Ulta Beauty Announces Fourth Quarter Fiscal 2022 Results
Ulta Beauty reported significant financial results for the fourth quarter and fiscal year ended January 28, 2023. Net sales reached $3.2 billion, up from $2.7 billion in the prior year, with comparable sales increasing 15.6%. Net income rose 17.8% to $340.8 million, resulting in diluted earnings per share of $6.68. For the full fiscal year, net sales surpassed $10 billion for the first time in the company’s history, totaling $10.2 billion, while net income climbed 26.0% to $1.2 billion. The company's outlook for fiscal 2023 anticipates net sales between $10.95 billion and $11.05 billion with diluted EPS projected at $24.70 to $25.40.
- Net sales increased 18.2% to $3.2 billion in Q4 FY22.
- Comparable sales rose 15.6%.
- Net income increased 17.8% to $340.8 million.
- Diluted earnings per share grew 23.5% to $6.68.
- Annual revenue surpassed $10 billion for the first time.
- Comparable sales growth decreased from 37.9% in FY21 to 15.6% in FY22.
- SG&A expenses rose 17.3% to $762.7 million.
- Higher inventory shrink impacting gross profit margins.
Comparable Sales Increased
Net Income of
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13 Weeks Ended |
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52 Weeks Ended |
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(Dollars in millions, except per share data) |
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2023 |
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2022 |
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2021 |
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2023 |
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2022 |
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2021 |
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Net sales |
|
$ |
3,226.8 |
|
$ |
2,729.4 |
|
$ |
2,198.7 |
|
|
$ |
10,208.6 |
|
$ |
8,630.9 |
|
$ |
6,152.0 |
Comparable sales |
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( |
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( |
Gross profit (as a percentage of net sales) |
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Selling, general and administrative expenses |
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$ |
762.7 |
|
$ |
650.0 |
|
$ |
514.1 |
|
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$ |
2,395.3 |
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$ |
2,061.5 |
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$ |
1,583.0 |
Operating income (as a percentage of net sales) |
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Diluted earnings per share |
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$ |
6.68 |
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$ |
5.41 |
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$ |
3.03 |
|
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$ |
24.01 |
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$ |
17.98 |
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$ |
3.11 |
New store openings, net |
|
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12 |
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6 |
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2 |
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47 |
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44 |
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|
10 |
“Ulta Beauty’s strong fourth quarter results punctuate an exceptional year with record sales, profitability, and member growth, reflecting robust demand and best-in-class execution,” said
Kimbell continued, “As we move into fiscal 2023, we remain optimistic about the strength and resiliency of the beauty category, and I am excited about the opportunities ahead to continue to expand our leadership position, capture market share gains, and drive long term value for all our stakeholders.”
For the Fourth Quarter of Fiscal 2022
-
Net sales increased
18.2% to compared to$3.2 billion in the fourth quarter of fiscal 2021 primarily due to the favorable impact from the continued resilience of the beauty category, retail price increases, and the impact of new brands and product innovation compared to the fourth quarter of fiscal 2021.$2.7 billion -
Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased
15.6% compared to an increase of21.4% in the fourth quarter of fiscal 2021, driven by a13.6% increase in transactions and a1.8% increase in average ticket. -
Gross profit increased
18.0% to compared to$1.2 billion in the fourth quarter of fiscal 2021. As a percentage of net sales, gross profit of$1.0 billion 37.6% was flat compared to the fourth quarter of fiscal 2021, primarily due to leverage of fixed costs, favorable channel mix shifts, and strong growth in other revenue, offset by higher inventory shrink. -
Selling, general and administrative (SG&A) expenses increased
17.3% to compared to$762.7 million in the fourth quarter of fiscal 2021. As a percentage of net sales, SG&A expenses decreased to$650.0 million 23.6% compared to23.8% in the fourth quarter of fiscal 2021, primarily due to leverage of marketing expenses and incentive compensation due to higher sales, partially offset by deleverage of store payroll and benefits due to wage investments and deleverage in corporate overhead due to strategic investments. -
Operating income increased
19.2% to , or$447.6 million 13.9% of net sales, compared to , or$375.6 million 13.8% of net sales, in the fourth quarter of fiscal 2021. -
The tax rate increased to
24.6% compared to22.9% in the fourth quarter of fiscal 2021. -
Net income increased
17.8% to compared to$340.8 million in the fourth quarter of fiscal 2021.$289.4 million -
Diluted earnings per share increased
23.5% to , including a$6.68 benefit due to income tax accounting for stock-based compensation, compared to$0.02 including a$5.41 benefit due to income tax accounting for stock-based compensation, in the fourth quarter of fiscal 2021.$0.05
For the Full Year of Fiscal 2022
-
Net sales increased
18.3% to compared to$10.2 billion in fiscal 2021, primarily due to the favorable impact from the continued resilience of the beauty category, retail price increases, the impact of new brands and product innovation, increased social occasions, and fewer COVID-19 limitations compared to fiscal 2021.$8.6 billion -
