BOLINGBROOK, Ill.- Ulta Beauty (NASDAQ:ULTA) today announced financial results for the thirteen week period (“Fourth Quarter”) and fifty-two week period (“Fiscal Year”) ended February 1, 2014, which compares to the fourteen and fifty-three week periods ended February 2, 2013.
“Ulta Beauty achieved excellent top line growth in the fourth quarter,” said Mary Dillon, Chief Executive Officer. “We delivered earnings growth consistent with our expectations and made significant progress with our key growth strategies. I am very proud of the team’s accomplishments during 2013, including the completion of the most ambitious store opening program in our company’s history; the addition of 25 significant new brands contributing to 7.9% annual comparable store sales growth; exciting growth in our loyalty program, now 13 million members strong; and rapid growth in Ulta.com, driven by major steps forward in our e-commerce platform and fulfillment capabilities.”
For the Fourth Quarter:
Net sales increased 14.4% to $868.1 million from $758.8 million in the fourth quarter of fiscal 2012. Excluding the sales for the 53rd week of fiscal 2012 of approximately $55 million, sales increased 23.3%;
Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 9.2% compared to an increase of 8.6% in the fourth quarter of fiscal 2012. This comparable sales performance benefited by approximately 200 basis points due to the negative impact of Super Storm Sandy and the timing impact of the 53rd week of fiscal 2012.
E-commerce comparable sales grew 82.5%, representing 260 basis points of the total company comparable sales increase of 9.2%;
Gross profit decreased 40 basis points to 33.8% from 34.2% in the fourth quarter of fiscal 2012;
Selling, general and administrative (SG&A) expense as a percentage of net sales increased 20 basis points to 20.5% compared to 20.3% in the fourth quarter of 2012;
Preopening expenses decreased to $1.8 million, compared to $1.9 million in the fourth quarter of fiscal 2012. Real estate activity in the fourth quarter of fiscal 2013 included 11 new stores compared to 13 new stores and one remodel in the fourth quarter of fiscal 2012;
Operating income increased 10.0% to $114.1 million, or 13.1% of net sales, compared to $103.8 million, or 13.7% of net sales, in the fourth quarter of fiscal 2012;
Net income increased 9.5% to $70.7 million compared to $64.5 million in the fourth quarter of fiscal 2012;
Income per diluted share increased 9.0% to $1.09 compared to $1.00 in the fourth quarter of fiscal 2012. Excluding the approximately $0.05 earnings per share benefit of the 53rd week in fiscal 2012, income per dilutive share increased 14.7%.
For the Fiscal Year 2013:
Net sales increased 20.3% to $2,670.6 million from $2,220.3 million in fiscal 2012. Excluding the sales for the 53rd week in fiscal 2012 of approximately $55 million, sales increased 23.3%;
Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 7.9% compared to an increase of 9.3% in fiscal 2012;
E-commerce comparable sales grew 76.6%, representing 180 basis points of the total company comparable sales increase of 7.9%;
Gross profit decreased 10 basis points to 35.2% compared to 35.3% in fiscal 2012;
SG&A expense as a percentage of net sales increased 30 basis points to 22.3% compared to 22.0% in fiscal 2012;
Pre-opening expense increased to $17.3 million compared to $14.8 million in fiscal 2012. Real estate activity for fiscal 2013 included 127 new stores, 4 relocations and 7 remodels compared to 102 new stores, 3 relocations and 21 remodels in fiscal 2012;
Operating income increased 17.0% to $327.6 million, or 12.3% of net sales, compared to $280.0 million, or 12.6% of net sales, in fiscal 2012;
Net income increased 17.6% to $202.8 million compared to $172.5 million in fiscal 2012;
Income per diluted share increased 17.5% to $3.15 compared to $2.68 in fiscal 2012. Non-GAAP income per diluted share adjusted for severance expense in the third quarter of fiscal 2013 and the impact of the 53rd week in fiscal 2012 increased 20.2%. A reconciliation of GAAP and Non-GAAP results is presented in Exhibit 5.
