Common Stock			Common Stock			Additional				Other		Total
	Issued			Treasury			Paid-In		Retained		Comprehensive		Stockholders'
(In thousands)	Shares	Amount		Shares	Amount		Capital		Earnings		Income		Equity
Balance – January 30, 2021	56,952	$	569	(692)	$	(37,801)	$	847,303	$	1,189,422	$	56	$	1,999,549
Net income	—		—	—		—		—		230,289		—		230,289
Stock-based compensation	—		—	—		—		8,978		—		—		8,978
Foreign currency translation adjustments	—		—	—		—		—		—		(56)		(56)
Stock options exercised and other awards	94		1	—		—		5,031		—		—		5,032
Purchase of treasury shares	—		—	(21)		(6,766)		—		—		—		(6,766)
Repurchase of common shares	(1,243)		(12)	—		—		—		(392,297)		—		(392,309)
Balance – May 1, 2021	55,803	$	558	(713)	$	(44,567)	$	861,312	$	1,027,414	$	—	$	1,844,717
Net income	—		—	—		—		—		250,893		—		250,893
Stock-based compensation	—		—	—		—		10,119		—		—		10,119
Stock options exercised and other awards	104		1	—		—		17,775		—		—		17,776
Purchase of treasury shares	—		—	(1)		(208)		—		—		—		(208)
Repurchase of common shares	(747)		(8)	—		—		—		(243,476)		—		(243,484)
Balance – July 31, 2021	55,160	$	551	(714)	$	(44,775)	$	889,206	$	1,034,831	$	—	$	1,879,813
Net income	—		—	—		—		—		215,289		—		215,289
Stock-based compensation	—		—	—		—		19,120		—		—		19,120
Stock options exercised and other awards	87		1	—		—		7,488		—		—		7,489
Purchase of treasury shares	—		—	(23)		(8,537)		—		—		—		(8,537)
Repurchase of common shares	(340)		(3)	—		—		—		(126,371)		—		(126,374)
Balance – October 30, 2021	54,907	$	549	(737)	$	(53,312)	$	915,814	$	1,123,749	$	—	$	1,986,800

See accompanying notes to consolidated financial statements.

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Ulta Beauty, Inc.

Consolidated Statements of Stockholders’ Equity

(Unaudited)


				Treasury -							Accumulated
	Common Stock			Common Stock			Additional				Other		Total
	Issued			Treasury			Paid-In		Retained		Comprehensive		Stockholders'
(In thousands)	Shares	Amount		Shares	Amount		Capital		Earnings		Income (Loss)		Equity
Balance – February 1, 2020	57,285	$	573	(676)	$	(34,448)	$	807,492	$	1,128,477	$	—	$	1,902,094
Net loss	—		—	—		—		—		(78,509)		—		(78,509)
Stock-based compensation	—		—	—		—		6,182		—		—		6,182
Foreign currency translation adjustments	—		—	—		—		—		—		(75)		(75)
Stock options exercised and other awards	45		—	—		—		250		—		—		250
Purchase of treasury shares	—		—	(15)		(3,002)		—		—		—		(3,002)
Repurchase of common shares	(327)		(3)	—		—		—		(72,978)		—		(72,981)
Balance – May 2, 2020	57,003	$	570	(691)	$	(37,450)	$	813,924	$	976,990	$	(75)	$	1,753,959
Net income	—		—	—		—		—		8,052		—		8,052
Stock-based compensation	—		—	—		—		8,413		—		—		8,413
Foreign currency translation adjustments	—		—	—		—		—		—		105		105
Stock options exercised and other awards	11		—	—		—		327		—		—		327
Purchase of treasury shares	—		—	—		(63)		—		—		—		(63)
Balance – August 1, 2020	57,014	$	570	(691)	$	(37,513)	$	822,664	$	985,042	$	30	$	1,770,793
Net income	—		—	—		—		—		74,798		—		74,798
Stock-based compensation	—		—	—		—		8,384		—		—		8,384
Foreign currency translation adjustments	—		—	—		—		—		—		(116)		(116)
Stock options exercised and other awards	10		—	—		—		769		—		—		769
Purchase of treasury shares	—		—	(1)		(191)		—		—		—		(191)
Balance – October 31, 2020	57,024	$	570	(692)	$	(37,704)	$	831,817	$	1,059,840	$	(86)	$	1,854,437

See accompanying notes to consolidated financial statements.

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Ulta Beauty, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share and store count data) (Unaudited)

1.Business and basis of presentation

The Company was founded in 1990 to operate specialty retail stores selling cosmetics, fragrance, haircare and skincare products, and related accessories and services. The stores also feature full-service salons. As used in these notes and throughout this Quarterly Report on Form 10-Q, all references to “we,” “us,” “our,” “Ulta Beauty,” or the “Company” refer to Ulta Beauty, Inc. and its consolidated subsidiaries.

As of October 30, 2021, the Company operated 1,302 stores across 50 states, as shown in the table below.


	Number of		Number of
Location	stores	Location	stores
Alabama	24	Montana	6
Alaska	3	Nebraska	5
Arizona	30	Nevada	15
Arkansas	11	New Hampshire	8
California	162	New Jersey	43
Colorado	26	New Mexico	7
Connecticut	18	New York	52
Delaware	3	North Carolina	39
Florida	90	North Dakota	3
Georgia	40	Ohio	45
Hawaii	4	Oklahoma	21
Idaho	9	Oregon	16
Illinois	55	Pennsylvania	45
Indiana	24	Rhode Island	3
Iowa	11	South Carolina	22