Ulta Beauty Announces Record First Quarter Fiscal 2022 Results

Rhea-AI Summary

Ulta Beauty reported a robust first quarter for fiscal 2022, with net sales rising to $2.3 billion, up from $1.9 billion year-over-year. Comparable sales surged by 18.0%, driven by a 10.0% increase in transactions and a 7.3% uptick in average ticket. Net income reached $331.4 million or $6.30 per diluted share, exceeding analysts' expectations. The company also raised its fiscal 2022 outlook, forecasting net sales between $9.35 billion and $9.55 billion. Additionally, Ulta repurchased $132.8 million in stock during the quarter.

Positive

• Net sales increased 21.0% to $2.3 billion.
• Comparable sales rose 18.0%, supported by transaction and ticket growth.
• Net income increased to $331.4 million, or $6.30 per share.
• Gross profit margin improved to 40.1% from 38.9%.

Negative

• None.

Net Sales of $2.3 Billion Compared to $1.9 Billion in the Year-Ago Quarter

Comparable Sales Increased 18.0%

Net Income of $331.4 Million or $6.30 Per Diluted Share

Company Raises Outlook for Fiscal Year 2022

BOLINGBROOK, Ill.--(BUSINESS WIRE)-- Ulta Beauty, Inc. (NASDAQ: ULTA) today announced financial results for the first quarter ended April 30, 2022.

	13 Weeks Ended
		April 30,			May 1,			May 2,
(Dollars in millions)		2022			2021			2020
Net sales		$	2,345.9		$	1,938.5		$	1,173.2
Comparable sales			18.0%			65.9%			(35.3%)
Gross profit (as a percentage of net sales)			40.1%			38.9%			25.9%
Selling, general and administrative expenses		$	501.0		$	443.9		$	380.9
Operating income (loss) (as a percentage of net sales)			18.7%			15.8%			(8.7%)
Diluted earnings (loss) per share		$	6.30		$	4.10		$	(1.39)
New store openings, net			10			26			10

“The Ulta Beauty team delivered exceptional first quarter results, with better-than-expected sales and earnings growth, supported by double-digit comparable sales growth across all major categories,” said Dave Kimbell, chief executive officer. “Solid execution of our strategies, paired with strong guest demand, fueled our financial performance and continued market share gains as we delighted our guests with exciting brand launches within our one-of-a-kind assortment and differentiated guest experiences.”

For the First Quarter of Fiscal 2022

• Net sales increased 21.0% to $2.3 billion compared to $1.9 billion in the first quarter of fiscal 2021 due to the favorable impact of fewer COVID-19 restrictions compared to the first quarter of fiscal 2021.
• Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 18.0%, driven by a 10.0% increase in transactions and an 7.3% increase in average ticket.
• Gross profit increased to $941.0 million compared to $753.8 million in the first quarter of fiscal 2021. As a percentage of net sales, gross profit increased to 40.1% compared to 38.9% in the first quarter of fiscal 2021, primarily due to leverage in fixed costs, strong growth in other revenue, and favorable channel mix shifts, partially offset by lower merchandise margin.
• Selling, general and administrative (“SG&A”) expenses increased to $501.0 million compared to $443.9 million in the first quarter of fiscal 2021. As a percentage of net sales, SG&A expenses decreased to 21.4% compared to 22.9% in the first quarter of fiscal 2021, primarily due to lower marketing expenses and leverage in store payroll and benefits due to higher sales, partially offset by deleverage in corporate overhead due to strategic investments.
• Pre-opening expenses decreased to $2.3 million compared to $4.6 million for the first quarter of fiscal 2021.
• Operating income increased to $437.7 million, or 18.7% of net sales, compared to $305.3 million, or 15.8% of net sales, in the first quarter of fiscal 2021.
• Tax rate decreased to 24.2% compared to 24.5% in the first quarter of fiscal 2021.
• Net income increased to $331.4 million compared to $230.3 million in the first quarter of fiscal 2021.
• Diluted earnings per share increased to $6.30, including a $0.02 benefit due to income tax accounting for share-based compensation, compared to $4.10, including a $0.03 benefit due to income tax accounting for share-based compensation, in the first quarter of fiscal 2021.

Balance Sheet

Cash and cash equivalents at the end of the first quarter of fiscal 2022 totaled $654.5 million.

Merchandise inventories, net at the end of first quarter of fiscal 2022 increased to $1.57 billion compared to $1.35 billion at the end of the first quarter of fiscal 2021. The increase reflects the addition of 28 net new stores, inventory to support new brand launches, and the acceleration of inventory receipts to support expected demand and mitigate anticipated global supply chain disruptions.

