Quarterly Report for Quarter Ending August 3, 2024 (Form 10-Q)

Table of Contents

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​

​

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended August 3, 2024

or

☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____________ to _____________

Commission File Number: 001-33764

ULTA BEAUTY, INC.

(Exact name of Registrant as specified in its charter)

​ incorporation or organization) ​	​ Identification No.) ​
Delaware (State or other jurisdiction of incorporation or organization)	38-4022268 (I.R.S. Employer Identification No.)
1000 Remington Blvd., Suite 120 Bolingbrook, Illinois (Address of principal executive offices)	60440 (Zip code)

​

Registrant's telephone number, including area code: (630) 410-4800

Securities registered pursuant to Section 12(b) of the Act:

​

​	​	​
​	​	​
Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ULTA	The NASDAQGlobal Select Market

​

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐Non-accelerated filer ☐Smaller reporting company ☐Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐Yes ☒No

The number of shares of the registrant's common stock, par value $0.01 per share, outstanding as of August 26, 2024 was 47,114,727 shares.

​

Table of Contents

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ULTA BEAUTY, INC.

TABLE OF CONTENTS

​

​	​	​
Part I - Financial Information	​
​	​
Item 1. Financial Statements	​
Consolidated Balance Sheets	3
Consolidated Statements of Income	4
Consolidated Statements of Cash Flows	5
Consolidated Statements of Stockholders' Equity	6
Notes to Consolidated Financial Statements	8
​	​
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	15
​	​
Item 3. Quantitative and Qualitative Disclosures about Market Risk	24
​	​
Item 4. Controls and Procedures	24
​	​
Part II - Other Information	25
​	​
Item 1. Legal Proceedings	25
​	​
Item 1A. Risk Factors	25
​	​
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	25
​	​
Item 3. Defaults Upon Senior Securities	25
​	​
Item 4. Mine Safety Disclosures	25
​	​
Item 5. Other Information	26
​	​
Item 6. Exhibits	26
​	​
SIGNATURES	27
​	​
​	​

​

​

​

2

Table of Contents

Part I - Financial Information

Item 1.Financial Statements

Ulta Beauty, Inc.

Consolidated Balance Sheets

​	​	​	​	​	​	​	​	​	​
​	​	August 3,	​	February 3,	​	July 29,
(In thousands, except per share data)		2024		2024		2023
Assets	​	​	(Unaudited)	​	​	​	​	​	(Unaudited)
Current assets:	​	​	​	​	​	​	​	​	​
Cash and cash equivalents	​	$	413,962	​	$	766,594	​	$	388,627
Receivables, net	​	​	200,863	​	​	207,939	​	​	174,444
Merchandise inventories, net	​	​	1,998,286	​	​	1,742,136	​	​	1,815,539
Prepaid expenses and other current assets	​	​	132,023	​	​	115,598	​	​	110,524
Prepaid income taxes	​	​	53,607	​	​	4,251	​	​	30,114
Total current assets	​	​	2,798,741	​	​	2,836,518	​	​	2,519,248
​	​	​	​	​	​	​	​	​	​
Property and equipment, net	​	​	1,225,850	​	​	1,182,335	​	​	1,073,144
Operating lease assets	​	​	1,599,735	​	​	1,574,530	​	​	1,549,146
Goodwill	​	​	10,870	​	​	10,870	​	​	10,870
Other intangible assets, net	​	​	357	​	​	510	​	​	718
Deferred compensation plan assets	​	​	46,280	​	​	43,516	​	​	40,087
Other long-term assets	​	​	55,575	​	​	58,732	​	​	55,547
Total assets	​	$	5,737,408	​	$	5,707,011	​	$	5,248,760
​	​	​	​	​	​	​	​	​	​
Liabilities and stockholders' equity	​	​	​	​	​	​	​	​	​
Current liabilities:	​	​	​	​	​	​	​	​	​
Accounts payable	​	$	566,904	​	$	544,001	​	$	521,315
Accrued liabilities	​	​	348,042	​	​	382,468	​	​	328,247
Deferred revenue	​	​	394,987	​	​	436,591	​	​	354,253
Current operating lease liabilities	​	​	281,301	​	​	283,821	​	​	287,359
Accrued income taxes	​	​	-	​	​	11,310	​	​	-
Total current liabilities	​	​	1,591,234	​	​	1,658,191	​	​	1,491,174
​	​	​	​	​	​	​	​	​	​
Non-current operating lease liabilities	​	​	1,647,698	​	​	1,627,271	​	​	1,593,040
Deferred income taxes	​	​	88,461	​	​	85,921	​	​	56,012
Other long-term liabilities	​	​	61,855	​	​	56,300	​	​	56,657
Total liabilities	​	​	3,389,248	​	​	3,427,683	​	​	3,196,883
​	​	​	​	​	​	​	​	​	​
Commitments and contingencies (Note 6)	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​
Stockholders' equity:	​	​	​	​	​	​	​	​	​
Common stock, $0.01 par value, 400,000 shares authorized; 48,143, 49,123, and 50,139 shares issued; 47,300, 48,324, and 49,341 shares outstanding; at August 3, 2024 (unaudited), February 3, 2024, and July 29, 2023 (unaudited), respectively	​	​	481	​	​	491	​	​	501
Treasury stock-common, at cost	​	​	(106,491)	​	​	(83,032)	​	​	(82,229)
Additional paid-in capital	​	​	1,099,197	​	​	1,075,104	​	​	1,049,679
Retained earnings	​	​	1,354,973	​	​	1,286,765	​	​	1,083,926
Total stockholders' equity	​	​	2,348,160	​	​	2,279,328	​	​	2,051,877
Total liabilities and stockholders' equity	​	$	5,737,408	​	$	5,707,011	​	$	5,248,760

