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 October ~~31, 2020~~30, 2021

☐ 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 NASDAQ Global 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 definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large ~~Accelerated Filer~~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 November ~~30, 2020~~29, 2021 was ~~56,338,639~~54,120,173 shares.

Table of Contents

ULTA BEAUTY, INC.

TABLE OF CONTENTS


Part I - Financial Information

Item 1. Financial Statements
Consolidated Balance Sheets		3
Consolidated Statements of ~~Operations~~Income		4
Consolidated Statements of Comprehensive Income		5
Consolidated Statements of Cash Flows		6
Consolidated Statements of Stockholders’ Equity		7
Notes to Consolidated Financial Statements		9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19

Item 3. Quantitative and Qualitative Disclosures about Market Risk		3128

Item 4. Controls and Procedures		3229

Part II - Other Information		3229

Item 1. Legal Proceedings		3229

Item 1A. Risk Factors		3229

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		3230

Item 3. Defaults Upon Senior Securities		3330

Item 4. Mine Safety Disclosures		3330

Item 5. Other Information		3330

Item 6. Exhibits		3431

SIGNATURES		3532

Table of Contents

Part I - Financial Information

Item 1.Financial Statements

Ulta Beauty, Inc.

Consolidated Balance Sheets

October 31,

February 1,

November 2,
(In thousands, except per share data)

2020

2020

2019
Assets

(Unaudited)

(Unaudited)
Current assets:

Cash and cash equivalents

$
560,902

$
392,325

$
208,843
Short-term investments

—

110,000

—
Receivables, net

136,271

139,337

112,888
Merchandise inventories, net

1,439,098

1,293,701

1,616,920
Prepaid expenses and other current assets

99,810

103,567

118,343
Prepaid income taxes

8,928

16,387

40,474
Total current assets

2,245,009

2,055,317

2,097,468

Property and equipment, net

1,042,262

1,205,524

1,233,412
Operating lease assets

1,510,030

1,537,565

1,529,524
Goodwill

10,870

10,870

10,870
Other intangible assets, net

2,696

3,391

3,622
Deferred compensation plan assets

30,141

27,849

26,269
Other long-term assets

29,986

23,356

27,683
Total assets

$
4,870,994

$
4,863,872

$
4,928,848

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$
478,501

$
414,009

$
594,993
Accrued liabilities

268,310

246,088

249,112
Deferred revenue

224,862

237,535

190,188
Current operating lease liabilities

252,171

239,629

222,627
Accrued income taxes

6,499

—

—
Total current liabilities

1,230,343

1,137,261

1,256,920

Non-current operating lease liabilities

1,661,750

1,698,718

1,706,806
Deferred income taxes

89,112

89,367

83,856
Other long-term liabilities

35,352

36,432

34,110
Total liabilities

3,016,557

2,961,778

3,081,692

Commitments and contingencies (Note 8)

Stockholders' equity:

Common stock, $0.01 par value, 400,000 shares authorized; 57,024, 57,285 and 57,959 shares issued; 56,332, 56,609 and 57,283 shares outstanding; at October 31, 2020 (unaudited), February 1, 2020, and November 2, 2019 (unaudited), respectively

570

573

580
Treasury stock-common, at cost

(37,704)

(34,448)

(34,272)
Additional paid-in capital

831,817

807,492

800,986
Retained earnings

1,059,840

1,128,477

1,079,862
Accumulated other comprehensive income (loss)

(86)

—

—
Total stockholders’ equity

1,854,437

1,902,094

1,847,156
Total liabilities and stockholders’ equity

$
4,870,994

$
4,863,872

$
4,928,848


	October 30,		January 30,		October 31,
(In thousands, except per share data)	2021		2021		2020
Assets		(Unaudited)				(Unaudited)
Current assets:
Cash and cash equivalents	$	605,053	$	1,046,051	$	560,902
Receivables, net		169,212		193,109		136,271
Merchandise inventories, net		1,916,343		1,168,215		1,439,098
Prepaid expenses and other current assets		105,584		107,402		99,810
Prepaid income taxes		37,501		—		8,928
Total current assets		2,833,693		2,514,777		2,245,009

Property and equipment, net		908,665		995,795		1,042,262
Operating lease assets		1,464,533		1,504,614		1,510,030
Goodwill		10,870		10,870		10,870
Other intangible assets, net		1,770		2,465		2,696
Deferred compensation plan assets		36,403		33,223		30,141
Other long-term assets		31,833		28,225		29,986
Total assets	$	5,287,767	$	5,089,969	$	4,870,994

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	747,451	$	477,052	$	478,501
Accrued liabilities		329,672		296,334		268,310
Deferred revenue		272,628		274,383		224,862
Current operating lease liabilities		274,365		253,415		252,171
Accrued income taxes		—		42,529		6,499
Total current liabilities		1,624,116		1,343,713		1,230,343