Comparable sales increased
15.6% compared to an increase of37.9% in fiscal 2021, driven by a10.8% increase in transactions and a4.3% increase in average ticket. -
Gross profit increased
20.1% to compared to$4.0 billion in fiscal 2021. As a percentage of net sales, gross profit increased to$3.4 billion 39.6% compared to39.0% in fiscal 2021, primarily due to leverage of fixed costs, strong growth in other revenue, and favorable channel mix shifts, partially offset by higher inventory shrink and lower merchandise margin. -
SG&A expenses increased
16.2% to compared to$2.4 billion in fiscal 2021. As a percentage of net sales, SG&A expenses decreased to$2.1 billion 23.5% compared to23.9% in fiscal 2021, primarily due to lower marketing expenses and leverage of incentive compensation due to higher sales, partially offset by deleverage of corporate overhead due to strategic investments and deleverage of store payroll and benefits due to wage investments. -
Operating income increased
26.3% to , or$1.6 billion 16.1% of net sales, compared to , or$1.3 billion 15.0% of net sales, in fiscal 2021. -
The tax rate increased to
24.4% compared to23.9% in fiscal 2021. -
Net income increased
26.0% to compared to$1.2 billion in fiscal 2021.$985.8 million -
Diluted earnings per share increased
33.5% to , including a$24.01 benefit due to income tax accounting for stock-based compensation, compared to$0.07 including a$17.98 benefit due to income tax accounting for stock-based compensation, in fiscal 2021.$0.13
Balance Sheet
Cash and cash equivalents at the end of the fourth quarter of fiscal 2022 were
Merchandise inventories, net at the end of the fourth quarter of fiscal 2022 totaled
Share Repurchase Program
During the fourth quarter of fiscal 2022, the Company repurchased 722,457 shares of its common stock at a cost of
Store Update
Real estate activity in the fourth quarter of fiscal 2022 included 12 new stores located in
At the end of the fourth quarter of fiscal 2022, the Company operated 1,355 stores totaling 14.2 million square feet.
Fiscal 2023 Outlook
For fiscal 2023, the Company plans to:
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FY23 Outlook |
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Net sales |
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Comparable sales |
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New stores, net |
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25-30 |
Remodel and relocation projects |
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20-30 |
Operating margin |
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Diluted earnings per share |
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Share repurchases |
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approximately |
Effective tax rate |
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approximately |
Capital expenditures |
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Depreciation and amortization expense |
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Conference Call Information
A conference call to discuss fourth quarter of fiscal 2022 results is scheduled for today,
About
At
Forward‑Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which reflect the company’s current views with respect to, among other things, future events and financial performance. These statements can be identified by the use of forward-looking words such as “outlook,” “believes,” “expects,” “plans,” “estimates,” “targets,” “strategies” or other comparable words. Any forward-looking statements contained in this press release are based upon the company’s historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the company or any other person that the future plans, estimates, targets, strategies or expectations contemplated by the company will be achieved. Such forward-looking statements are subject to various risks and uncertainties, which include, without limitation:
- changes in the overall level of consumer spending and volatility in the economy, including as a result of the COVID-19 pandemic and geo-political events;
- the impact of current inflationary cost pressures on payroll, benefits, supply chain, and other operating costs;
- our ability to sustain our growth plans and successfully implement our long-range strategic and financial plan;
- the ability to execute our operational excellence priorities, including continuous improvement, Project SOAR (our replacement enterprise resource planning platform), and supply chain optimization;
- epidemics, pandemics or natural disasters that have and could continue to negatively impact sales;
- our ability to gauge beauty trends and react to changing consumer preferences in a timely manner;
- the possibility that we may be unable to compete effectively in our highly competitive markets;
- the possibility that cybersecurity or information security breaches and other disruptions could compromise our information or result in the unauthorized disclosure of confidential information;
- the possibility of material disruptions to our information systems;
- the failure to maintain satisfactory compliance with applicable privacy and data protection laws and regulations;
- the possibility that the capacity of our distribution and order fulfillment infrastructure and the performance of our distribution centers and fast fulfillment centers may not be adequate to support our expected future growth plans;
- changes in the wholesale cost of our products;
- a decline in operating results that has and may continue to lead to asset impairment and store closure charges;
- the possibility that new store openings and existing locations may be impacted by developer or co-tenant issues;
- our ability to attract and retain key executive personnel;
- the impact of climate change on our business operations and/or supply chain;
- our ability to successfully execute our common stock repurchase program or implement future common stock repurchase programs; and
-
other risk factors detailed in the company’s public filings with the
Securities and Exchange Commission (theSEC ), including risk factors contained in its Annual Report on Form 10‑K for the fiscal year endedJanuary 29, 2022 , as such may be amended or supplemented in its subsequently filed Quarterly Reports on Form 10-Q.
