Ulta Beauty Announces Second Quarter Fiscal 2022 Results
Ulta Beauty reported robust financial results for Q2 and H1 fiscal 2022, achieving net sales of $2.3 billion, an increase from $2.0 billion year-over-year. Comparable sales rose by 14.4%, driven by an 8.3% rise in transactions and a 5.6% increase in average ticket size. Net income surged 17.8% to $295.7 million, with diluted EPS climbing 25.0% to $5.70. The company raised its sales outlook for fiscal 2022 to $9.65 billion to $9.75 billion, reflecting strong demand and strategic innovations.
- Net sales rose by 16.8% to $2.3 billion.
- Net income increased by 17.8% to $295.7 million.
- Diluted EPS grew by 25.0% to $5.70.
- Comparable sales improved by 14.4%.
- Gross profit margin decreased to 40.4% from 40.6%.
- SG&A expenses increased by 15.1% to $534.5 million.
Comparable Sales Increased
Net Income of
Company Raises Outlook for Fiscal Year 2022
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13 Weeks Ended |
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26 Weeks Ended |
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(Dollars in millions) |
2022 |
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2021 |
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2020 |
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2022 |
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2021 |
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2020 |
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Net sales |
|
$ |
2,297.1 |
|
$ |
1,967.2 |
|
$ |
1,228.0 |
|
|
$ |
4,643.0 |
|
$ |
3,905.7 |
|
$ |
2,401.2 |
Comparable sales |
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(26.7)% |
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(31.1)% |
Gross profit (as a percentage of net sales) |
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Selling, general and administrative expenses |
|
$ |
534.5 |
|
$ |
464.3 |
|
$ |
271.6 |
|
|
$ |
1,035.4 |
|
$ |
908.2 |
|
$ |
652.5 |
Operating income (loss) (as a percentage of net sales) |
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(3.7)% |
Diluted earnings (loss) per share |
|
$ |
5.70 |
|
$ |
4.56 |
|
$ |
0.14 |
|
|
$ |
12.00 |
|
$ |
8.66 |
|
$ |
(1.25) |
New store openings, net |
|
|
7 |
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6 |
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— |
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17 |
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32 |
|
|
10 |
“Strong consumer demand and broad-based momentum across our business continued as our teams executed our plans with excellence,” said
Kimbell continued, “As we look to the second half of the year, we continue to operate in a dynamic environment, but I am confident that our unique model and one-of-a-kind assortment, paired with the strong emotional connection guests have to Beauty, position us well to continue to deliver profitable growth.”
For the Second Quarter of Fiscal 2022
-
Net sales increased
16.8% to compared to$2.3 billion in the second quarter of fiscal 2021 due to the favorable impact from the continued resilience of the beauty category, the impact of new brands and product innovation, and the easing of COVID-19 restrictions compared to the second quarter of fiscal 2021.$2.0 billion -
Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased
14.4% compared to an increase of56.3% in the second quarter of fiscal 2021, driven by an8.3% increase in transactions and a5.6% increase in average ticket. -
Gross profit increased
16.3% to compared to$928.2 million in the second quarter of fiscal 2021. As a percentage of net sales, gross profit decreased to$798.0 million 40.4% compared to40.6% in the second quarter of fiscal 2021, primarily due to lower merchandise margin and higher inventory shrink, partially offset by leverage of fixed costs and strong growth in other revenue. -
Selling, general and administrative (SG&A) expenses increased
15.1% to compared to$534.5 million in the second quarter of fiscal 2021. As a percentage of net sales, SG&A expenses decreased to$464.3 million 23.3% compared to23.6% in the second quarter of fiscal 2021, primarily due to lower marketing expenses and leverage of store payroll and benefits and store expenses due to higher sales, partially offset by deleverage in corporate overhead primarily due to strategic investments and higher incentive compensation. -
Pre-opening expenses increased to
compared to$2.3 million in the second quarter of fiscal 2021.$1.4 million -
Operating income increased
17.8% to , or$391.4 million 17.0% of net sales, compared to , or$332.3 million 16.9% of net sales, in the second quarter of fiscal 2021. -