Non-current operating lease liabilities		1,565,921		1,643,386		1,661,750
Deferred income taxes		67,267		65,359		89,112
Other long-term liabilities		43,663		37,962		35,352
Total liabilities		3,300,967		3,090,420		3,016,557

Commitments and contingencies (Note 7)

Stockholders' equity:
Common stock, $0.01 par value, 400,000 shares authorized; 54,907, 56,952 and 57,024 shares issued; 54,170, 56,260 and 56,332 shares outstanding; at October 30, 2021 (unaudited), January 30, 2021, and October 31, 2020 (unaudited), respectively		549		569		570
Treasury stock-common, at cost		(53,312)		(37,801)		(37,704)
Additional paid-in capital		915,814		847,303		831,817
Retained earnings		1,123,749		1,189,422		1,059,840
Accumulated other comprehensive income (loss)		—		56		(86)
Total stockholders’ equity		1,986,800		1,999,549		1,854,437
Total liabilities and stockholders’ equity	$	5,287,767	$	5,089,969	$	4,870,994

See accompanying notes to consolidated financial statements.

Table of Contents

Ulta Beauty, Inc.

Consolidated Statements of ~~Operations~~Income

(Unaudited)


	13 Weeks Ended				39 Weeks Ended				13 Weeks Ended				39 Weeks Ended
	October 31,		November 2,		October 31,		November 2,		October 30,		October 31,		October 30,		October 31,
(In thousands, except per share data)	2020		2019		2020		2019		2021		2020		2021		2020
Net sales	$	1,552,033	$	1,682,514	$	3,953,252	$	5,092,150	$	1,995,775	$	1,552,033	$	5,901,501	$	3,953,252
Cost of sales		1,006,514		1,059,081		2,775,121		3,217,971		1,206,301		1,006,514		3,560,276		2,775,121
Gross profit		545,519		623,433		1,178,131		1,874,179		789,474		545,519		2,341,225		1,178,131

Selling, general and administrative expenses		416,378		449,198		1,068,877		1,245,174		503,403		416,378		1,411,577		1,068,877
Impairment, restructuring and other costs		23,624		—		83,924		—		—		23,624		—		83,924
Pre-opening expenses		4,240		6,455		12,782		15,667		1,832		4,240		7,778		12,782
Operating income		101,277		167,780		12,548		613,338		284,239		101,277		921,870		12,548
Interest expense (income), net		1,383		(900)		5,272		(4,617)
Interest expense, net										413		1,383		1,196		5,272
Income before income taxes		99,894		168,680		7,276		617,955		283,826		99,894		920,674		7,276
Income tax expense		25,096		38,933		2,935		134,729		68,537		25,096		224,203		2,935
Net income	$	74,798	$	129,747	$	4,341	$	483,226	$	215,289	$	74,798	$	696,471	$	4,341

Net income per common share:
Basic	$	1.33	$	2.25	$	0.08	$	8.31	$	3.97	$	1.33	$	12.68	$	0.08
Diluted	$	1.32	$	2.25	$	0.08	$	8.27	$	3.94	$	1.32	$	12.60	$	0.08

Weighted average common shares outstanding:
Basic		56,327		57,568		56,355		58,123		54,291		56,327		54,921		56,355
Diluted		56,546		57,763		56,524		58,396		54,660		56,546		55,280		56,524

See accompanying notes to consolidated financial statements.

Table of Contents

Ulta Beauty, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)


	13 Weeks Ended				39 Weeks Ended				13 Weeks Ended				39 Weeks Ended
	October 31,		November 2,		October 31,		November 2,		October 30,		October 31,		October 30,		October 31,
(In thousands)	2020		2019		2020		2019		2021		2020		2021		2020
Net income	$	74,798	$	129,747	$	4,341	$	483,226	$	215,289	$	74,798	$	696,471	$	4,341
Other comprehensive income (loss):
Other comprehensive income:
Foreign currency translation adjustments		(116)		—		(86)		—		—		(116)		—		(86)
Comprehensive income	$	74,682	$	129,747	$	4,255	$	483,226	$	215,289	$	74,682	$	696,471	$	4,255

See accompanying notes to consolidated financial statements.

Table of Contents

Ulta Beauty, Inc.