​

See accompanying notes to consolidated financial statements.

3

Table of Contents

Ulta Beauty, Inc.

Consolidated Statements of Income

(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

13 Weeks Ended

​

26 Weeks Ended

​

​

August 3,

​

July 29,

​

August 3,

​

July 29,

(In thousands, except per share data)

2024

​

2023

​

2024

​

2023

Net sales

​

$

2,552,087

​

$

2,529,809

​

$

5,277,935

​

$

5,164,072

Cost of sales

​

​

1,573,910

​

​

1,536,197

​

​

3,229,978

​

​

3,115,603

Gross profit

​

​

978,177

​

​

993,612

​

​

2,047,957

​

​

2,048,469

​

​

​

​

​

​

​

​

​

​

​

​

​

Selling, general and administrative expenses

​

​

644,821

​

​

600,692

​

​

1,310,734

​

​

1,212,821

Pre-opening expenses

​

​

4,155

​

​

1,278

​

​

7,074

​

​

1,936

Operating income

​

​

329,201

​

​

391,642

​

​

730,149

​

​

833,712

Interest income, net

​

​

(4,526)

​

​

(4,449)

​

​

(11,426)

​

​

(11,797)

Income before income taxes

​

​

333,727

​

​

396,091

​

​

741,575

​

​

845,509

Income tax expense

​

​

81,171

​

​

95,989

​

​

175,906

​

​

198,356

Net income

​

$

252,556

​

$

300,102

​

$

565,669

​

$

647,153

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income per common share:

​

​

​

​

​

​

​

​

​

​

​

​

Basic

​

$

5.32

​

$

6.05

​

$

11.83

​

$

12.97

Diluted

​

$

5.30

​

$

6.02

​

$

11.78

​

$

12.90

​

​

​

​

​

​

​

​

​

​

​

​

​

Weighted average common shares outstanding:

​

​

​

​

​

​

​

​

​

​

​

​

Basic

​

​

47,505

​

​

49,617

​

​

47,815

​

​

49,885

Diluted

​

​

47,667

​

​

49,849

​

​

48,022

​

​

50,157

​

See accompanying notes to consolidated financial statements.

