Ulta Beauty announces its results for the second quarter of fiscal year 2019

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BOLINGBROOK, Illinois – (BUSINESS WIRE) –

Net sales increased 12.0%

Comparable sales increased 6.2%

Diluted EPS increased 12.2% to $ 2.76

Update of the forecasts for the 2019 financial year

<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Ulta Beauty, Inc. (ULTA) announced today the financial results of the thirteen weeks ("second quarter") and twenty-six weeks ("first six months") ended August 3, 2019 compared to the same periods ended August 4, 2018. " data-reactid = "16"> Ulta Beauty, Inc. (ULTA) today announced its financial results for the thirteen-week period (the "second quarter") and the twenty-six-week period (the " first half ") ended August 3, 2019 compared to the same periods ended August 4, 2018.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = ""The Ulta Beauty team has recorded a new quarter of strong top-line performance, gross margin expansion and double-digit earnings growth," said Mary Dillon, general manager. "In the future, we have updated our outlook for fiscal 2019 to reflect the headwinds we currently see in the US cosmetics market. We remain confident that our differentiated, guest-driven business model will generate continuous market share gains and solid returns for our shareholders over the long term. "data-reactid =" 17 ">"The Ulta Beauty team has recorded a new quarter of strong top-line performance, gross margin expansion and double-digit earnings growth," said Mary Dillon, general manager. "In the future, we have updated our outlook for fiscal 2019 to reflect the headwinds we currently see in the US cosmetics market. We remain confident that our differentiated, guest-driven business model will generate continuous market share gains and solid returns for our shareholders over the long term.

For the second quarter of fiscal year 2019

Net sales increased 12.0% to $ 1,666.6 million from $ 1,488.2 million in the second quarter of fiscal 2018;
Like-for-like sales (store sales for at least 14 months and online sales) increased 6.2% from 6.5% in the second quarter of fiscal 2018. The increase in same-store sales was 6 , 2% was driven by transaction growth of 5.4% and 0.8%. % growth of the average ticket;
Gross margin as a percentage of net sales increased by 40 basis points to 36.4%, compared to 36.0% in the second quarter of fiscal 2018, mainly due to the improvement in revenues. merchandise margins arising from our marketing and merchandising strategies and the leverage of fixed store costs, partially offset by investments in our salon services;
Selling, general and administrative expenses as a percentage of net sales increased by 90 basis points to stand at 23.6%, compared to 22.7% in the second quarter of fiscal 2018, mainly in because of the reduction in corporate overhead related to investments in growth initiatives and in-store workforce. ;
Pre-opening costs increased to $ 5.0 million compared to $ 4.5 million in the second quarter of fiscal 2018. The real estate business in the second quarter of fiscal 2019 included 20 new stores, eight renovations and four relocations, compared to 19 new stores, seven renovations and a move in the second quarter of fiscal 2018;
Operating income increased 7.3% to $ 208.0 million, or 12.5% of net sales, compared to $ 193.8 million, or 13.0%. % of net business revenue, in the second quarter of fiscal year 2018;
The tax rate decreased to stand at 23.1%, compared to 23.9% in the second quarter of fiscal 2018. The lower effective tax rate is primarily attributable to an increase in federal tax credits;
Net income rose 8.7% to $ 161.3 million from $ 148.3 million in the second quarter of fiscal 2018; and
Diluted earnings per share increased by 12.2% to $ 2.76, which included a benefit of $ 0.04 primarily due to an increase in federal tax credits, compared to $ 2.46 in the second quarter of fiscal 2018, which included a benefit of $ 0.02 due to the recognition of income taxes. based compensation.