Consolidated Statements of Cash Flows

(Unaudited)


	39 Weeks Ended
	October 30,		October 31,
(In thousands)	2021		2020
Operating activities
Net income	$	696,471	$	4,341
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		204,734		226,386
Non-cash lease expense		206,017		196,354
Long-lived asset impairment charge		—		69,932
Deferred income taxes		1,908		(255)
Stock-based compensation expense		38,217		22,979
Loss on disposal of property and equipment		3,357		5,219
Change in operating assets and liabilities:
Receivables		23,897		3,066
Merchandise inventories		(748,128)		(145,397)
Prepaid expenses and other current assets		1,818		3,007
Income taxes		(80,027)		13,958
Accounts payable		266,104		62,337
Accrued liabilities		24,482		24,582
Deferred revenue		(1,755)		(12,673)
Operating lease liabilities		(222,451)		(212,665)
Other assets and liabilities		213		(2,126)
Net cash provided by operating activities		414,857		259,045

Investing activities
Proceeds from short-term investments		—		110,000
Capital expenditures		(108,418)		(116,745)
Acquisitions, net of cash acquired		—		(1,220)
Purchases of equity investments		—		(5,665)
Net cash used in investing activities		(108,418)		(13,630)

Financing activities
Proceeds from long-term debt		—		800,000
Payments on long-term debt		—		(800,000)
Repurchase of common shares		(762,167)		(72,981)
Stock options exercised		30,297		1,346
Purchase of treasury shares		(15,511)		(3,256)
Debt issuance costs		—		(1,861)
Net cash used in financing activities		(747,381)		(76,752)

Effect of exchange rate changes on cash and cash equivalents		(56)		(86)
Net increase (decrease) in cash and cash equivalents		(440,998)		168,577
Cash and cash equivalents at beginning of period		1,046,051		392,325
Cash and cash equivalents at end of period	$	605,053	$	560,902

Supplemental information
Cash paid for interest	$	1,594	$	701
Income taxes paid, net of refunds		301,312		8,100
Non-cash capital expenditures		13,148		27,916

See accompanying notes to consolidated financial statements.

Table of Contents

Ulta Beauty, Inc.

Consolidated Statements of Stockholders’ Equity

(Unaudited)

39 Weeks Ended

October 31,

November 2,
(In thousands)

2020

2019
Operating activities

Net income

$
4,341

$
483,226
Adjustments to reconcile net income to net cash provided by operating activities:


Depreciation and amortization

226,386

219,207
Non-cash lease expense

196,354

219,220
Long-lived asset impairment charge

69,932

—
Deferred income taxes

(255)

(8)
Stock-based compensation expense

22,979

19,108
Loss on disposal of property and equipment

5,219

4,821
Change in operating assets and liabilities:

Receivables

3,066

5,812
Merchandise inventories

(145,397)

(402,591)
Prepaid expenses and other current assets

3,007

(5,487)
Income taxes

13,958

(23,477)
Accounts payable

62,337

190,977
Accrued liabilities

24,582

23,109
Deferred revenue

(12,673)

(8,866)
Operating lease liabilities

(212,665)

(198,181)
Other assets and liabilities

(2,126)

30,636
Net cash provided by operating activities

259,045

557,506

Investing activities

Purchases of short-term investments

—

(245,000)
Proceeds from short-term investments

110,000

245,000
Capital expenditures

(116,745)

(241,136)
Acquisitions, net of cash acquired

(1,220)

—
Purchases of equity investments

(5,665)

(43,757)
Net cash used in investing activities

(13,630)

(284,893)

Financing activities

Proceeds from long-term debt

800,000

—
Payments on long-term debt

(800,000)

—
Repurchase of common shares

(72,981)

(506,868)
Stock options exercised

1,346

43,211
Purchase of treasury shares

(3,256)

(9,364)
Debt issuance costs

(1,861)

—
Net cash used in financing activities

(76,752)

(473,021)

Effect of exchange rate changes on cash and cash equivalents

(86)