​

​

​

4

Table of Contents

Ulta Beauty, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

​

​	​	​	​	​	​	​
​	​	26 Weeks Ended
​	​	August 3,	​	July 29,
(In thousands)		2024		2023
Operating activities	​	​	​	​	​	​
Net income	​	$	565,669	​	$	647,153
Adjustments to reconcile net income to net cash provided by operating activities:		​	​	​	​	​
Depreciation and amortization	​	​	130,053	​	​	119,862
Non-cash lease expense	​	​	163,481	​	​	152,867
Deferred income taxes	​	​	2,540	​	​	666
Stock-based compensation expense	​	​	19,272	​	​	21,539
Loss on disposal of property and equipment	​	​	5,204	​	​	3,878
Change in operating assets and liabilities:	​	​	​	​	​	​
Receivables	​	​	7,076	​	​	24,978
Merchandise inventories	​	​	(256,150)	​	​	(212,088)
Prepaid expenses and other current assets	​	​	(16,425)	​	​	19,722
Income taxes	​	​	(60,666)	​	​	8,194
Accounts payable	​	​	29,715	​	​	(38,752)
Accrued liabilities	​	​	(33,634)	​	​	(102,763)
Deferred revenue	​	​	(41,604)	​	​	(40,424)
Operating lease liabilities	​	​	(170,779)	​	​	(163,527)
Other assets and liabilities	​	​	15,127	​	​	(12,497)
Net cash provided by operating activities	​	​	358,879	​	​	428,808
​	​	​	​	​	​	​
Investing activities	​	​	​	​	​	​
Capital expenditures	​	​	(186,301)	​	​	(204,748)
Other investments	​	​	(5,091)	​	​	(1,687)
Net cash used in investing activities	​	​	(191,392)	​	​	(206,435)
​	​	​	​	​	​	​
Financing activities	​	​	​	​	​	​
Repurchase of common shares	​	​	(501,768)	​	​	(559,011)
Stock options exercised	​	​	9,196	​	​	9,147
Purchase of treasury shares	​	​	(23,459)	​	​	(21,759)
Debt issuance costs	​	​	(4,088)	​	​	-
Net cash used in financing activities	​	​	(520,119)	​	​	(571,623)
​	​	​	​	​	​	​
Net decrease in cash and cash equivalents	​	​	(352,632)	​	​	(349,250)
Cash and cash equivalents at beginning of period	​	​	766,594	​	​	737,877
Cash and cash equivalents at end of period	​	$	413,962	​	$	388,627
​	​	​	​	​	​	​
Supplemental information	​	​	​	​	​	​
Income taxes paid, net of refunds		$	233,249	​	$	189,166
Non-cash capital expenditures	​	​	54,075	​	​	51,860

​

See accompanying notes to consolidated financial statements.

​

5

Table of Contents

Ulta Beauty, Inc.

Consolidated Statements of Stockholders' Equity

(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Treasury -

​

​

​

​

​

​

​

​

​

Common Stock

​

Common Stock

​

Additional

​

​

​

Total

​

​

Issued

​

​

​

Treasury

​

​

​

Paid-In

​

Retained

​

Stockholders'

(In thousands)

Shares

Amount

Shares

Amount

Capital

Earnings

Equity

Balance - February 3, 2024

​

49,123

​

$

491

​

(799)

​

$

(83,032)

​

$

1,075,104

​

$

1,286,765

​

$

2,279,328

Net income

​

-

​

​

-

​

-

​

​

-

​

​

-

​

​

313,113

​

​

313,113

Stock-based compensation

​

-

​

​

-

​

-

​

​

-

​

​

10,082

​

​

-

​

​

10,082

Stock options exercised and other awards

​

153

​

​

2

​

-

​

​

-

​

​

8,911

​

​

-

​

​

8,913

Purchase of treasury shares

​

-

​

​

-

​

(44)

​

​

(23,283)

​

​

-

​

​

-

​

​

(23,283)

Repurchase of common shares, including excise tax

​

(588)

​

​

(6)

​

-

​

​

-

​

​

(2,275)

​

​

(285,129)

​

​

(287,410)

Balance - May 4, 2024

​

48,688

​

$

487

​

(843)

​

$

(106,315)

​

$

1,091,822

​

$

1,314,749

​

$

2,300,743

Net income

​

-

​

​

-

​

-

​

​

-

​

​

-

​

​

252,556

​

​

252,556

Stock-based compensation

​

-

​

​

-

​

-

​

​

-

​

​

9,190

​

​

-

​

​

9,190

Stock options exercised and other awards

​

5

​

​

-

​

-

​

​

-

​

​

283

​

​

-

​

​

283

Purchase of treasury shares

​

-

​

​

-

​

-

​

​

(176)

​

​

-

​

​

-

​

​

(176)

Repurchase of common shares, including excise tax

​

(550)

​

​

(6)

​

-

​

​

-

​

​

(2,098)

​

​

(212,332)

​

​

(214,436)

Balance - August 3, 2024

​

48,143

​

$

481

​

(843)

​

$

(106,491)

​

$

1,099,197

​

$

1,354,973

​

$

2,348,160

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

See accompanying notes to consolidated financial statements.

