Ulta Beauty Announces Third Quarter Fiscal 2022 Results
Ulta Beauty reported net sales of $2.3 billion for Q3 2022, up from $2.0 billion in Q3 2021, reflecting a 14.6% increase in comparable sales. Net income rose to $274.6 million, or $5.34 per diluted share, a 27.5% increase year-over-year. The company also raised its fiscal 2022 outlook, projecting net sales between $9.95 billion and $10.00 billion. The gross profit margin improved to 41.2%. Despite an increase in selling, general, and administrative expenses, operating income grew to $361.9 million.
- Net sales increased by 17.2% YoY to $2.3 billion.
- Comparable sales rose by 14.6%, driven by a 10.7% increase in transactions.
- Gross profit increased 22.0% to $962.8 million; gross margin improved to 41.2%.
- Operating income rose 27.3% to $361.9 million.
- Net income increased by 27.5% to $274.6 million.
- Company raised fiscal 2022 net sales outlook to $9.95 billion-$10.00 billion.
- SG&A expenses increased 18.6% to $597.2 million, impacting margins.
- Comparable sales growth declined from 25.8% in the previous year to 14.6%.
Comparable Sales Increased
Net Income of
Company Raises Outlook for Fiscal Year 2022
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13 Weeks Ended |
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39 Weeks Ended |
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(Dollars in millions, except per share data) |
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2022 |
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2021 |
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2020 |
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2022 |
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2021 |
|
2020 |
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Net sales |
|
$ |
2,338.8 |
|
$ |
1,995.8 |
|
$ |
1,552.0 |
|
|
$ |
6,981.8 |
|
$ |
5,901.5 |
|
$ |
3,953.3 |
Comparable sales |
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(8.9)% |
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(23.8)% |
Gross profit (as a percentage of net sales) |
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Selling, general and administrative expenses |
|
$ |
597.2 |
|
$ |
503.4 |
|
$ |
416.4 |
|
|
$ |
1,632.6 |
|
$ |
1,411.6 |
|
$ |
1,068.9 |
Operating income (as a percentage of net sales) |
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Diluted earnings per share |
|
$ |
5.34 |
|
$ |
3.94 |
|
$ |
1.32 |
|
|
$ |
17.35 |
|
$ |
12.60 |
|
$ |
0.08 |
New store openings, net |
|
|
18 |
|
|
6 |
|
|
(2) |
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|
|
35 |
|
|
38 |
|
|
8 |
“Amidst a challenging macro environment, the
For the Third Quarter of Fiscal 2022
-
Net sales increased
17.2% to compared to$2.3 billion in the third 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 third quarter of fiscal 2021.$2.0 billion -
Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased
14.6% compared to an increase of25.8% in the third quarter of fiscal 2021, driven by a10.7% increase in transactions and a3.5% increase in average ticket. -
Gross profit increased
22.0% to compared to$962.8 million in the third quarter of fiscal 2021. As a percentage of net sales, gross profit increased to$789.5 million 41.2% compared to39.6% in the third quarter of fiscal 2021, primarily due to leverage in fixed costs, strong growth in other revenue, and higher merchandise margin, partially offset by higher inventory shrink. -
Selling, general and administrative (SG&A) expenses increased
18.6% to compared to$597.2 million in the third quarter of fiscal 2021. As a percentage of net sales, SG&A expenses increased to$503.4 million 25.5% compared to25.2% in the third quarter of fiscal 2021, primarily due to deleverage in store payroll and benefits and corporate overhead due to strategic investments, partially offset by lower marketing expenses. -