—
Net increase (decrease) in cash and cash equivalents

168,577

(200,408)
Cash and cash equivalents at beginning of period

392,325

409,251
Cash and cash equivalents at end of period

$
560,902

$
208,843

Supplemental information

Cash paid for interest

$
701

$
—
Income taxes paid, net of refunds


8,100

126,719
Non-cash capital expenditures

27,916

44,271


				Treasury -							Accumulated
	Common Stock			Common Stock			Additional				Other		Total
	Issued			Treasury			Paid-In		Retained		Comprehensive		Stockholders'
(In thousands)	Shares	Amount		Shares	Amount		Capital		Earnings		Income		Equity
Balance – January 30, 2021	56,952	$	569	(692)	$	(37,801)	$	847,303	$	1,189,422	$	56	$	1,999,549
Net income	—		—	—		—		—		230,289		—		230,289
Stock-based compensation	—		—	—		—		8,978		—		—		8,978
Foreign currency translation adjustments	—		—	—		—		—		—		(56)		(56)
Stock options exercised and other awards	94		1	—		—		5,031		—		—		5,032
Purchase of treasury shares	—		—	(21)		(6,766)		—		—		—		(6,766)
Repurchase of common shares	(1,243)		(12)	—		—		—		(392,297)		—		(392,309)
Balance – May 1, 2021	55,803	$	558	(713)	$	(44,567)	$	861,312	$	1,027,414	$	—	$	1,844,717
Net income	—		—	—		—		—		250,893		—		250,893
Stock-based compensation	—		—	—		—		10,119		—		—		10,119
Stock options exercised and other awards	104		1	—		—		17,775		—		—		17,776
Purchase of treasury shares	—		—	(1)		(208)		—		—		—		(208)
Repurchase of common shares	(747)		(8)	—		—		—		(243,476)		—		(243,484)
Balance – July 31, 2021	55,160	$	551	(714)	$	(44,775)	$	889,206	$	1,034,831	$	—	$	1,879,813
Net income	—		—	—		—		—		215,289		—		215,289
Stock-based compensation	—		—	—		—		19,120		—		—		19,120
Stock options exercised and other awards	87		1	—		—		7,488		—		—		7,489
Purchase of treasury shares	—		—	(23)		(8,537)		—		—		—		(8,537)
Repurchase of common shares	(340)		(3)	—		—		—		(126,371)		—		(126,374)
Balance – October 30, 2021	54,907	$	549	(737)	$	(53,312)	$	915,814	$	1,123,749	$	—	$	1,986,800

See accompanying notes to consolidated financial statements.

Table of Contents

Ulta Beauty, Inc.

Consolidated Statements of Stockholders’ Equity

(Unaudited)

Treasury -

Accumulated

Common Stock

Common Stock

Additional

Other

Total

Issued

Treasury

Paid-In

Retained

Comprehensive

Stockholders'
(In thousands)

Shares

Amount

Shares

Amount

Capital

Earnings

Income (Loss)

Equity
Balance – February 1, 2020

57,285

$
573

(676)

$
(34,448)

$
807,492

$
1,128,477

$
—

$
1,902,094
Net loss

—

—

—

—

—

(78,509)

—

(78,509)
Stock-based compensation

—

—

—

—

6,182

—

—

6,182
Foreign currency translation adjustments

—

—

—

—

—

—

(75)

(75)
Stock options exercised and other awards

45

—

—

—

250

—

—

250
Purchase of treasury shares

—

—

(15)

(3,002)

—

—

—

(3,002)
Repurchase of common shares

(327)

(3)

—

—

—

(72,978)

—

(72,981)
Balance – May 2, 2020

57,003

$
570

(691)

$
(37,450)

$
813,924

$
976,990

$
(75)

$
1,753,959
Net income

—

—

—

—

—

8,052

—

8,052
Stock-based compensation

—

—

—

—

8,413

—

—

8,413
Foreign currency translation adjustments

—

—

—

—

—

—

105

105
Stock options exercised and other awards

11

—

—

—

327

—

—

327
Purchase of treasury shares

—

—

—

(63)

—

—

—

(63)
Balance – August 1, 2020

57,014

$
570

(691)

$
(37,513)

$
822,664

$
985,042

$
30

$
1,770,793
Net income

—

—

—

—

—

74,798

—

74,798
Stock-based compensation

—

—

—

—

8,384

—

—

8,384
Foreign currency translation adjustments

—

—

—

—

—

—

(116)

(116)
Stock options exercised and other awards

10

—

—

—

769

—

—

769
Purchase of treasury shares

—

—

(1)

(191)

—

—

—

(191)
Balance – October 31, 2020

57,024

$
570

(692)

$
(37,704)

$
831,817

$
1,059,840

$
(86)