Share Repurchase Program

During the first quarter of fiscal 2022, the Company repurchased 331,834 shares of its common stock at a cost of $132.8 million. As of April 30, 2022, $1.87 billion remained available under the $2.0 billion share repurchase program announced in March 2022.

Store Update

Real estate activity in the first quarter of fiscal 2022 included 10 new stores located in Cranston, RI; Las Vegas, NV; Meriden, CT; North Hollywood, CA; Prince Frederick, MD; Riverside, CA; Stephenville, TX; Vienna, VA; Warrenton,VA; and Woodbridge, NJ. In addition, the Company relocated six stores.

At the end of the first quarter of fiscal 2022, the Company operated 1,318 stores totaling 13.9 million square feet.

Fiscal 2022 Outlook

The Company has updated its outlook for fiscal 2022.

			Prior FY22 Outlook		Updated FY22 Outlook
Net sales			$9.05 billion to $9.15 billion		$9.35 billion to $9.55 billion
Comparable sales			3% to 4%		6% to 8%
New stores, net			50		no change
Remodel and relocation projects			35		no change
Operating margin			13.7% to 14.0%		14.1% to 14.4%
Diluted earnings per share			$18.20 to $18.70		$19.20 to $20.10
Share repurchases			approximately $900 million		no change
Effective tax rate			approximately 24.5%		no change
Capital expenditures			$375 million to $425 million		no change
Depreciation and amortization expense			$250 million to $255 million		no change

The Company’s outlook for fiscal 2022 assumes no material increases in the federal minimum wage.

Conference Call Information

A conference call to discuss first quarter of fiscal 2022 results is scheduled for today, May 26, 2022, at 4:30 p.m. Eastern Time / 3:30 p.m. Central Time. Investors and analysts interested in participating in the call are invited to dial (877) 704‑4453. The conference call will also be webcast live at https://www.ulta.com/investor. A replay of the webcast will remain available for 90 days. A replay of the conference call will be available until 11:59 p.m. ET on June 9, 2022 and can be accessed by dialing (844) 512‑2921 and entering conference ID number 13729192.

About Ulta Beauty

At Ulta Beauty (NASDAQ: ULTA), the possibilities are beautiful. Ulta Beauty is the largest U.S. beauty retailer and the premier beauty destination for cosmetics, fragrance, skin care products, hair care products and salon services. In 1990, the Company reinvented the beauty retail experience by offering a new way to shop for beauty – bringing together all things beauty, all in one place. Today, Ulta Beauty operates 1,318 retail stores across 50 states and also distributes its products through its website, which includes a collection of tips, tutorials, and social content. For more information, visit www.ulta.com.

Ulta Beauty was recently added to the Bloomberg Gender Equality Index, which tracks the financial performance of public companies committed to supporting gender equality through policy development, representation and transparency. More information about Ulta Beauty’s corporate responsibility efforts can be found at www.ulta.com/investor/ESG.

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;
• 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 (the SEC), including risk factors contained in its Annual Report on Form 10‑K for the fiscal year ended January 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 SEC are available at www.sec.gov. Except to the extent required by the federal securities laws, the Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

											Exhibit 1
Ulta Beauty, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
		13 Weeks Ended
		April 30,						May 1,
		2022						2021
		(Unaudited)						(Unaudited)
Net sales		$	2,345,901		100.0	%		$	1,938,519		100.0	%
Cost of sales			1,404,875		59.9	%			1,184,731		61.1	%
Gross profit			941,026		40.1	%			753,788		38.9	%
Selling, general and administrative expenses			500,970		21.4	%			443,875		22.9	%
Pre-opening expenses			2,348		0.1	%			4,589		0.2	%
Operating income			437,708		18.7	%			305,324		15.8	%
Interest expense, net			401		0.0	%			358		0.0	%
Income before income taxes			437,307		18.6	%			304,966		15.8	%
Income tax expense			105,912		4.5	%			74,677		3.9	%
Net income		$	331,395		14.1	%		$	230,289		11.9	%
Net income per common share:
Basic		$	6.34					$	4.13
Diluted		$	6.30					$	4.10
Weighted average common shares outstanding:
Basic			52,250						55,795
Diluted			52,582						56,172