​

6

Table of Contents

Ulta Beauty, Inc.

Consolidated Statements of Stockholders' Equity

(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Treasury -

​

​

​

​

​

​

​

​

​

Common Stock

​

Common Stock

​

Additional

​

​

​

Total

​

​

Issued

​

​

​

Treasury

​

​

​

Paid-In

​

Retained

​

Stockholders'

(In thousands)

Shares

Amount

Shares

Amount

Capital

Earnings

Equity

Balance - January 28, 2023

​

51,120

​

$

511

​

(756)

​

$

(60,470)

​

$

1,023,997

​

$

995,773

​

$

1,959,811

Net income

​

-

​

​

-

​

-

​

​

-

​

​

-

​

​

347,051

​

​

347,051

Stock-based compensation

​

-

​

​

-

​

-

​

​

-

​

​

9,721

​

​

-

​

​

9,721

Stock options exercised and other awards

​

150

​

​

1

​

-

​

​

-

​

​

8,926

​

​

-

​

​

8,927

Purchase of treasury shares

​

-

​

​

-

​

(41)

​

​

(21,659)

​

​

-

​

​

-

​

​

(21,659)

Repurchase of common shares, including excise tax

​

(541)

​

​

(5)

​

-

​

​

-

​

​

(2,266)

​

​

(283,512)

​

​

(285,783)

Balance - April 29, 2023

​

50,729

​

$

507

​

(797)

​

$

(82,129)

​

$

1,040,378

​

$

1,059,312

​

$

2,018,068

Net income

​

-

​

​

-

​

-

​

​

-

​

​

-

​

​

300,102

​

​

300,102

Stock-based compensation

​

-

​

​

-

​

-

​

​

-

​

​

11,818

​

​

-

​

​

11,818

Stock options exercised and other awards

​

4

​

​

-

​

-

​

​

-

​

​

220

​

​

-

​

​

220

Purchase of treasury shares

​

-

​

​

-

​

(1)

​

​

(100)

​

​

-

​

​

-

​

​

(100)

Repurchase of common shares, including excise tax

​

(594)

​

​

(6)

​

-

​

​

-

​

​

(2,737)

​

​

(275,488)

​

​

(278,231)

Balance - July 29, 2023

​

50,139

​

$

501

​

(798)

​

$

(82,229)

​

$

1,049,679

​

$

1,083,926

​

$

2,051,877

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

See accompanying notes to consolidated financial statements.

​

​

7

Table of Contents

​

Ulta Beauty, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share and store count data) (Unaudited)

​

1.Business and basis of presentation

Ulta Beauty, Inc. was founded in 1990 to operate specialty retail stores selling cosmetics, fragrance, haircare and skincare products, and related accessories and services. Nearly every store features a full-service salon. As used in these notes and throughout this Quarterly Report on Form 10-Q, all references to "we," "us," "our," "Ulta Beauty," or the "Company" refer to Ulta Beauty, Inc. and its consolidated subsidiaries.

As of August 3, 2024, the Company operated 1,411 stores across 50 states, as shown in the table below.

