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Ulta Beauty announced financial results for the 13-week period (fourth quarter) and 52-week period (fiscal year) ended February 1, 2014, which compares to the 14- and 53-week periods ended February 2, 2013.
“Ulta Beauty achieved excellent top line growth in the fourth quarter,” said Mary Dillon, Ulta’s CEO. “We delivered earnings growth consistent with our expectations and made significant progress with our key growth strategies. I am very proud of the team’s accomplishments during 2013, including the completion of the most ambitious store opening program in our company’s history; the addition of 25 significant new brands contributing to 7.9% annual comparable store sales growth; exciting growth in our loyalty program, now 13 million members strong; and rapid growth in Ulta.com, driven by major steps forward in our e-commerce platform and fulfillment capabilities.”
For the fourth quarter 2013, net sales increased 14.4% to $868.1 million from $758.8 million in the fourth quarter of fiscal 2012. Excluding the sales for the 53rd week of fiscal 2012 of approximately $55 million, sales increased 23.3%. Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 9.2% compared to an increase of 8.6% in the fourth quarter of fiscal 2012. And e-commerce comparable sales grew 82.5%. Operating income increased 10% to $114.1 million, or 13.1% of net sales, compared to $103.8 million, or 13.7% of net sales, in the fourth quarter of fiscal 2012; and net income increased 9.5% to $70.7 million compared to $64.5 million in the fourth quarter of fiscal 2012.
For the fiscal year 2013, net sales increased 20.3% to $2.67 billion from $2.22 billion in fiscal 2012. Excluding the sales for the 53rd week in fiscal 2012 of approximately $55 million, sales increased 23.3%. Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 7.9% compared to an increase of 9.3% in fiscal 2012; and e-commerce comparable sales grew 76.6%. Operating income increased 17% to $327.6 million, or 12.3% of net sales, compared to $280 million, or 12.6% of net sales, in fiscal 2012; and net income increased 17.6% to $202.8 million compared to $172.5 million in fiscal 2012.
During the fourth quarter, the company opened 11 stores located in California, Wisconsin, Louisiana, Florida, Washington, Virginia and Connecticut. Ulta ended the fourth quarter with 675 stores and square footage of 7,158,286, which represents a 22% increase in square footage compared to the fourth quarter of fiscal 2012.
For fiscal 2014, the company plans to achieve comparable sales growth of approximately 4–6%, including the impact of the e-commerce business; expand square footage by 15% with the opening of 100 net new stores; increase total sales in the mid-teens percentage range; remodel 12 locations; deliver earnings per share growth in the mid-teens percentage range, including incremental investments representing approximately $0.10 of earnings per share to fund brand awareness and guest experience initiatives, and excluding any potential accretion from share repurchases; incur capital expenditures of approximately $265 million in fiscal 2014, compared to $226 million in fiscal 2013; and generate free cash flow in excess of $100 million.
For the first quarter of fiscal 2014, the company currently expects net sales in the range of $693–704 million, compared to actual net sales of $582.7 million in the first quarter of fiscal 2013. Comparable sales for the first quarter of 2014, including e-commerce sales, are expected to increase 5–7%. The company reported a comparable sales increase of 6.7% in the first quarter of 2013.
“From a position of strength, we are making important investments to support the long-term growth and success of Ulta Beauty,” said Dillon. “We are building the right supply chain and systems to support 1,200 stores and a much larger e-commerce business, we are developing our customer loyalty programs and CRM capabilities, we are investing in brand awareness to drive new customer acquisition, and we are working to deliver a differentiated customer experience. All of these initiatives are designed to drive sustainable growth and create shareholder value.”