For the first six months of the 2019 fiscal year

Net sales increased 12.5% to $ 3,409.6 million compared to $ 3,031.9 million in the first half of fiscal 2018;
Comparable sales increased 6.6%, compared to an increase of 7.3% in the first half of fiscal 2018. The increase in comparable sales of 6.6% is explained by 4.8% growth in the number of transactions and 1.8% growth in average ticket prices;
Gross margin as a percentage of net sales increased by 50 basis points to 36.7% from 36.2% in the first half of fiscal 2018, mainly due to improved margins on merchandise driven by our marketing and merchandising strategies and by the leverage of fixed store costs, in part. offset by investments in our salon services and our supply chain operations;
Selling, general and overhead expenses, as a percentage of net sales, increased by 80 basis points to 23.3%, compared to 22.5% in the first half of fiscal year 2018. , mainly due to the reduction of debt overhead related to investments in growth initiatives and store labor, partly offset by the improvement of store fees and variable marketing due to cost control and higher sales volume;
Pre-opening costs decreased to $ 9.2 million from $ 9.8 million in the first half of fiscal 2018. The real estate business in the first half of the year was FY 2019 included 42 new stores, nine renovations and four removals, compared to 53 new stores, nine remodelings and one move in the first six months of fiscal 2018;
Operating income increased 10.4% to $ 445.6 million, or 13.1% of net sales, compared to $ 403.7 million, or 13.3% of net sales. % of net business revenue, in the first half of fiscal year 2018;
The tax rate decreased to stand at 21.3%, compared to 23.0% in the first half of fiscal 2018. The lower effective tax rate is primarily attributable to the accounting for income tax purposes for stock – based compensation;
Net income increased 13.0% to $ 353.5 million from $ 312.7 million in the first half of fiscal 2018; and
Diluted earnings per share increased by 16.7% to $ 6.02, including a benefit of $ 0.21 primarily due to income tax expense recognition for earnings-based compensation. compared to $ 5.16 for the first half of fiscal 2018, which included a $ 0.07 benefit related to stock-based compensation accounting.

Balance sheet

Merchandise inventories, net at the end of the second quarter of fiscal 2019, totaled $ 1,316.0 million, compared to $ 1,219.7 million at the end of the second quarter of fiscal year 2018 , which represents an increase of $ 96.3 million. The increase in total inventories is attributable to 89 new net stores. Average inventories per store are stable compared to the second quarter of fiscal 2018.

The company closed the second quarter of fiscal 2019 with $ 327.4 million in cash and cash equivalents and short-term investments.

Recent accounting position – Leases

On February 3, 2019, the Company adopted the Accounting Standards Coding Standard (ASC) 842 using the modified retrospective approach. The new standard requires leases to be recorded on the balance sheet as lease liabilities with corresponding assets with the right of use. At the time of the adoption, the Company recognized and measured the leases without revising the comparative information or the disclosures. The adoption of ASC 842 resulted in the recording of assets and liabilities under operating leases of $ 1.46 billion and $ 1.84 billion , respectively, February 3, 2019. As part of the adoption, the Company recorded an adjustment to retained earnings of $ 2.4 million.

Share repurchase program

During the second quarter of fiscal 2019, the Company repurchased 791,603 common shares at a cost of $ 270.9 million. During the first half of fiscal year 2019, the Company repurchased 1,110,034 common shares at a cost of $ 378.3 million. As at August 3, 2019, $ 517.3 million was available under the $ 875.0 million share repurchase program announced in March 2019.

Expansion of the store

During the second quarter of fiscal 2019, the Company opened 20 stores located in Bridgehampton, NY; Buena Park, CA; Collierville, TN; Colorado Springs, CO; Dallas, TX; Granbury, TX; Hamden, CT; Hilliard, OH; Lewiston, ID; Lake Moses, WA; Porter Ranch, CA; Reno, NV; Rio Grande, NJ; San Antonio, TX; San Ramon, CA; Sugar Land, TX; Terrell, TX; Trinity, FL; Troy, MI; and Wylie, TX. In addition, the company has closed three stores.

The Company closed the second quarter of fiscal 2019 with 1,213 stores and an area of 12,753,598 square feet, representing a 7.9% increase in square footage from the second quarter of 2018 fiscal year.

Perspective

The company has updated its outlook for the 2019 fiscal year to reflect the headwinds expected for the cosmetics sector across the sector. It currently provides for:

open approximately 80 new stores, complete approximately 20 retrofit or relocation projects, and approximately 270 store renovations;
increase total sales between 9% and 12% (a previously low double digit growth);
achieve comparable sales growth of about 4% to 6% (vs. 6% previously at 7%), including e-commerce growth of 20% to 30%;
operating profit margin deleveraging rate of the order of 60 to 70 basis points (previously, leverage of the order of 10 to 20 basis points);
generate diluted earnings per share of between $ 11.86 and $ 12.06 (compared with $ 12.83 to $ 13.03), including the impact of approximately $ 700 million in redemptions shares and assuming an effective tax rate of 23% (compared to 24% previously);
$ 340 to $ 350 million in capital expenditures (previously $ 380 to $ 400 million) and
depreciate approximately $ 300 million (previously $ 315 million).