​

​	​	​	​	​	​	​
​	​	Number of	​	​	​	Number of
Location		stores		Location		stores
Alabama	​	27	​	Montana	​	6
Alaska	​	3	​	Nebraska	​	5
Arizona	​	37	​	Nevada	​	16
Arkansas	​	11	​	New Hampshire	​	8
California	​	173	​	New Jersey	​	46
Colorado	​	27	​	New Mexico	​	7
Connecticut	​	19	​	New York	​	56
Delaware	​	4	​	North Carolina	​	46
Florida	​	100	​	North Dakota	​	4
Georgia	​	44	​	Ohio	​	47
Hawaii	​	4	​	Oklahoma	​	22
Idaho	​	10	​	Oregon	​	19
Illinois	​	55	​	Pennsylvania	​	45
Indiana	​	26	​	Rhode Island	​	5
Iowa	​	11	​	South Carolina	​	26
Kansas	​	14	​	South Dakota	​	3
Kentucky	​	16	​	Tennessee	​	32
Louisiana	​	18	​	Texas	​	133
Maine	​	3	​	Utah	​	15
Maryland	​	29	​	Vermont	​	1
Massachusetts	​	27	​	Virginia	​	35
Michigan	​	49	​	Washington	​	37
Minnesota	​	20	​	West Virginia	​	7
Mississippi	​	12	​	Wisconsin	​	21
Missouri	​	26	​	Wyoming	​	4
​	​	​	​	Total	​	1,411

​

The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and the U.S. Securities and Exchange Commission's Article 10, Regulation S-X. These financial statements were prepared on a consolidated basis to include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts, transactions, and unrealized profit were eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary to fairly state the financial position and results of operations and cash flows for the interim periods presented.

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The Company's business is subject to seasonal fluctuation, with significant portions of net sales and net income being realized during the fourth quarter of the fiscal year due to the holiday selling season. The results for the 13 and 26 weeks ended August 3, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending February 1, 2025, or for any other future interim period or for any future year.

These unaudited interim consolidated financial statements and the related notes should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended February 3, 2024. All amounts are stated in thousands, with the exception of per share amounts and number of stores.

​

2.Summary of significant accounting policies

Information regarding significant accounting policies is contained in Note 2, "Summary of significant accounting policies," to the consolidated financial statements in the Annual Report on Form 10-K for the year ended February 3, 2024. Presented below and in the following notes is supplemental information that should be read in conjunction with "Notes to Consolidated Financial Statements" in the Annual Report.

Fiscal quarter

The Company's quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31. The second quarter in fiscal 2024 and 2023 ended on August 3, 2024 and July 29, 2023, respectively.

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the accounting period. Actual results could differ from those estimates. The Company considers its accounting policies relating to inventory valuations, vendor allowances, impairment of long-lived tangible and right-of-use assets, loyalty program and income taxes to be the most significant accounting policies that involve management estimates and judgments. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Recent accounting pronouncements not yet adopted

Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure. The guidance updates reportable segment disclosure requirements, primarily through requiring enhanced disclosures about significant segment expenses and information used to assess segment performance. The ASU is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-07 on related disclosures.

Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The guidance is effective for fiscal years beginning after December 15, 2024 and should be applied either prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on related disclosures.

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Securities and Exchange Commission (SEC) Climate-Related Disclosures

In March 2024, the SEC adopted rules intended to enhance and standardize climate-related disclosures in registration statements and annual reports. The new rules will require disclosure of material climate-related risks, including disclosure of Board of Directors' oversight and risk management activities, the material impacts of these risks to us and the quantification of material impacts to us as a result of severe weather events and other natural conditions. The rules also require disclosure of material greenhouse gas emissions and any material climate-related targets and goals. The new rules will be effective for annual reporting periods beginning in fiscal year 2025, except for the greenhouse gas emissions disclosures which will be effective for annual reporting periods beginning in fiscal year 2026, however the new rules have been stayed by the federal courts and, as a result, the SEC has indefinitely delayed their effectiveness. The Company is currently evaluating the impact of these new rules.

​

3.Revenue

Net sales include retail stores and e-commerce merchandise sales as well as salon services and other revenue. Other revenue includes the private label and co-branded credit card programs, royalties derived from the partnership with Target Corporation, and deferred revenue related to the loyalty program and gift card breakage.

​

Disaggregated revenue

​

The following table sets forth the approximate percentage of net sales by primary category:

​

​	​	​	​	​	​	​	​	​
​	​	13 Weeks Ended	​	26 Weeks Ended
​	​	August 3,	​	July 29,	​	August 3,	​	July 29,
(Percentage of net sales)	​	2024	​	2023	​	2024	​	2023
Cosmetics	​	39%	​	40%	​	40%	​	42%
Skincare	​	24%	​	23%	​	24%	​	22%
Haircare	​	20%	​	22%	​	19%	​	21%
Fragrance	​	11%	​	9%	​	11%	​	9%
Services	​	4%	​	4%	​	4%	​	4%
Other	​	2%	​	2%	​	2%	​	2%
​	​	100%	​	100%	​	100%	​	100%

​

Certain sales departments were reclassified between categories in the prior year to conform to current year presentation, including moving the bath category from Fragrance to Skincare.