$
1,854,437

~~See accompanying notes to consolidated financial statements.~~

~~Table of Contents~~

~~Ulta Beauty, Inc.~~

~~Consolidated Statements of Stockholders’ Equity~~

~~(Unaudited)~~


				Treasury -												Treasury -							Accumulated
	Common Stock			Common Stock			Additional				Total		Common Stock			Common Stock			Additional				Other		Total
	Issued			Treasury			Paid-In		Retained		Stockholders'		Issued			Treasury			Paid-In		Retained		Comprehensive		Stockholders'
(In thousands)	Shares	Amount		Shares	Amount		Capital		Earnings		Equity		Shares	Amount		Shares	Amount		Capital		Earnings		Income (Loss)		Equity
Balance – February 2, 2019	59,232	$	592	(648)	$	(24,908)	$	738,671	$	1,105,863	$	1,820,218
Net income	—		—	—		—		—		192,221		192,221
Balance – February 1, 2020													57,285	$	573	(676)	$	(34,448)	$	807,492	$	1,128,477	$	—	$	1,902,094
Net loss													—		—	—		—		—		(78,509)		—		(78,509)
Stock-based compensation	—		—	—		—		6,030		—		6,030	—		—	—		—		6,182		—		—		6,182
Adoption of accounting standards - ASC 842	—		—	—		—		—		(2,375)		(2,375)
Foreign currency translation adjustments													—		—	—		—		—		—		(75)		(75)
Stock options exercised and other awards	348		4	—		—		42,052		—		42,056	45		—	—		—		250		—		—		250
Purchase of treasury shares	—		—	(27)		(9,183)		—		—		(9,183)	—		—	(15)		(3,002)		—		—		—		(3,002)
Repurchase of common shares	(318)		(3)	—		—		—		(107,396)		(107,399)	(327)		(3)	—		—		—		(72,978)		—		(72,981)
Balance – May 4, 2019	59,262	$	593	(675)	$	(34,091)	$	786,753	$	1,188,313	$	1,941,568
Balance – May 2, 2020													57,003	$	570	(691)	$	(37,450)	$	813,924	$	976,990	$	(75)	$	1,753,959
Net income	—		—	—		—		—		161,258		161,258	—		—	—		—		—		8,052		—		8,052
Stock-based compensation	—		—	—		—		6,736		—		6,736	—		—	—		—		8,413		—		—		8,413
Foreign currency translation adjustments													—		—	—		—		—		—		105		105
Stock options exercised and other awards	15		—	—		—		879		—		879	11		—	—		—		327		—		—		327
Purchase of treasury shares	—		—	—		(89)		—		—		(89)	—		—	—		(63)		—		—		—		(63)
Repurchase of common shares	(792)		(8)	—		—		—		(270,893)		(270,901)
Balance – August 3, 2019	58,485	$	585	(675)	$	(34,180)	$	794,368	$	1,078,678	$	1,839,451
Balance – August 1, 2020													57,014	$	570	(691)	$	(37,513)	$	822,664	$	985,042	$	30	$	1,770,793
Net income	—		—	—		—		—		129,747		129,747	—		—	—		—		—		74,798		—		74,798
Stock-based compensation	—		—	—		—		6,342		—		6,342	—		—	—		—		8,384		—		—		8,384
Foreign currency translation adjustments													—		—	—		—		—		—		(116)		(116)
Stock options exercised and other awards	4		—	—		—		276		—		276	10		—	—		—		769		—		—		769
Purchase of treasury shares	—		—	(1)		(92)		—		—		(92)	—		—	(1)		(191)		—		—		—		(191)
Repurchase of common shares	(530)		(5)	—		—		—		(128,563)		(128,568)
Balance – November 2, 2019	57,959	$	580	(676)	$	(34,272)	$	800,986	$	1,079,862	$	1,847,156

Balance – October 31, 2020													57,024	$	570	(692)	$	(37,704)	$	831,817	$	1,059,840	$	(86)	$	1,854,437

See accompanying notes to consolidated financial statements.

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Ulta Beauty, Inc.

Notes to Consolidated Financial Statements

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

1.Business and basis of presentation

~~On January 29, 2017, Ulta Salon, Cosmetics & Fragrance, Inc. implemented a holding company reorganization. Pursuant~~The Company was founded in 1990 to the reorganization, Ulta Beauty, Inc., which was incorporated as a Delaware corporation in December 2016, became the successor to Ulta Salon, Cosmetics & Fragrance, Inc., the former publicly-traded companyoperate specialty retail stores selling cosmetics, fragrance, haircare and ~~now a wholly owned subsidiary of Ulta Beauty, Inc.~~skincare products, and related accessories and services. The stores also feature full-service salons. 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.

The Company was originally founded in 1990 to operate specialty retail stores selling cosmetics, fragrance, haircare and skincare products, and related accessories and services. The stores also feature full-service salons. As of October ~~31, 2020,~~30, 2021, the Company operated ~~1,262~~1,302 stores across 50 states, as shown in the table below.