The company’s tax rate increased to
24.5% compared to24.4% in the second quarter of fiscal 2021. -
Net income increased
17.8% to compared to$295.7 million in the second quarter of fiscal 2021.$250.9 million -
Diluted earnings per share increased
25.0% to , including a$5.70 benefit due to income tax accounting for stock-based compensation, compared to$0.01 , including a$4.56 benefit due to income tax accounting for stock-based compensation, in the second quarter of fiscal 2021.$0.04
For the First Six Months of Fiscal 2022
-
Net sales increased
18.9% to compared to$4.6 billion in the first six months of fiscal 2021, primarily due to the favorable impact from the continued resilience of the beauty category, the impact of new brands and product innovation, and the easing of COVID-19 restrictions compared to the first six months of fiscal 2021.$3.9 billion -
Comparable sales increased
16.2% compared to an increase of60.9% in the first six months of fiscal 2021, driven by a9.2% increase in transactions and a6.4% increase in average ticket. -
Gross profit increased
20.5% to compared to$1.9 billion in the first six months of fiscal 2021. As a percentage of net sales, gross profit increased to$1.6 billion 40.3% compared to39.7% in the first six months of fiscal 2021, primarily due to leverage of fixed costs, strong growth in other revenue, and favorable channel mix shifts, partially offset by lower merchandise margin and higher inventory shrink. -
SG&A expenses increased
14.0% to compared to$1.0 billion in the first six months of fiscal 2021. As a percentage of net sales, SG&A expenses decreased to$0.9 billion 22.3% compared to23.3% in the first six months of fiscal 2021, due to lower marketing expenses and leverage of store payroll and benefits due to higher sales, partially offset by deleverage in corporate overhead primarily due to strategic investments. -
Pre-opening expenses decreased to
compared to$4.6 million in the first six months of fiscal 2021.$5.9 million -
Operating income increased
30.0% to , or$829.1 million 17.9% of net sales, compared to , or$637.6 million 16.3% of net sales, in the first six months of fiscal 2021. -
The company’s tax rate was
24.3% compared to24.4% in the first six months of fiscal 2021. -
Net income increased
30.3% to compared to$627.1 million in the first six months of fiscal 2021.$481.2 million -
Diluted earnings per share increased
38.6% to , including a$12.00 benefit due to income tax accounting for stock-based compensation, compared to$0.03 , including a$8.66 benefit due to income tax accounting for stock-based compensation, in the first six months of fiscal 2021.$0.07
Balance Sheet
Cash and cash equivalents at the end of the second quarter of fiscal 2022 were
Merchandise inventories, net at the end of the second quarter of fiscal 2022 totaled
Share Repurchase Program
During the second quarter of fiscal 2022, the Company repurchased 797,994 shares of its common stock at a cost of
Store Update
Real estate activity in the second quarter of fiscal 2022 included seven new stores located in
At the end of the second quarter of fiscal 2022, the Company operated 1,325 stores totaling 13.9 million square feet.
Fiscal 2022 Outlook
Based on the results for the first six months of fiscal 2022 and sales trends experience to date in August, the Company has increased its outlook for fiscal 2022.
The Company’s updated outlook for fiscal 2022 is as follows:
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Prior FY22 Outlook |
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Updated FY22 Outlook |
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Net sales |
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Comparable sales |
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New stores, net |
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50 |
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no change |
Remodel and relocation projects |
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35 |
|
no change |
Operating margin |
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|
|
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Diluted earnings per share |
|
|
|
|
|
Share repurchases |
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approximately |
|
no change |
Effective tax rate |
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approximately |
|
no change |
Capital expenditures |
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|
|
|
Depreciation and amortization expense |
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approximately |
The Company’s outlook for fiscal 2022 assumes a consistent federal tax rate.