As noted above, to align more closely with industry practices, the Company no longer provides quarterly outlooks. The Company will continue to provide annual outlooks, which will be updated quarterly as appropriate.

Teleconference Information

<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "A teleconference to discuss the second quarter of the year. Fiscal year 2019 Results are expected today, August 29, 2019, at 5:00 pm Eastern Time / 4:00 pm Central Time Investors and analysts wishing to participate in the teleconference are invited to attend. dial (877) 705-6003 also be live webcast http://ir.ultabeauty.com. The broadcast of the webcast will remain available for 90 days. A retransmission of the teleconference will be available until 11:59 pm. AND on September 12, 2019 and can be accessed by dialing (844) 512-2921 and entering Conference Identification Number 13693346. "data-reactid =" 62 "> Teleconference to discuss second quarter results fiscal year 2019 is scheduled for today, August 29, 2019, at 5:00 pm Eastern Time / 4:00 pm Central Time Investors and analysts wishing to participate in the The conference call will also be broadcast live on the Internet at http://ir.ultabeauty.com and a retransmission of the webcast will be available for 90 days. A retransmission of the teleconference will be available until 11:59 pm ET on September 12, 2019 and can be accessed by dialing (844) 512-2921 and entering Conference Identification Number 13693346.

About Ulta Beauty

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "At Ulta Beauty (ULTA), the possibilities are beautiful. Ulta Beauty is America's largest beauty retailer and premier beauty destination for cosmetics, fragrances, skin care products, hair care products and salon services. In 1990, the company reinvented the experience of retailing beauty products by offering a new way to shop for beauty – by bringing all things beauty together in one place. Today, Ulta Beauty has become the first national retailer offering full beauty experience. "Data-reactid =" 64 "> At Ulta Beauty (ULTA), the possibilities are magnificent: Ulta Beauty is the largest American beauty retailer and the first beauty destination for cosmetics, perfumes, skincare products skin, hair care products and salon services In 1990, the company reinvented the experience of retailing beauty products by offering a new way to shop for beauty – bringing together all the beauties at same location, Ulta Beauty has become the first national retailer to offer a complete beauty experience.

Ulta Beauty brings beauty to life every day in our stores and online with more than 25,000 products from around 500 well-established and emerging beauty brands in all categories and at all prices, including Ulta's own brand Beauty. Ulta Beauty also offers a full service salon in each store offering services for hair, skin, eyebrows and makeup.

<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Ulta Beauty is recognized for its commitment to personalized service , exciting, fun stores, and our industry-leading Ultamate Rewards loyalty program: Effective August 3, 2019, Ulta Beauty operates 1,213 retail stores in 50 states and distributes its products through its website, which includes collection of tips, tutorials, and social content For more information, visit www.ulta.com. "data-reactid =" 70 "> Ulta Beauty is recognized for its commitment to providing personalized service, attractive and attractive stores and its industry-leading loyalty program, Ultamate Rewards – as of August 3, 2019, Ulta Beauty operates 1,213 retail outlets in 50 states and also distributes its products on its website, which includes a collection of tips, tutorials and social content. For more information, visit www.ulta.com. com.