Deferred revenue

Deferred revenue primarily represents contract liabilities for the obligation to transfer additional goods or services to a guest for which the Company has received consideration, such as unredeemed Ulta Beauty Rewards loyalty points and unredeemed Ulta Beauty gift cards. In addition, breakage on gift cards is recognized proportionately as redemption occurs.

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​

The following table provides a summary of the changes included in deferred revenue during the 13 and 26 weeks ended August 3, 2024 and July 29, 2023:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

13 Weeks Ended

​

26 Weeks Ended

​

​

August 3,

​

July 29,

​

August 3,

​

July 29,

(In thousands)

​

2024

​

2023

​

2024

2023

Beginning balance

​

$

391,446

​

$

350,123

​

$

428,788

​

$

388,583

Additions to contract liabilities (1)

​

​

120,189

​

​

114,374

​

​

253,584

​

​

237,770

Deductions to contract liabilities (2)

​

​

(123,818)

​

​

(118,430)

​

​

(294,555)

​

​

(280,286)

Ending balance

​

$

387,817

​

$

346,067

​

$

387,817

​

$

346,067

(1)	Loyalty points and gift cards issued in the current period but not redeemed or expired.

(2)	Revenue recognized in the current period related to the beginning liability.

​

Other amounts included in deferred revenue were $7,170 and $8,186 at August 3, 2024 and July 29, 2023, respectively.

​

4.Goodwill and other intangible assets

Goodwill, which represents the excess of cost over the fair value of net assets acquired, was $10,870 at August 3, 2024, February 3, 2024, and July 29, 2023. No additional goodwill was recognized during the 13 and 26 weeks ended August 3, 2024. The recoverability of goodwill is reviewed annually during the fourth quarter or more frequently if an event occurs or circumstances change that would indicate that impairment may exist.

Other definite-lived intangible assets are amortized over their useful lives. The recoverability of intangible assets is reviewed whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.

​

5.Leases

The Company leases retail stores, distribution centers, fast fulfillment centers, market fulfillment centers, corporate offices, and certain equipment under non-cancelable operating leases with various expiration dates through 2036. All leases are classified as operating leases and generally have initial lease terms of 10 yearsand, when determined applicable, include renewal options under substantially the same terms and conditions as the original leases. Leases do not contain any material residual value guarantees or material restrictive covenants.

​

Lease cost

The majority of operating lease cost relates to retail stores, distribution centers, fast fulfillment centers, and market fulfillment centers and is classified within cost of sales. Operating lease cost for corporate offices is classified within selling, general and administrative expenses. Operating lease cost from the control date through store opening date is classified within pre-opening expenses.

​
The following table presents a summary of operating lease costs:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

13 Weeks Ended

​

26 Weeks Ended

​

​

August 3,

​

July 29,

​

August 3,

​

July 29,

(In thousands)

​

2024

​

2023

​

2024

​

2023

Operating lease cost

​

$

88,080

​

$

83,121

​

$

176,235

​

$

168,249

​

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Other information

The following table presents supplemental disclosures of cash flow information related to operating leases:

​	​	​	​	​	​	​
​		26 Weeks Ended
​	​	August 3,	​	July 29,
(In thousands)		2024	​	2023
Cash paid for operating lease liabilities (1)	​	$	203,766	​	$	196,638
Operating lease assets obtained in exchange for operating lease liabilities (non-cash)	​	​	188,686	​	​	140,750

(1)	Excludes $19,882and $17,450related to cash received for tenant incentives for the 26 weeks ended August 3, 2024 and July 29, 2023, respectively.

​

6.Commitments and contingencies

The Company is involved in various legal proceedings that are incidental to the conduct of the business including both class action and single plaintiff litigation. In the opinion of management, the amount of any liability with respect to these proceedings, either individually or in the aggregate, will not have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows.