									Exhibit 2
Ulta Beauty, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
		April 30,			January 29,			May 1,
		2022			2022			2021
		(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	654,486		$	431,560		$	947,456
Receivables, net			192,754			233,682			154,342
Merchandise inventories, net			1,570,552			1,499,218			1,353,565
Prepaid expenses and other current assets			114,075			110,814			108,393
Prepaid income taxes			—			5,909			—
Total current assets			2,531,867			2,281,183			2,563,756
Property and equipment, net			909,543			914,476			960,440
Operating lease assets			1,488,040			1,482,256			1,487,616
Goodwill			10,870			10,870			10,870
Other intangible assets, net			1,307			1,538			2,233
Deferred compensation plan assets			35,978			38,409			34,279
Other long-term assets			34,431			35,647			28,350
Total assets		$	5,012,036		$	4,764,379		$	5,087,544
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	585,500		$	552,730		$	552,837
Accrued liabilities			305,000			364,797			322,676
Deferred revenue			324,694			353,579			270,090
Current operating lease liabilities			276,440			274,118			263,200
Accrued income taxes			108,113			12,786			113,960
Total current liabilities			1,599,747			1,558,010			1,522,763
Non-current operating lease liabilities			1,568,356			1,572,638			1,613,309
Deferred income taxes			40,702			39,693			66,483
Other long-term liabilities			57,611			58,665			40,272
Total liabilities			3,266,416			3,229,006			3,242,827
Commitments and contingencies
Total stockholders’ equity			1,745,620			1,535,373			1,844,717
Total liabilities and stockholders’ equity		$	5,012,036		$	4,764,379		$	5,087,544

							Exhibit 3
Ulta Beauty, Inc.
Consolidated Statements of Cash Flows
(In thousands)
		13 Weeks Ended
		April 30,				May 1,
		2022				2021
		(Unaudited)				(Unaudited)
Operating activities
Net income		$	331,395			$	230,289
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			62,839				70,599
Non-cash lease expense			72,192				68,881
Deferred income taxes			1,009				1,124
Stock-based compensation expense			10,356				8,978
Loss on disposal of property and equipment			1,002				1,089
Change in operating assets and liabilities:
Receivables			40,928				38,767
Merchandise inventories			(71,334	)			(185,350	)
Prepaid expenses and other current assets			(3,261	)			(991	)
Income taxes			101,236				71,431
Accounts payable			42,586				76,580
Accrued liabilities			(57,214	)			23,209
Deferred revenue			(28,885	)			(4,293	)
Operating lease liabilities			(79,936	)			(72,175	)
Other assets and liabilities			3,390				1,929
Net cash provided by operating activities			426,303				330,067
Investing activities
Capital expenditures			(71,076	)			(34,563	)
Other investments			(797	)			—
Net cash used in investing activities			(71,873	)			(34,563	)
Financing activities
Repurchase of common shares			(132,834	)			(392,309	)
Stock options exercised			6,502				5,032
Purchase of treasury shares			(5,172	)			(6,766	)
Net cash used in financing activities			(131,504	)			(394,043	)
Effect of exchange rate changes on cash and cash equivalents			—				(56	)
Net increase (decrease) in cash and cash equivalents			222,926				(98,595	)
Cash and cash equivalents at beginning of period			431,560				1,046,051
Cash and cash equivalents at end of period		$	654,486			$	947,456

								Exhibit 4
Ulta Beauty, Inc.
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
				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

					Exhibit 5
Ulta Beauty, Inc.
Sales by Category
The following table sets forth the approximate percentage of net sales by primary category:
		13 Weeks Ended
		April 30,			May 1,
		2022			2021
Cosmetics		44	%		45	%
Haircare products and styling tools		20	%		19	%
Skincare		18	%		19	%
Fragrance and bath		12	%		11	%
Services		3	%		3	%
Accessories and other		3	%		3	%
		100	%		100	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220526005523/en/

Investor Contacts:

Kiley Rawlins, CFA

Vice President, Investor Relations

krawlins@ulta.com

Media Contact:

Eileen Ziesemer

Vice President, Public Relations

eziesemer@ulta.com

(708) 305-4479

Source: Ulta Beauty, Inc.

FAQ

What were Ulta's first quarter earnings for 2022?

Ulta reported net income of $331.4 million or $6.30 per diluted share for the first quarter of fiscal 2022.

How did Ulta's net sales perform in the first quarter of 2022?

Net sales for Ulta in the first quarter of fiscal 2022 were $2.3 billion, up from $1.9 billion in the same quarter of 2021.

What is the updated fiscal 2022 outlook for Ulta?

Ulta raised its fiscal 2022 outlook, expecting net sales between $9.35 billion and $9.55 billion.

How much did Ulta repurchase in shares during the first quarter of 2022?

Ulta repurchased $132.8 million in shares during the first quarter of fiscal 2022.

What were the comparable sales growth figures for Ulta in Q1 2022?

Comparable sales increased by 18.0% in the first quarter of fiscal 2022.