Operating income increased
27.3% to , or$361.9 million 15.5% of net sales, compared to , or$284.2 million 14.2% of net sales, in the third quarter of fiscal 2021. -
The tax rate increased to
24.3% compared to24.1% in the third quarter of fiscal 2021. -
Net income increased
27.5% to compared to$274.6 million in the third quarter of fiscal 2021.$215.3 million -
Diluted earnings per share increased
35.5% to , including a$5.34 benefit due to income tax accounting for stock-based compensation, compared to$0.02 , including a$3.94 benefit due to income tax accounting for stock-based compensation, in the third quarter of fiscal 2021.$0.01
For the First Nine Months of Fiscal 2022
-
Net sales increased
18.3% to compared to$7.0 billion in the first nine months of 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, and the easing of COVID-19 restrictions compared to the first nine months of fiscal 2021.$5.9 billion -
Comparable sales increased
15.6% compared to an increase of47.1% in the first nine months of fiscal 2021, driven by a9.7% increase in transactions and a5.4% increase in average ticket. -
Gross profit increased
21.0% to compared to$2.8 billion in the first nine months of fiscal 2021. As a percentage of net sales, gross profit increased to$2.3 billion 40.6% compared to39.7% in the first nine 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
15.7% to compared to$1.6 billion in the first nine months of fiscal 2021. As a percentage of net sales, SG&A expenses decreased to$1.4 billion 23.4% compared to23.9% in the first nine months of fiscal 2021, due to lower marketing expenses, partially offset by deleverage in corporate overhead primarily due to strategic investments. -
Operating income increased
29.2% to , or$1.2 billion 17.1% of net sales, compared to , or$921.9 million 15.6% of net sales, in the first nine months of fiscal 2021. -
The tax rate decreased to
24.3% compared to24.4% in the first nine months of fiscal 2021. -
Net income increased
29.5% to compared to$901.7 million in the first nine months of fiscal 2021.$696.5 million -
Diluted earnings per share increased
37.7% to , including a$17.35 benefit due to income tax accounting for stock-based compensation, compared to$0.05 including a$12.60 benefit due to income tax accounting for stock-based compensation, in the first nine months of fiscal 2021.$0.08
Balance Sheet
Cash and cash equivalents at the end of the third quarter of fiscal 2022 were
Merchandise inventories, net at the end of the third quarter of fiscal 2022 totaled
Share Repurchase Program
During the third quarter of fiscal 2022, the Company repurchased 340,271 shares of its common stock at a cost of
Store Update
Real estate activity in the third quarter of fiscal 2022 included 18 new stores located in
At the end of the third quarter of fiscal 2022, the Company operated 1,343 stores totaling 14.1 million square feet.
Fiscal 2022 Outlook
Based on third quarter results and updated expectations for the fourth quarter, 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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47 |
Remodel and relocation projects |
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35 |
|
33 |
Operating margin |
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Diluted earnings per share |
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|
|
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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 |
|
no change |
The Company’s outlook for fiscal 2022 assumes a consistent federal tax rate.
Conference Call Information
A conference call to discuss third 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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2022 |
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2021 |
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(Unaudited) |