Conference Call Information
A conference call to discuss second 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 |
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(In thousands, except per share data) |
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|
13 Weeks Ended |
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2022 |
|
2021 |
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(Unaudited) |
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(Unaudited) |
|||||||||
Net sales |
|
$ |
2,297,113 |
|
|
100.0 |
% |
|
$ |
1,967,207 |
|
100.0 |
% |
Cost of sales |
|
|
1,368,949 |
|
|
59.6 |
% |
|
|
1,169,244 |
|
59.4 |
% |
Gross profit |
|
|
928,164 |
|
|
40.4 |
% |
|
|
797,963 |
|
40.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||
Selling, general and administrative expenses |
|
|
534,459 |
|
|
23.3 |
% |
|
|
464,299 |
|
23.6 |
% |
Pre-opening expenses |
|
|
2,277 |
|
|
0.1 |
% |
|
|
1,357 |
|
0.1 |
% |
Operating income |
|
|
391,428 |
|
|
17.0 |
% |
|
|
332,307 |
|
16.9 |
% |
Interest expense (income), net |
|
|
(108 |
) |
|
(0.0 |
%) |
|
|
425 |
|
0.0 |
% |
Income before income taxes |
|
|
391,536 |
|
|
17.0 |
% |
|
|
331,882 |
|
16.9 |
% |
Income tax expense |
|
|
95,859 |
|
|
4.2 |
% |
|
|
80,989 |
|
4.1 |
% |
Net income |
|
$ |
295,677 |
|
|
12.9 |
% |
|
$ |
250,893 |
|
12.8 |
% |
|
|
|
|
|
|
|
|
|
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|
|||
Net income per common share: |
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
$ |
5.73 |
|
|
|
|
$ |
4.59 |
|
|
||
Diluted |
|
$ |
5.70 |
|
|
|
|
$ |
4.56 |
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|
||
|
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Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
51,607 |
|
|
|
|
|
54,675 |
|
|
||
Diluted |
|
|
51,900 |
|
|
|
|
|
55,014 |
|
|
||
Exhibit 2 |
||||||||||
|
||||||||||
Consolidated Statements of Income |
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(In thousands, except per share data) |
||||||||||
|
|
26 Weeks Ended |
||||||||
|
|
|
|
|
||||||
|
|
2022 |
|
2021 |
||||||
|
|
(Unaudited) |
|
(Unaudited) |
||||||
Net sales |
|
$ |
4,643,014 |
|
|
|
$ |
3,905,726 |
|
|
Cost of sales |
|
|
2,773,824 |
|
|
|
|
2,353,975 |
|
|
Gross profit |
|
|
1,869,190 |
|
|
|
|
1,551,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
1,035,429 |
|
|
|
|
908,174 |
|
|
Pre-opening expenses |
|
|
4,625 |
|
|
|
|
5,946 |
|
|
Operating income |
|
|
829,136 |
|
|
|
|
637,631 |
|
|
Interest expense, net |
|
|
293 |
|
|
|
|
783 |
|
|
Income before income taxes |
|
|
828,843 |
|
|
|
|
636,848 |
|
|
Income tax expense |
|
|
201,771 |
|
|
|
|
155,666 |
|
|
Net income |
|
$ |
627,072 |
|
|
|
$ |
481,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
12.08 |
|
|
|
$ |
8.71 |
|
|
Diluted |
|
$ |
12.00 |
|
|
|
$ |
8.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
51,928 |
|
|
|
|
55,235 |
|
|
Diluted |
|
|
52,237 |
|
|
|
|
55,592 |
|
|
Exhibit 3 |
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Condensed Consolidated Balance Sheets |
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(In thousands) |
|||||||||
|
|
|
|
|
|
|
|||
|
|
2022 |
|
2022 |
|
2021 |
|||
|
|
(Unaudited) |
|
|
|
|
(Unaudited) |
||
Assets |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
434,226 |
|
$ |
431,560 |
|
$ |
770,144 |
Receivables, net |
|
|
180,514 |
|
|
233,682 |
|
|
154,416 |
Merchandise inventories, net |
|
|
1,666,130 |
|
|
1,499,218 |
|
|
1,443,685 |
Prepaid expenses and other current assets |
|
|
123,014 |
|
|
110,814 |
|
|
108,145 |
Prepaid income taxes |
|
|
39,029 |
|
|
5,909 |
|
|
18,544 |
Total current assets |
|
|
2,442,913 |
|
|
2,281,183 |
|
|
2,494,934 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
912,017 |
|
|
914,476 |
|
|
909,507 |
Operating lease assets |
|
|
1,509,246 |
|
|
1,482,256 |
|
|
1,470,166 |
|
|
|
10,870 |
|
|
10,870 |
|
|
10,870 |
Other intangible assets, net |
|
|
1,075 |
|
|
1,538 |
|
|
2,001 |
Deferred compensation plan assets |
|
|
33,393 |
|
|
38,409 |
|
|
36,396 |
Other long-term assets |
|
|
36,480 |
|
|
35,647 |
|
|
30,711 |
Total assets |
|
$ |
4,945,994 |
|
$ |