Forward-looking statements

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "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 our current views regarding: other things, future events and financial performance. You may identify such forward-looking statements by using forward looking terms such as "outlook", "believes", "plans", "plans", "estimates", "targets", "strategies" or any other comparable term. All forward-looking statements in this press release are based on our historical performance and current plans, estimates and expectations. The inclusion of this forward-looking information should not be construed as an affirmation on our part or on the part of any other person that future plans, estimates, objectives, strategies or expectations contemplated by us will be achieved. These forward-looking statements are subject to various risks and uncertainties, including: the evolution of the general level of consumer spending and the volatility of the economy; the possibility that we can not compete in our highly competitive markets; the possibility that the capacity of our distribution and order processing infrastructure and the performance of our recently opened or near-term distribution centers may not be sufficient to support our current and future growth plans provided; our ability to sustain our growth plans and successfully implement our long-term strategic and financial plan; the ability to execute our effective cost optimization program for growth; the possibility that cybersecurity violations and other disruptions could compromise our information or result in unauthorized disclosure of confidential information; the possibility of material disruption of our information systems; our ability to assess trends in beauty and respond in a timely manner to changing consumer preferences; the evolution of the wholesale price of our products; the potential for developer or roommate issues to impact new store openings and existing locations; our ability to attract and retain key executives; natural disasters that can have a negative impact on sales; our ability to successfully execute our common share repurchase program or to implement future share repurchase programs; and other risk factors detailed in our public filings with the Securities and Exchange Commission (the "SEC"), including the risk factors described in our annual report on Form 10-K for the US. fiscal year ended February 2, 2019, as they may be amended or supplemented in our quarterly reports on Form 10-Q. Our documents with the SEC are available at the following address: www.sec.gov. Except to the extent required by federal securities laws, the Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, events or otherwise. future or otherwise."data-reactid =" 72 ">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 our current views regarding: other things, future events and financial performance. You may identify such forward-looking statements by using forward looking terms such as "outlook", "believes", "plans", "plans", "estimates", "targets", "strategies" or any other comparable term. All forward-looking statements in this press release are based on our historical performance and current plans, estimates and expectations. The inclusion of this forward-looking information should not be construed as an affirmation on our part or on the part of any other person that future plans, estimates, objectives, strategies or expectations contemplated by us will be achieved. These forward-looking statements are subject to various risks and uncertainties, including: the evolution of the general level of consumer spending and the volatility of the economy; the possibility that we can not compete in our highly competitive markets; the possibility that the capacity of our distribution and order processing infrastructure and the performance of our recently opened or near-term distribution centers may not be sufficient to support our current and future growth plans provided; our ability to sustain our growth plans and successfully implement our long-term strategic and financial plan; the ability to execute our effective cost optimization program for growth; the possibility that cybersecurity violations and other disruptions could compromise our information or result in unauthorized disclosure of confidential information; the possibility of material disruption of our information systems; our ability to assess trends in beauty and respond in a timely manner to changing consumer preferences; the evolution of the wholesale price of our products; the potential for developer or roommate issues to impact new store openings and existing locations; our ability to attract and retain key executives; natural disasters that can have a negative impact on sales; our ability to successfully execute our common share repurchase program or to implement future share repurchase programs; and other risk factors detailed in our public filings with the Securities and Exchange Commission (the "SEC"), including the risk factors described in our annual report on Form 10-K for the US. fiscal year ended February 2, 2019, as they may be amended or supplemented in our quarterly reports on Form 10-Q. Our SEC filings are available at www.sec.gov. Except to the extent required by federal securities laws, the Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, events or otherwise. future or otherwise.

Room 1
Ulta Beauty, Inc. Consolidated statements of income (In thousands, except per share data)

	13 weeks completed
	August 3					August 4th
	2019					2018
	(Not verified)					(Not verified)
Net sales	$	1,666,607		100.0	%	$	1,488,221		100.0	%
Cost of sales		1,060,708		63.6	%		952,760		64.0	%
Gross profit		605,899		36.4	%		535461		36.0	%

Selling, general and administrative expenses		392843		23.6	%		337.142		22.7	%
Pre-opening fee		5,038		0.3	%		4,504		0.3	%
Operating product		208,018		12.5	%		193,815		13.0	%
Net interest		(1,671	)	0.1	%		(1,143	)	0.1	%
Income before taxes		209,689		12.6	%		194,958		13.1	%
The income tax expense		48,431		2.9	%		46,635		3.1	%
Net revenue	$	161,258		9.7	%	$	148,323		10.0	%

Net income per common share:
Basic	$	2.77				$	2.47
Diluted	$	2.76				$	2.46

Weighted average number of ordinary shares outstanding:
Basic		58171					60,070
Diluted		58,446					60,375

Room 2
Ulta Beauty, Inc. Consolidated statements of income (In thousands, except per share data)

	26 weeks completed
	August 3					August 4th
	2019					2018
	(Not verified)					(Not verified)
Net sales	$	3,409,636		100.0	%	$	3,031,888		100.0	%
Cost of sales		2,158,890		63.3	%		1,935,714		63.8	%
Gross profit		1,250,746		36.7	%		1,096,174		36.2	%

Selling, general and administrative expenses		795,976		23.3	%		682.766		22.5	%
Pre-opening fee		9,212		0.3	%		9,751		0.3	%
Operating product		445.558		13.1	%		403.657		13.3	%
Net interest		(3,717	)	0.1	%		(2,468	)	0.1	%
Income before taxes		449.275		13.2	%		406.125		13.4	%
The income tax expense		95,796		2.8	%		93,406		3.1	%
Net revenue	$	353.479		10.4	%	$	312,719		10.3	%

Net income per common share:
Basic	$	6.05				$	5.18
Diluted	$	6.02				$	5.16

Weighted average number of ordinary shares outstanding:
Basic		58,401					60340
Diluted		58,718					60,630