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(Unaudited) |
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Net sales |
|
$ |
2,338,793 |
|
|
100.0 |
% |
|
$ |
1,995,775 |
|
100.0 |
% |
Cost of sales |
|
|
1,375,976 |
|
|
58.8 |
% |
|
|
1,206,301 |
|
60.4 |
% |
Gross profit |
|
|
962,817 |
|
|
41.2 |
% |
|
|
789,474 |
|
39.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||
Selling, general and administrative expenses |
|
|
597,164 |
|
|
25.5 |
% |
|
|
503,403 |
|
25.2 |
% |
Pre-opening expenses |
|
|
3,797 |
|
|
0.2 |
% |
|
|
1,832 |
|
0.1 |
% |
Operating income |
|
|
361,856 |
|
|
15.5 |
% |
|
|
284,239 |
|
14.2 |
% |
Interest expense (income), net |
|
|
(849 |
) |
|
(0.0 |
%) |
|
|
413 |
|
0.0 |
% |
Income before income taxes |
|
|
362,705 |
|
|
15.5 |
% |
|
|
283,826 |
|
14.2 |
% |
Income tax expense |
|
|
88,120 |
|
|
3.8 |
% |
|
|
68,537 |
|
3.4 |
% |
Net income |
|
$ |
274,585 |
|
|
11.7 |
% |
|
$ |
215,289 |
|
10.8 |
% |
|
|
|
|
|
|
|
|
|
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|
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Net income per common share: |
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|
|
|
|
|
|
|
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|
|||
Basic |
|
$ |
5.37 |
|
|
|
|
$ |
3.97 |
|
|
||
Diluted |
|
$ |
5.34 |
|
|
|
|
$ |
3.94 |
|
|
||
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|||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
51,131 |
|
|
|
|
|
54,291 |
|
|
||
Diluted |
|
|
51,418 |
|
|
|
|
|
54,660 |
|
|
Exhibit 2 |
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Consolidated Statements of Income (In thousands, except per share data) |
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|
|
39 Weeks Ended |
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|
2022 |
|
2021 |
|||||||||
|
|
(Unaudited) |
|
(Unaudited) |
|||||||||
Net sales |
|
$ |
6,981,807 |
|
|
100.0 |
% |
|
$ |
5,901,501 |
|
100.0 |
% |
Cost of sales |
|
|
4,149,800 |
|
|
59.4 |
% |
|
|
3,560,276 |
|
60.3 |
% |
Gross profit |
|
|
2,832,007 |
|
|
40.6 |
% |
|
|
2,341,225 |
|
39.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||
Selling, general and administrative expenses |
|
|
1,632,593 |
|
|
23.4 |
% |
|
|
1,411,577 |
|
23.9 |
% |
Pre-opening expenses |
|
|
8,422 |
|
|
0.1 |
% |
|
|
7,778 |
|
0.1 |
% |
Operating income |
|
|
1,190,992 |
|
|
17.1 |
% |
|
|
921,870 |
|
15.6 |
% |
Interest expense (income), net |
|
|
(556 |
) |
|
(0.0 |
%) |
|
|
1,196 |
|
0.0 |
% |
Income before income taxes |
|
|
1,191,548 |
|
|
17.1 |
% |
|
|
920,674 |
|
15.6 |
% |
Income tax expense |
|
|
289,891 |
|
|
4.2 |
% |
|
|
224,203 |
|
3.8 |
% |
Net income |
|
$ |
901,657 |
|
|
12.9 |
% |
|
$ |
696,471 |
|
11.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||
Net income per common share: |
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
$ |
17.45 |
|
|
|
|
$ |
12.68 |
|
|
||
Diluted |
|
$ |
17.35 |
|
|
|
|
$ |
12.60 |
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
51,663 |
|
|
|
|
|
54,921 |
|
|
||
Diluted |
|
|
51,962 |
|
|
|
|
|
55,280 |
|
|
Exhibit 3 |
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Condensed Consolidated Balance Sheets (In thousands) |
|||||||||
|
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|
|
|
|
|
|||
|
|
2022 |
|
2022 |
|
2021 |
|||
|
|
(Unaudited) |
|
|
|
|
(Unaudited) |
||
Assets |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
250,628 |
|
$ |
431,560 |
|
$ |
605,053 |
Receivables, net |
|
|
200,304 |
|
|
233,682 |
|
|
169,212 |
Merchandise inventories, net |
|
|
2,114,669 |
|
|
1,499,218 |
|
|
1,916,343 |
Prepaid expenses and other current assets |
|
|
137,642 |
|
|
110,814 |
|
|
105,584 |
Prepaid income taxes |
|
|
42,572 |
|
|
5,909 |
|
|
37,501 |
Total current assets |
|
|
2,745,815 |
|
|
2,281,183 |
|
|
2,833,693 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
967,039 |
|
|
914,476 |
|
|
908,665 |