Number of

Number of
Location

stores

Location

stores
Alabama

22

Montana

6
Alaska

3

Nebraska

5
Arizona

30

Nevada

15
Arkansas

10

New Hampshire

7
California

156

New Jersey

41
Colorado

26

New Mexico

7
Connecticut

17

New York

49
Delaware

3

North Carolina

34
Florida

86

North Dakota

3
Georgia

38

Ohio

43
Hawaii

4

Oklahoma

21
Idaho

9

Oregon

17
Illinois

55

Pennsylvania

44
Indiana

24

Rhode Island

3
Iowa

10

South Carolina

20
Kansas

13

South Dakota

3
Kentucky

15

Tennessee

27
Louisiana

18

Texas

117
Maine

3

Utah

14
Maryland

27

Vermont

1
Massachusetts

21

Virginia

30
Michigan

48

Washington

34
Minnesota

18

West Virginia

7
Mississippi

10

Wisconsin

20
Missouri

25

Wyoming

3

Total

1,262


	Number of		Number of
Location	stores	Location	stores
Alabama	24	Montana	6
Alaska	3	Nebraska	5
Arizona	30	Nevada	15
Arkansas	11	New Hampshire	8
California	162	New Jersey	43
Colorado	26	New Mexico	7
Connecticut	18	New York	52
Delaware	3	North Carolina	39
Florida	90	North Dakota	3
Georgia	40	Ohio	45
Hawaii	4	Oklahoma	21
Idaho	9	Oregon	16
Illinois	55	Pennsylvania	45
Indiana	24	Rhode Island	3
Iowa	11	South Carolina	22
Kansas	13	South Dakota	3
Kentucky	15	Tennessee	28
Louisiana	18	Texas	119
Maine	3	Utah	14
Maryland	27	Vermont	1
Massachusetts	23	Virginia	30
Michigan	49	Washington	35
Minnesota	19	West Virginia	7
Mississippi	10	Wisconsin	20
Missouri	25	Wyoming	3
		Total	1,302

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

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recurring nature, necessary to fairly state the financial position and results of operations and cash flows for the interim periods presented.

The novel coronavirus (COVID-19) pandemic has had, and will continue to have, a negative impact on the Company’s business, financial condition, profitability, cash flows, and supply chain, although the full extent is uncertain. See Note 3, “ImpactTable of ~~the COVID-19 pandemic,” for additional details. In addition, the~~Contents

The Company’s business is subject to seasonal fluctuation, with significant portions of ~~the Company’s~~ net sales and net income being realized during the fourth quarter of the fiscal year due to the holiday selling season. ~~As a result, the~~The results for the 13 and 39 weeks ended October ~~31, 2020~~30, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending January ~~30, 2021,~~29, 2022, or for any other future interim period or for any future ~~year.~~year, in particular as a result of the uncertainty around the continuing effects of the COVID-19 pandemic on future periods.

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 1, 2020.~~January 30, 2021. 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 ~~the Company’s~~ significant accounting policies is contained in Note 2, “Summary of significant accounting policies,” to the consolidated financial statements in the ~~Company’s~~ Annual Report on Form 10-K for the year ended ~~February 1, 2020.~~January 30, 2021. 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 ~~Company’s~~ third quarter in fiscal ~~2020~~2021 and ~~2019~~2020 ended on October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ 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 ~~operating lease~~right-of-use assets, loyalty program and income taxes to be the most significant accounting policies that involve management estimates and judgments. ~~The COVID-19 pandemic has created~~Significant changes, if any, in those estimates and ~~may continue~~assumptions resulting from continuing changes in the economic environment, including those related to ~~create significant uncertainty in macroeconomic conditions, which may cause further business disruptions and adversely impact~~ the ~~Company’s results of operations. While the full impact~~impacts of the COVID-19 pandemic, will be reflected in the consolidated financial statements in future periods.

Impairment of long-lived tangible and right-of-use assets

The asset group is ~~unknown~~defined as the lowest level for which identifiable cash flows are available and ~~cannot~~largely independent of the cash flows of other groups of assets. The asset group identified is at the store level and includes both property and equipment and operating lease assets.

Significant estimates are used in determining future cash flows of each store over its remaining lease term including our expectations of future projected cash flows including revenues and operating expenses. An impairment loss is recorded if the carrying amount of the long-lived asset exceeds its fair value.

Long-lived tangible and right-of-use assets are evaluated for indicators of impairment quarterly or when events or changes in circumstances indicate that their carrying amounts may not be ~~reasonably estimated,~~recoverable. An undiscounted cash flow analysis is performed over the ~~Company has made accounting estimates~~asset group. Asset groups are written down only to the extent that their carrying value exceeds their respective fair value. Fair values of the asset group are determined by discounting the cash flows at a rate that approximates the cost of capital of a market participant. Management’s forecast of future cash flows is based on the ~~facts~~income approach. The fair value of individual operating lease assets is determined under the market approach using estimated market rent assessments based on broker quotes.

The determination of fair value under the income approach requires assumptions including forecasts of future cash flows (such as revenue growth rates and ~~circumstances available~~operating expenses) and selection of a market-based discount rate. Estimates of market rent are based on non-binding broker quotes. As these inputs are unobservable, they are classified as Level 3 inputs

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under the fair value hierarchy (see Note 9, “Fair value measurements”). If actual results are not consistent with estimates and assumptions used in estimating future cash flows and asset fair values, there may be exposure to additional impairment losses in a future period (see Note 4, “Impairment, restructuring and other costs”).