Exhibit 3
Ulta Beauty, Inc. Condensed Consolidated Balance Sheets (In thousands)

	August 3		February 2		August 4th
	2019		2019		2018
	(Not verified)				(Not verified)
Assets
Active in the short term:
Cash and cash equivalents	$	177,398	$	409.251	$	237 107
short-term investments		150,000		–		149,000
Net claims		107,263		136 168		103,666
Stocks of goods, net		1,315,999		1,214,329		1,219,685
Expenses paid in advance and other current assets		131,171		138 116		103,618
Taxes on income paid in advance		38,769		16,997		17,082
Total current assets		1,920,600		1,914,861		1,830,158

Property and equipment, net		1,219,948		1,226,029		1,212,978
Rental capital		1,499,556		–		–
Good will		10,870		10,870		–
Other intangible assets, net		3,854		4,317		–
Deferred compensation plan assets		24,665		20,511		19,585
Other long-term assets		30,882		14,584		10,628
Total assets	$	4,710,375	$	3,191 172	$	3073349

Liabilities and equity
Current liabilities:
Accounts payable	$	450.117	$	404,016	$	409,849
Fees to pay		224.202		220 666		202,999
Deferred revenue		182,354		199,054		145,907
Current lease liabilities outstanding		208,261		–		–
Total current liabilities		1,064,934		823.736		758 755

Non-current operating lease liabilities		1,683,743		–		–
Deferred rent		–		434.980		422,455
Deferred taxes		86,598		83,864		49,700
Other long-term liabilities		35,649		28,374		29,961
Total responsibilities		2,870,924		1,370,954		1,260,871

Commitments and contingencies

Total equity of shareholders		1,839,451		1,820,218		1,812,478
Total liabilities and equity	$	4,710,375	$	3,191 172	$	3073349

Room 4
Ulta Beauty, Inc. Consolidated statements of cash flows (In thousands)

	26 weeks completed
	August 3			August 4th
	2019			2018
	(Not verified)			(Not verified)
Operations activities
Net revenue	$	353.479		$	312,719
Adjustments to reconcile net income to net cash generated by operating activities:
Depreciation and amortization		144,951			137,815
Non-monetary leasing costs		152.134			–
Deferred taxes		2,734			612
Stock-based compensation charge		12,766			13,172
Loss on the disposition of property and equipment		3,215			499
Variation of operating assets and liabilities:
receivables		11,437			(3,947	)
Stocks of goods		(101,670	)		(123,261	)
Expenses paid in advance and other current assets		(18,315	)		(4,952	)
Income taxes		(21,772	)		(29,694	)
Accounts payable		46.101			84,091
Fees to pay		(2,629	)		(6.572	)
Deferred revenue		(16,700	)		(6,577	)
Operating lease liabilities		(138.557	)		–
Deferred rent		–			14.539
Other assets and liabilities		20.162			(441	)
Net cash provided by operating activities		447.336			388.003

Investing activities
Purchases of short-term investments		(245,000	)		(558.163	)
Proceeds from short-term investments		95,000			529.163
Purchases of property and equipment		(151.213	)		(141.691	)
Purchases of equity investments		(33.339	)		–
Net cash used in investing activities		(334.552	)		(170.691	)

Financing activities
Repurchase of common shares		(378.300	)		(260.452	)
Stock exercised options		42.935			8.448
Purchase of treasury shares		(9.272	)		(5,646	)
Net cash used in financing activities		(344.637	)		(257.650	)

Net decrease in cash and cash equivalents		(231.853	)		(40.338	)
Cash and cash equivalents at beginning of period		409.251			277.445
Cash and cash equivalents at end of period	$	177.398		$	237.107

Exhibit 5
2019 Store Expansion

	Total open blinds	Number of stores	Number of stores	Total stores
	at beginning of the	opened during the	closed during the	open to
Fiscal 2019	quarter	quarter	quarter	end of the quarter
1^st Quarter	1,174	22	0	1,196
2^{North Dakota} Quarter	1,196	20	3	1,213


		Gross square feet for
	Total gross square	open gold blinds	Gross square feet for	Total gross square
	feet at beginning of	expanded during the	blinds closed	feet at end of the
Fiscal 2019	the quarter	quarter	during the quarter	quarter
1^st Quarter	12337145	236.596	0	12573741
2^{North Dakota} Quarter	12573741	209.469	29.612	12753598

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