The company’s filings with the
Exhibit 1 |
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Consolidated Statements of Income (In thousands, except per share data) |
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13 Weeks Ended |
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2023 |
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2022 |
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(Unaudited) |
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(Unaudited) |
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Net sales |
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$ |
3,226,773 |
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100.0 |
% |
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$ |
2,729,388 |
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100.0 |
% |
Cost of sales |
|
|
2,014,270 |
|
|
62.4 |
% |
|
|
1,702,059 |
|
62.4 |
% |
Gross profit |
|
|
1,212,503 |
|
|
37.6 |
% |
|
|
1,027,329 |
|
37.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||
Selling, general and administrative expenses |
|
|
762,706 |
|
|
23.6 |
% |
|
|
649,968 |
|
23.8 |
% |
Pre-opening expenses |
|
|
2,179 |
|
|
0.1 |
% |
|
|
1,739 |
|
0.1 |
% |
Operating income |
|
|
447,618 |
|
|
13.9 |
% |
|
|
375,622 |
|
13.8 |
% |
Interest (income) expense, net |
|
|
(4,378 |
) |
|
(0.1 |
%) |
|
|
467 |
|
0.1 |
% |
Income before income taxes |
|
|
451,996 |
|
|
14.0 |
% |
|
|
375,155 |
|
13.7 |
% |
Income tax expense |
|
|
111,245 |
|
|
3.4 |
% |
|
|
85,789 |
|
3.1 |
% |
Net income |
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$ |
340,751 |
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|
10.6 |
% |
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$ |
289,366 |
|
10.6 |
% |
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Net income per common share: |
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Basic |
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$ |
6.73 |
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|
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$ |
5.44 |
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Diluted |
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$ |
6.68 |
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$ |
5.41 |
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Weighted average common shares outstanding: |
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|
|
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Basic |
|
|
50,624 |
|
|
|
|
|
53,163 |
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Diluted |
|
|
50,976 |
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|
|
|
|
53,519 |
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|
Exhibit 2 |
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Consolidated Statements of Income (In thousands, except per share data) |
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52 Weeks Ended |
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2023 |
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2022 |
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(Unaudited) |
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Net sales |
|
$ |
10,208,580 |
|
|
100.0 |
% |
|
$ |
8,630,889 |
|
100.0 |
% |
Cost of sales |
|
|
6,164,070 |
|
|
60.4 |
% |
|
|
5,262,335 |
|
61.0 |
% |
Gross profit |
|
|
4,044,510 |
|
|
39.6 |
% |
|
|
3,368,554 |
|
39.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||
Selling, general and administrative expenses |
|
|
2,395,299 |