Balance Sheet and Cash Flow
Merchandise inventories at the end of the fourth quarter of fiscal 2013 totaled $457.9 million, compared to $361.1 million at the end of the fourth quarter of fiscal 2012, representing an increase of $96.8 million. Average inventory per store increased 3.3% for the fourth quarter of fiscal 2013 compared to the fourth quarter of fiscal 2012.
Store Expansion
During the fourth quarter, the Company opened 11 stores located in Capitola, CA; Eureka, CA; Glendale, WI; Irvine, CA; Lafayette, LA; Lakeland, FL; Longview, WA; Manassas, VA; Meriden, CT; Orlando, FL and San Rafael, CA. The Company ended the fourth quarter with 675 stores and square footage of 7,158,286, which represents a 22% increase in square footage compared to the fourth quarter of fiscal 2012.
Outlook
For fiscal 2014, the Company plans to:
achieve comparable sales growth of approximately 4% to 6%, including the impact of the e-commerce business;
expand square footage by 15% with the opening of 100 net new stores;
increase total sales in the mid-teens percentage range;
remodel 12 locations;
deliver earnings per share growth in the mid-teens percentage range, including incremental investments representing approximately $0.10 of earnings per share to fund brand awareness and guest experience initiatives, and excluding any potential accretion from share repurchases;
incur capital expenditures of approximately $265 million in fiscal 2014, compared to $226 million in fiscal 2013; and
generate free cash flow in excess of $100 million.
For the first quarter of fiscal 2014, the Company currently expects net sales in the range of $693 million to $704 million, compared to actual net sales of $582.7 million in the first quarter of fiscal 2013. Comparable sales for the first quarter of 2014, including e-commerce sales, are expected to increase 5% to 7%. The Company reported a comparable sales increase of 6.7% in the first quarter of 2013.
Income per diluted share for the first quarter of fiscal 2014 is estimated to be in the range of $0.70 to $0.75. This compares to income per diluted share for the first quarter of fiscal 2013 of $0.65.
“From a position of strength, we are making important investments to support the long-term growth and success of Ulta Beauty,” said Mary Dillon. “We are building the right supply chain and systems to support 1,200 stores and a much larger e-commerce business, we are developing our customer loyalty programs and CRM capabilities, we are investing in brand awareness to drive new customer acquisition, and we are working to deliver a differentiated customer experience. All of these initiatives are designed to drive sustainable growth and create shareholder value.”
About Ulta Beauty
Ulta Beauty is the largest beauty retailer that provides one-stop shopping for prestige, mass and salon products and salon services in the United States. Ulta Beauty provides affordable indulgence to its customers by combining unmatched product breadth, value and convenience with the distinctive environment and experience of a specialty retailer. Ulta Beauty offers a unique combination of over 20,000 prestige and mass beauty products across the categories of cosmetics, fragrance, hair care, skincare, bath and body products and salon styling tools, as well as salon hair care products. Ulta Beauty also offers a full-service salon in all of its stores. As of February 1, 2014, Ulta operates 675 retail stores across 46 states and also distributes its products through the Company’s website.
This news is courtesy of www.ultra.com.
One Response to “Ulta Beauty Reports Increase In Growth and Profits”
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March 25th, 2014 at 11:55 am
The availability of beauty products to everyone is good but it also creates areas of discrepancies for consumers…..because of the access that it gives to people that are uneducated in the field of cosmetology….these consumers will buy products because of the cost even if it is not appropriate for their use….this will cause them to experience hair loss and discoloration…..it will also prevent consultation that is available when we go into a beauty supply store….as most of the supply stores have established relationship with their clients….this also affects the finances of a cosmetologist….as when people are able to buy products they often times refrain from going to the salons and do at home jobs that is more often than not hazardous to them