CARES Act

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was enacted. The CARES Act, among other things, includes provisions relating to refundable payroll taxes, deferral of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The most significant relief measures which the Company qualifies for are the employee retention credit, payroll tax deferral, and technical corrections to tax depreciation.

The Company recognizes government grants for which there is a reasonable assurance of compliance with grant conditions and receipt of credits. The Company believes there is a reasonable assurance that it will comply with the relevant conditions of the employee retention credit provision of the CARES Act and that it will receive the credit. The Company will continue to assess the treatment of the CARES Act to the extent additional guidance and regulations are issued, the further applicability of the CARES Act, and the potential impacts on the business.

Employee retention credit (ERC) and payroll tax deferral. The ERC allows for a refundable tax credit against certain employment taxes equal to 50% of the first ten thousand dollars in qualified wages paid to each employee commencing on March 13, 2020 through January 1, 2021 and 70% of the first ten thousand dollars, per quarter, in qualified wages paid to each employee commencing on January 1, 2021 through December 31, 2021. To be eligible, the Company must (i) have had operations fully or partially suspended because of a governmental order, or (ii) have had gross receipts decline by more than 50% in a calendar quarter in fiscal 2020 or 20% in a calendar quarter in fiscal 2021, when compared to the same quarter in 2019. Qualified wages are limited to wages paid to employees who were not providing services due to the COVID-19 pandemic. During the 13 weeks ended October 30, 2021 and October 31, 2020, there was $634 and $2,402, respectively, related to the ERC recognized as a reduction of the associated costs within selling, general and administrative expenses on the consolidated statements of income. During the 39 weeks ended October 30, 2021 and October 31, 2020, there was $4,021 and $50,583, respectively, related to the ERC recognized as a reduction of the associated costs within selling, general and administrative expenses on the consolidated statements of income. The receivable for the ERC was $56,426, $52,405, and $50,583 as of October 30, 2021, January 30, 2021, and October 31, 2020, respectively.

Additionally, the ~~reporting date. Actual~~CARES Act contains provisions for the deferral of the employer portion of social security taxes incurred through the end of calendar 2020. As of January 30, 2021 and October 31, 2020, there was $43,845 and $34,060, respectively, of social security tax payments deferred, of which 50% was required to be remitted by December 2021 and the remaining 50% by December 2022. The deferred amounts ~~could differ~~were recorded within accrued liabilities on the consolidated balance sheets. The company submitted payments for these taxes during the 13 weeks ended October 30, 2021, the therefore has no deferral balance as of October 30, 2021.

Technical corrections to tax depreciation. The CARES Act also includes a technical correction of tax depreciation methods for qualified improvement property, which changes 39-year property to 15-year property eligible for 100% tax bonus depreciation. This provision of the CARES Act resulted in a cash tax refund of $4,600 relating to property and equipment, from ~~these estimates,~~filing an amendment to the Company’s 2018 federal income tax return, during the 13 and ~~such differences could be material.~~39 weeks ended October 31, 2020.

~~Recent~~Recently adopted accounting pronouncements ~~not yet adopted~~

Taxes – Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes. The guidance removes certain exceptions for recognizing deferred taxes for equity method investments, performing intraperiod allocation, and calculating income taxes in interim periods. The ASU also

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adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for goodwill and allocating taxes to members of a consolidated group, among others. This guidance is effective for interim and annual reporting periods beginning after December 15, 2020. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The transition requirements are dependent upon each amendment within this update and will be applied either prospectively or retrospectively. The Company adopted the new guidance as of January 31, 2021, and its adoption ~~of ASU 2019-12 is not expected to have a material~~had no impact on the Company’s consolidated financial position, results of operations, or cash flows.

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~~Recently adopted accounting pronouncements~~

~~Intangibles – Goodwill and Other-Internal-Use Software.~~ In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which clarifies and aligns the accounting for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019 and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted. The Company adopted the new guidance prospectively as of February 2, 2020, and its adoption did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.

3.~~Impact of the COVID-19 pandemic~~

In March 2020, the World Health Organization declared COVID-19 a global pandemic. In response to federal, state, and local government restrictions and recommendations and for the health and safety of our associates and guests, the Company temporarily closed all stores effective March 19, 2020. Effective April 19, 2020, the Company temporarily furloughed many store and salon associates and introduced curbside pickup, and on May 11, 2020, the Company started a phased store reopening process. By July 20, 2020, the full fleet of Ulta Beauty stores was operational. By October 31, 2020, salon and brow services had resumed in almost all stores. Reflecting operational limitations related to COVID-19 and the partial resumption of services, the Company has reactivated more than half of the furloughed associates.