|
|
23.5 |
% |
|
|
2,061,545 |
|
23.9 |
% |
Pre-opening expenses |
|
|
10,601 |
|
|
0.1 |
% |
|
|
9,517 |
|
0.1 |
% |
Operating income |
|
|
1,638,610 |
|
|
16.1 |
% |
|
|
1,297,492 |
|
15.0 |
% |
Interest (income) expense, net |
|
|
(4,934 |
) |
|
0.0 |
% |
|
|
1,663 |
|
0.0 |
% |
Income before income taxes |
|
|
1,643,544 |
|
|
16.1 |
% |
|
|
1,295,829 |
|
15.0 |
% |
Income tax expense |
|
|
401,136 |
|
|
3.9 |
% |
|
|
309,992 |
|
3.6 |
% |
Net income |
|
$ |
1,242,408 |
|
|
12.2 |
% |
|
$ |
985,837 |
|
11.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
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Net income per common share: |
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
$ |
24.17 |
|
|
|
|
$ |
18.09 |
|
|
||
Diluted |
|
$ |
24.01 |
|
|
|
|
$ |
17.98 |
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
51,403 |
|
|
|
|
|
54,482 |
|
|
||
Diluted |
|
|
51,738 |
|
|
|
|
|
54,841 |
|
|
Exhibit 3 |
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Condensed Consolidated Balance Sheets (In thousands) |
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|
|
2023 |
|
2022 |
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||
|
|
(Unaudited) |
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|
|
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
737,877 |
|
$ |
431,560 |
|
Receivables, net |
|
|
199,422 |
|
|
233,682 |
|
Merchandise inventories, net |
|
|
1,603,451 |
|
|
1,499,218 |
|
Prepaid expenses and other current assets |
|
|
130,246 |
|
|
110,814 |
|
Prepaid income taxes |
|
|
38,308 |
|
|
5,909 |
|
Total current assets |
|
|
2,709,304 |
|
|
2,281,183 |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
1,009,273 |
|
|
914,476 |
|
Operating lease assets |
|
|
1,561,263 |
|
|
1,482,256 |
|
|
|
|
10,870 |
|
|
10,870 |
|
Other intangible assets, net |
|
|
1,312 |
|
|
1,538 |
|
Deferred compensation plan assets |
|
|
35,382 |
|
|
38,409 |
|
Other long-term assets |
|
|
43,007 |
|
|
35,647 |
|
Total assets |
|
$ |
5,370,411 |
|
$ |
4,764,379 |
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
559,527 |
|
$ |
552,730 |
|
Accrued liabilities |
|
|
444,278 |
|
|
364,797 |
|
Deferred revenue |
|
|
394,677 |
|
|
353,579 |
|
Current operating lease liabilities |
|
|
283,293 |
|
|
274,118 |
|
Accrued income taxes |
|
|
— |
|
|
12,786 |
|
Total current liabilities |
|
|
1,681,775 |
|
|
1,558,010 |
|
|
|
|
|
|
|
|
|
Non-current operating lease liabilities |
|
|
1,619,883 |
|
|
1,572,638 |
|
Deferred income taxes |
|
|
55,346 |
|
|
39,693 |
|
Other long-term liabilities |
|
|
53,596 |
|
|
58,665 |
|
Total liabilities |
|
|
3,410,600 |
|
|
3,229,006 |
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
1,959,811 |
|
|
1,535,373 |
|
Total liabilities and stockholders’ equity |
|
$ |
5,370,411 |
|
$ |
4,764,379 |
|
Exhibit 4 |
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Condensed Consolidated Statements of Cash Flows (In thousands) |
||||||||
|
|
52 Weeks Ended |
||||||
|
|
|
|
|
||||
|
|
2023 |
|
2022 |
||||
|
|
(Unaudited) |
|
|
||||
Operating activities |
|
|
|
|
|
|
||
Net income |
|
$ |
1,242,408 |
|
|
$ |
985,837 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
241,372 |
|
|
|
268,460 |
|
Non-cash lease expense |
|
|
301,912 |
|
|
|
276,229 |
|
Deferred income taxes |
|
|
15,653 |
|
|
|
(25,666 |
) |
Stock-based compensation expense |
|
|
43,044 |
|
|
|
47,259 |
|
Loss on disposal of property and equipment |
|
|
6,688 |
|
|
|
5,358 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