​

7.Debt

On March 13, 2024, the Company entered into Amendment No. 3 to the Second Amended and Restated Loan Agreement (as so amended, the Loan Agreement) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and a Lender thereunder; Wells Fargo Bank, National Association and JPMorgan Chase Bank, N.A., as Lead Arrangers and Bookrunners; JPMorgan Chase Bank, N.A., as Syndication Agent and a Lender; PNC Bank, National Association, as Documentation Agent and a Lender; and the other lenders party thereto. The Loan Agreement matures on March 13, 2029, provides maximum revolving loans equal to the lesser of $800,000 or a percentage of eligible owned inventory and eligible owned receivables (which borrowing base may, at the election of the Company and satisfaction of certain conditions, include a percentage of qualified cash), contains a $50,000 subfacility for letters of credit and allows the Company to increase the revolving facility by an additional $200,000, subject to the consent by each lender and other conditions. The Loan Agreement contains a requirement to maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 during such periods when availability under the Loan Agreement falls below a specified threshold. Substantially all of the Company's assets are pledged as collateral for outstanding borrowings under the Loan Agreement. Outstanding borrowings bear interest, at the Company's election, at either a base rate plus a margin of 0.5% to 1.0% or the Term SecuredOvernightFinancing Rate plus a margin of 1.5% to 2.0%, and a credit spread adjustment of 0.10%, with such margins based on the Company's borrowing availability, and the unused line fee is 0.25% to 0.375% per annum.

As of August 3, 2024, February 3, 2024, and July 29, 2023, there were no borrowings outstanding under the credit facility.

As of August 3, 2024, the Company was in compliance with all terms and covenants of the Loan Agreement.

​

8.Fair value measurements

The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximates their estimated fair values due to the short maturities of these instruments.

Fair value is measured using inputs from the three levels of the fair value hierarchy, which are described as follows:

●	Level 1 - observable inputs such as quoted prices for identical instruments in active markets.

●	Level 2 - inputs other than quoted prices in active markets that are observable either directly or indirectly through corroboration with observable market data.

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●	Level 3 - unobservable inputs in which there is little or no market data, which would require the Company to develop its own assumptions.

​

As of August 3, 2024, February 3, 2024, and July 29, 2023, there were liabilities related to the non-qualified deferred compensation plan included in other long-term liabilities on the consolidated balance sheets of $48,720, $42,653, and $42,529, respectively. The liabilities are categorized as Level 2 as they are based on third-party reported values, which are based primarily on quoted market prices of underlying assets of the funds within the plan.

​

9.Stock-based compensation

Stock-based compensation expense is measured on the grant date based on the fair value of the award. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period for awards expected to vest. The estimated grant date fair value of stock options was determined using a Black-Scholes valuation model using the following weighted-average assumptions for the periods indicated:

​

​	​	​	​	​
​		​	​	​
​	​	26 Weeks Ended
​	​	August 3,	​	July 29,
​		2024		2023
Volatility rate		33.0%	​	45.0%
Average risk-free interest rate		4.4%	​	3.8%
Average expected life (in years)		3.5		3.4
Dividend yield		-		-

​

The expected volatility is based on the historical volatility of the Company's common stock. The risk-free interest rate is based on the United States Treasury yield curve in effect on the date of grant for the respective expected life of the option. The expected life represents the time the options granted are expected to be outstanding. The expected life of options granted is derived from historical data on Ulta Beauty stock option exercises. Forfeitures of stock options are estimated at the grant date based on historical rates of stock option activity and reduce the stock-based compensation expense recognized. The Company does not currently pay a regular dividend.

The Company granted 56 and 42 stock options during the 26 weeks ended August 3, 2024 and July 29, 2023, respectively. Stock-based compensation expense for stock options was $1,506 and $1,749 for the 13 weeks ended August 3, 2024 and July 29, 2023, respectively. Stock-based compensation expense for stock options was $3,185 and $3,219 for the 26 weeks ended August 3, 2024 and July 29, 2023, respectively. The weighted-average grant date fair value of these stock options was $157.66 and $199.15 for the 26 weeks ended August 3, 2024 and July 29, 2023, respectively. At August 3, 2024, there was approximately $15,252 of unrecognized stock-based compensation expense related to unvested stock options.