Operating lease assets |
|
|
1,556,940 |
|
|
1,482,256 |
|
|
1,464,533 |
|
|
|
10,870 |
|
|
10,870 |
|
|
10,870 |
Other intangible assets, net |
|
|
844 |
|
|
1,538 |
|
|
1,770 |
Deferred compensation plan assets |
|
|
31,529 |
|
|
38,409 |
|
|
36,403 |
Other long-term assets |
|
|
18,512 |
|
|
35,647 |
|
|
31,833 |
Total assets |
|
$ |
5,331,549 |
|
$ |
4,764,379 |
|
$ |
5,287,767 |
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
647,117 |
|
$ |
552,730 |
|
$ |
747,451 |
Accrued liabilities |
|
|
462,773 |
|
|
364,797 |
|
|
329,672 |
Deferred revenue |
|
|
312,132 |
|
|
353,579 |
|
|
272,628 |
Current operating lease liabilities |
|
|
275,749 |
|
|
274,118 |
|
|
274,365 |
Accrued income taxes |
|
|
— |
|
|
12,786 |
|
|
— |
Total current liabilities |
|
|
1,697,771 |
|
|
1,558,010 |
|
|
1,624,116 |
|
|
|
|
|
|
|
|
|
|
Non-current operating lease liabilities |
|
|
1,621,252 |
|
|
1,572,638 |
|
|
1,565,921 |
Deferred income taxes |
|
|
38,627 |
|
|
39,693 |
|
|
67,267 |
Other long-term liabilities |
|
|
51,644 |
|
|
58,665 |
|
|
43,663 |
Total liabilities |
|
|
3,409,294 |
|
|
3,229,006 |
|
|
3,300,967 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
1,922,255 |
|
|
1,535,373 |
|
|
1,986,800 |
Total liabilities and stockholders’ equity |
|
$ |
5,331,549 |
|
$ |
4,764,379 |
|
$ |
5,287,767 |
Exhibit 4 |
||||||||
Condensed Consolidated Statements of Cash Flows (In thousands) |
||||||||
|
|
39 Weeks Ended |
||||||
|
|
|
|
|
||||
|
|
2022 |
|
2021 |
||||
|
|
(Unaudited) |
|
(Unaudited) |
||||
Operating activities |
|
|
|
|
|
|
||
Net income |
|
$ |
901,657 |
|
|
$ |
696,471 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
182,182 |
|
|
|
204,734 |
|
Non-cash lease expense |
|
|
222,548 |
|
|
|
206,017 |
|
Deferred income taxes |
|
|
(1,066 |
) |
|
|
1,908 |
|
Stock-based compensation expense |
|
|
32,554 |
|
|
|
38,217 |
|
Loss on disposal of property and equipment |
|
|
3,892 |
|
|
|
3,357 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
||
Receivables |
|
|
33,378 |
|
|
|
23,897 |
|
Merchandise inventories |
|
|
(615,451 |
) |
|
|
(748,128 |
) |
Prepaid expenses and other current assets |
|
|
(26,828 |
) |
|
|
1,818 |
|
Income taxes |
|
|
(49,446 |
) |
|
|
(80,027 |
) |
Accounts payable |
|
|
94,214 |
|
|
|
266,104 |
|
Accrued liabilities |
|
|
64,164 |
|
|
|
24,482 |
|
Deferred revenue |
|
|
(41,447 |
) |
|
|
(1,755 |
) |
Operating lease liabilities |
|
|
(246,988 |
) |
|
|
(222,451 |
) |
Other assets and liabilities |
|
|
20,063 |
|
|
|
213 |
|
Net cash provided by operating activities |
|
|
573,426 |
|
|
|
414,857 |
|
|
|
|
|
|
|
|
||
Investing activities |
|
|
|
|
|
|
||
Capital expenditures |
|
|
(203,961 |
) |
|
|
(108,418 |
) |
Other investments |
|
|
(3,068 |
) |
|
|
— |
|
Net cash used in investing activities |
|
|
(207,029 |
) |
|
|
(108,418 |
) |
|
|
|
|
|
|
|
||
Financing activities |
|
|
|
|
|
|
||
Repurchase of common shares |
|
|
(571,908 |
) |
|
|
(762,167 |
) |
Stock options exercised |
|
|
31,319 |
|
|
|
30,297 |
|
Purchase of treasury shares |
|
|
(6,740 |
) |
|
|
(15,511 |
) |
Net cash used in financing activities |
|
|
(547,329 |
) |
|
|
(747,381 |
) |
|
|
|
|
|
|
|
||
Effect of exchange rate changes on cash and cash equivalents |
|
|
— |
|
|
|
(56 |
) |
Net decrease in cash and cash equivalents |
|
|
(180,932 |
) |
|
|
(440,998 |
) |
Cash and cash equivalents at beginning of period |
|
|
431,560 |
|
|
|
1,046,051 |
|
Cash and cash equivalents at end of period |
|
$ |
250,628 |
|
|
$ |
605,053 |
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39 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/20221201005756/en/
Investor Contacts:
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 net sales for Q3 2022?
How much did Ulta's net income increase in Q3 2022?
What is Ulta's updated fiscal 2022 outlook?
What was the increase in Ulta's diluted earnings per share for Q3 2022?