||
Receivables |
|
|
34,260 |
|
|
|
(40,573 |
) |
Merchandise inventories |
|
|
(104,233 |
) |
|
|
(331,003 |
) |
Prepaid expenses and other current assets |
|
|
(19,432 |
) |
|
|
(3,412 |
) |
Income taxes |
|
|
(45,182 |
) |
|
|
(35,652 |
) |
Accounts payable |
|
|
8,309 |
|
|
|
66,156 |
|
Accrued liabilities |
|
|
48,249 |
|
|
|
58,598 |
|
Deferred revenue |
|
|
41,098 |
|
|
|
79,196 |
|
Operating lease liabilities |
|
|
(324,500 |
) |
|
|
(303,914 |
) |
Other assets and liabilities |
|
|
(7,731 |
) |
|
|
12,392 |
|
Net cash provided by operating activities |
|
|
1,481,915 |
|
|
|
1,059,265 |
|
|
|
|
|
|
|
|
||
Investing activities |
|
|
|
|
|
|
||
Capital expenditures |
|
|
(312,126 |
) |
|
|
(172,187 |
) |
Other investments |
|
|
(2,458 |
) |
|
|
(4,297 |
) |
Net cash used in investing activities |
|
|
(314,584 |
) |
|
|
(176,484 |
) |
|
|
|
|
|
|
|
||
Financing activities |
|
|
|
|
|
|
||
Repurchase of common shares |
|
|
(900,033 |
) |
|
|
(1,521,925 |
) |
Stock options exercised |
|
|
46,011 |
|
|
|
40,386 |
|
Purchase of treasury shares |
|
|
(6,992 |
) |
|
|
(15,677 |
) |
Net cash used in financing activities |
|
|
(861,014 |
) |
|
|
(1,497,216 |
) |
|
|
|
|
|
|
|
||
Effect of exchange rate changes on cash and cash equivalents |
|
|
— |
|
|
|
(56 |
) |
Net increase (decrease) in cash and cash equivalents |
|
|
306,317 |
|
|
|
(614,491 |
) |
Cash and cash equivalents at beginning of year |
|
|
431,560 |
|
|
|
1,046,051 |
|
Cash and cash equivalents at end of year |
|
$ |
737,877 |
|
|
$ |
431,560 |
|
Exhibit 5 |
||||||||
Store Update |
||||||||
|
||||||||
|
|
Total stores open |
|
Number of stores |
|
Number of stores |
|
Total stores |
|
|
at beginning of the |
|
opened during the |
|
closed during the |
|
open at |
Fiscal 2022 |
|
quarter |
|
quarter |
|
quarter |
|
end of the quarter |
1st Quarter |
|
1,308 |
|
10 |
|
0 |
|
1,318 |
2nd Quarter |
|
1,318 |
|
7 |
|
0 |
|
1,325 |
3rd Quarter |
|
1,325 |
|
18 |
|
0 |
|
1,343 |
4th Quarter |
|
1,343 |
|
12 |
|
0 |
|
1,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross square feet for |
|
|
|
|
|
|
Total gross square |
|
stores opened or |
|
Gross square feet for |
|
Total gross square |
|
|
feet at beginning of |
|
expanded during the |
|
stores closed |
|
feet at end of the |
Fiscal 2022 |
|
the quarter |
|
quarter |
|
during the quarter |
|
quarter |
1st Quarter |
|
13,770,438 |
|
90,905 |
|
0 |
|
13,861,343 |
2nd Quarter |
|
13,861,343 |
|
61,257 |
|
0 |
|
13,922,600 |
3rd Quarter |
|
13,922,600 |
|
151,730 |
|
0 |
|
14,074,330 |
4th Quarter |
|
14,074,330 |
|
126,073 |
|
0 |
|
14,200,403 |
Exhibit 6 |
||||
Sales by Category |
||||
The following tables set forth the approximate percentage of net sales by primary category: | ||||
|
||||
|
|
13 Weeks Ended |
||
|
|
|
|
|
|
2023 |
|
2022 |
|
Cosmetics |
|
|
|
|
Haircare products and styling tools |
|
|
|
|
Skincare |
|
|
|
|
Fragrance and bath |
|
|
|
|
Services |
|
|
|
|
Accessories and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52 Weeks Ended |
||
|
|
|
|
|
|
|
2023 |
|
2022 |
Cosmetics |
|
|
|
|
Haircare products and styling tools |
|
|
|
|
Skincare |
|
|
|
|
Fragrance and bath |
|
|
|
|
Services |
|
|
|
|
Accessories and other |
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230309005603/en/
Investor Contacts:
Vice President, Investor Relations
krawlins@ulta.com
Media Contact:
Vice President, Public Relations
eziesemer@ulta.com
(708) 305-4479
Source:
FAQ
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