4,764,379 |
|
$ |
4,954,585 |
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
586,851 |
|
$ |
552,730 |
|
$ |
535,257 |
Accrued liabilities |
|
|
323,939 |
|
|
364,797 |
|
|
313,372 |
Deferred revenue |
|
|
316,571 |
|
|
353,579 |
|
|
265,462 |
Current operating lease liabilities |
|
|
274,693 |
|
|
274,118 |
|
|
267,442 |
Accrued income taxes |
|
|
— |
|
|
12,786 |
|
|
— |
Total current liabilities |
|
|
1,502,054 |
|
|
1,558,010 |
|
|
1,381,533 |
|
|
|
|
|
|
|
|
|
|
Non-current operating lease liabilities |
|
|
1,582,003 |
|
|
1,572,638 |
|
|
1,585,539 |
Deferred income taxes |
|
|
40,029 |
|
|
39,693 |
|
|
64,535 |
Other long-term liabilities |
|
|
52,840 |
|
|
58,665 |
|
|
43,165 |
Total liabilities |
|
|
3,176,926 |
|
|
3,229,006 |
|
|
3,074,772 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
1,769,068 |
|
|
1,535,373 |
|
|
1,879,813 |
Total liabilities and stockholders’ equity |
|
$ |
4,945,994 |
|
$ |
4,764,379 |
|
$ |
4,954,585 |
Exhibit 4 |
||||||||
|
||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||
(In thousands) |
||||||||
|
|
26 Weeks Ended |
||||||
|
|
|
|
|
||||
|
|
2022 |
|
2021 |
||||
|
|
(Unaudited) |
|
(Unaudited) |
||||
Operating activities |
|
|
|
|
|
|
||
Net income |
|
$ |
627,072 |
|
|
$ |
481,182 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
123,721 |
|
|
|
139,577 |
|
Non-cash lease expense |
|
|
146,251 |
|
|
|
137,521 |
|
Deferred income taxes |
|
|
336 |
|
|
|
(824 |
) |
Stock-based compensation expense |
|
|
22,875 |
|
|
|
19,097 |
|
Loss on disposal of property and equipment |
|
|
2,277 |
|
|
|
1,703 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
||
Receivables |
|
|
53,168 |
|
|
|
38,693 |
|
Merchandise inventories |
|
|
(166,912 |
) |
|
|
(275,470 |
) |
Prepaid expenses and other current assets |
|
|
(12,200 |
) |
|
|
(741 |
) |
Income taxes |
|
|
(45,906 |
) |
|
|
(61,074 |
) |
Accounts payable |
|
|
40,051 |
|
|
|
59,360 |
|
Accrued liabilities |
|
|
(49,364 |
) |
|
|
17,858 |
|
Deferred revenue |
|
|
(37,008 |
) |
|
|
(8,921 |
) |
Operating lease liabilities |
|
|
(163,302 |
) |
|
|
(146,892 |
) |
Other assets and liabilities |
|
|
(392 |
) |
|
|
344 |
|
Net cash provided by operating activities |
|
|
540,667 |
|
|
|
401,413 |
|
|
|
|
|
|
|
|
||
Investing activities |
|
|
|
|
|
|
||
Capital expenditures |
|
|
(120,500 |
) |
|
|
(57,305 |
) |
Other investments |
|
|
(1,249 |
) |
|
|
— |
|
Net cash used in investing activities |
|
|
(121,749 |
) |
|
|
(57,305 |
) |
|
|
|
|
|
|
|
||
Financing activities |
|
|
|
|
|
|
||
Repurchase of common shares |
|
|
(434,448 |
) |
|
|
(635,793 |
) |
Stock options exercised |
|
|
24,521 |
|
|
|
22,808 |
|
Purchase of treasury shares |
|
|
(6,325 |
) |
|
|
(6,974 |
) |
Net cash used in financing activities |
|
|
(416,252 |
) |
|
|
(619,959 |
) |
|
|
|
|
|
|
|
||
Effect of exchange rate changes on cash and cash equivalents |
|
|
— |
|
|
|
(56 |
) |
Net increase (decrease) in cash and cash equivalents |
|
|
2,666 |
|
|
|
(275,907 |
) |
Cash and cash equivalents at beginning of period |
|
|
431,560 |
|
|
|
1,046,051 |
|
Cash and cash equivalents at end of period |
|
$ |
434,226 |
|
|
$ |
770,144 |
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
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 |
Exhibit 6 |
||||
|
||||
Sales by Category |
||||
The following tables set forth the approximate percentage of net sales by primary category: |
||||
|
|
13 Weeks Ended |
||
|
|
|
|
|
|
2022 |
|
2021 |
|
Cosmetics |
|
|
|
|
Haircare products and styling tools |
|
|
|
|
Skincare |
|
|
|
|
Fragrance and bath |
|
|
|
|
Services |
|
|
|
|
Accessories and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26 Weeks Ended |
||
|
|
|
|
|
|
|
2022 |
|
2021 |
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/20220825005493/en/
Investor Contact:
Vice President, Investor Relations
krawlins@ulta.com
Media Contact:
Vice President, Public Relations
eziesemer@ulta.com
(708) 305-4479
Source:
FAQ
What were Ulta's Q2 2022 earnings results?
How did Ulta's comparable sales perform in Q2 2022?
What is Ulta's updated fiscal 2022 outlook?
What is the diluted EPS for Ulta in Q2 2022?