There were 51 and 45 restricted stock units issued during the 26 weeks ended August 3, 2024 and July 29, 2023, respectively. Stock-based compensation expense for restricted stock units was $4,997 and $4,934 for the 13 weeks ended August 3, 2024 and July 29, 2023, respectively. Stock-based compensation expense for restricted stock units was $9,385 and $9,293 for the 26 weeks ended August 3, 2024 and July 29, 2023, respectively. At August 3, 2024, there was approximately $39,738 of unrecognized stock-based compensation expense related to restricted stock units.

There were 71 and 33 performance-based restricted stock units issued during the 26 weeks ended August 3, 2024 and July 29, 2023, respectively. Stock-based compensation expense for performance-based restricted stock units was $2,687 and $5,135 for the 13 weeks ended August 3, 2024 and July 29, 2023, respectively. Stock-based compensation expense for performance-based restricted stock units was $6,702 and $9,027 for the 26 weeks ended August 3, 2024 and July 29, 2023, respectively. At August 3, 2024, there was approximately $25,089 of unrecognized stock-based compensation expense related to performance-based restricted stock units.

​

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10.Income taxes

Income tax expense reflects the federal statutory tax rate and the weighted average state statutory tax rate for the states in which the Company operates stores. Income tax expense of $81,171 for the 13 weeks ended August 3, 2024 represents an effective tax rate of 24.3%, compared to $95,989 of tax expense representing an effective tax rate of 24.2% for the 13 weeks ended July 29, 2023.

Income tax expense of $175,906 for the 26 weeks ended August 3, 2024 represents an effective tax rate of 23.7%, compared to $198,356 of tax expense representing an effective tax rate of 23.5% for the 26 weeks ended July 29, 2023.

​

On August 16, 2022, the Inflation Reduction Act of 2022 was enacted into law, which, among other things, introduced a 15% corporate alternative minimum tax on book income of certain large corporations and created a 1% excise tax on net share repurchases. The corporate alternative minimum tax is effective beginning in fiscal 2024 and did not have a material impact on the consolidated financial statements for the 13 and 26 weeks ended August 3, 2024. The excise tax applies to share repurchases made after December 31, 2022.

​

11.Net income per common share

The following is a reconciliation of net income and the number of shares of common stock used in the computation of net income per basic and diluted common share:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

13 Weeks Ended

​

26 Weeks Ended

​

​

August 3,

​

July 29,

​

August 3,

​

July 29,

(In thousands, except per share data)

2024

2023

2024

2023

Numerator:

​

​

​

​

​

​

​

​

​

​

​

​

Net income

$

252,556

​

$

300,102

​

$

565,669

​

$

647,153

​

​

​

​

​

​

​

​

​

​

​

​

​

Denominator:

​

​

​

​

​

​

​

​

​

​

​

​

Weighted-average common shares - Basic

​

​

47,505

​

​

49,617

​

​

47,815

​

​

49,885

Dilutive effect of stock options and non-vested stock

​

​

162

​

​

232

​

​

207

​

​

272

Weighted-average common shares - Diluted

​

​

47,667

​

​

49,849

​

​

48,022

​

​

50,157

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income per common share:

​

​

​

​

​

​

​

​

​

​

​

​

Basic

​

$

5.32

​

$

6.05

​

$

11.83

​

$

12.97

Diluted

​

$

5.30

​

$

6.02

​

$

11.78

​

$

12.90

​

The denominator for diluted net income per common share for the 13 weeks ended August 3, 2024 and July 29, 2023 excludes 184 and 127 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects. The denominator for diluted net income per common share for the 26 weeks ended August 3, 2024 and July 29, 2023 excludes 195 and 133 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects. Outstanding performance-based restricted stock units are included in the computation of dilutive shares only to the extent that the underlying performance conditions are satisfied prior to the end of the reporting period or would be considered satisfied if the end of the reporting period were the end of the related contingency period and the results would be dilutive under the treasury stock method.
​

12.Share repurchase program

In March 2022, the Board of Directors authorized a share repurchase program (the 2022 Share Repurchase Program) pursuant to which the Company could repurchase up to $2,000,000 of the Company's common stock. The 2022 Share Repurchase Program authorization revoked the previously authorized but unused amounts from the earlier share repurchase program. The 2022 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

​