Results of operations for the 13 and 39 weeks ended October 31, 2020 were significantly impacted by the effects of COVID-19, and the pandemic is expected to continue to have a negative impact on the Company’s business, financial condition, profitability, cash flows, and supply chain, although the full extent is uncertain. As COVID-19 continues to evolve and resurgences occur, the extent of the impact on the Company’s business, financial condition, profitability, cash flows, and supply chain will depend on future developments, including, but not limited to, the potential temporary reclosing of certain stores, the potential temporary restrictions on certain store operating hours and/or in-store capacity, the duration of potential future quarantines, shelter-in-place and other travel restrictions within the U.S. and other affected countries, the severity of the virus, the duration and spread of the virus, the duration, timing and severity of the impact on consumer spending, how quickly and to what extent normal economic and operating conditions can resume, and the public’s response to resurgences of the virus and its eventual aftermath, all of which are highly uncertain and cannot be predicted.

The multi-year, strategic investments the Company has made to enhance omnichannel and supply chain capabilities, combined with the ongoing commitment of the Company’s distribution associates, have enabled the Company to support increased e-commerce demand and guest engagement.

~~The Company has taken the following steps to preserve financial liquidity through these unprecedented circumstances:~~

●

~~the drawdown of $800,000 on March 18, 2020 under the Company’s revolving credit facility, which was repaid in full on September 2, 2020;~~

●

~~limited new hires and delayed merit increases for all corporate, store, and salon associates;~~

●

~~reduced marketing, travel and controllable expenses;~~

●

~~aligned inventory receipts with current sales trends;~~

●

~~prioritized payment obligations;~~

●

~~reduced new store openings, relocations and remodel projects; and~~

●

~~suspended the Company’s stock repurchase program, which may be resumed in the fourth quarter of fiscal 2020.~~

The Company evaluates long-lived assets for indicators of impairment quarterly or when events or changes in circumstances indicate that their carrying amounts may not be recoverable. As a result of the COVID-19 pandemic, the Company experienced lower than projected revenues and identified indicators of impairment for certain stores, which resulted in the recording of certain long-lived asset impairment and restructuring charges. See Note 5, “Impairment, restructuring and other costs,” for additional details.

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~~CARES Act~~

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was enacted. The CARES Act, among other things, includes provisions relating to refundable payroll taxes, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. ~~The most significant relief measures which the Company qualifies for are the employee retention credit, payroll tax deferral, and~~ ~~technical corrections to tax depreciation.~~

~~The Company recognizes government grants for which there is a reasonable assurance of compliance with grant conditions and receipt of credits.~~ The Company believes there is a reasonable assurance that it will comply with the relevant conditions of the employee retention credit provision of the CARES Act and that it will receive the credit. The Company ~~will continue to assess the treatment of the CARES Act to the extent additional guidance and regulations are issued, the further applicability of the CARES Act to the Company, and the potential impacts on the business.~~

~~Employee retention credit (ERC) and payroll tax deferral.~~ The ERC allows for a refundable tax credit against certain employment taxes equal to 50% of the first ten thousand dollars in qualified wages paid to each employee commencing on March 13, 2020 and through January 1, 2021. To be eligible, the Company must (i) have had operations fully or partially suspended because of a shut-down order from a governmental authority related to COVID-19, or (ii) have had gross receipts decline by more than 50% in a calendar quarter when compared to the same quarter in 2019. Qualified wages are limited to wages paid to employees who were not providing services due to the COVID-19 pandemic. During the 13 and 39 weeks ended October 31, 2020, the Company recognized $2,402 and $50,583, respectively, related to the ERC as a reduction of the associated costs within selling, general and administrative expenses on the consolidated statements of operations and within accounts receivable, net on the consolidated balance sheets.

~~Additionally, the CARES Act~~ ~~contains provisions for deferral of the employer portion of social security taxes incurred through the end of calendar 2020. As of October 31, 2020, the Company has deferred $34,060 in social security tax payments,~~ ~~of which 50% are required to be~~ ~~remitted by December 2021 and the remaining 50% by December 2022. The deferred amounts are recorded as a liability within accrued liabilities on the Company’s consolidated balance sheets.~~

~~Technical corrections to tax depreciation.~~ The CARES Act also includes a technical correction of tax depreciation methods for qualified improvement property, which changes 39-year property to 15-year property eligible for 100% tax bonus depreciation. This provision of the CARES Act resulted in a cash tax refund of $4,600 relating to property and equipment, from filing an amended federal income tax return, as of October 31, 2020. Furthermore, t~~he Company expects the changes to qualified impairment property depreciation to result in reductions to estimated income tax payments for fiscal 2020.~~

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43.Revenue

~~The Company’s net~~Net sales include retail stores and e-commerce merchandise sales as well as salon services and other revenue. Other revenue sources mainly include the private label and co-branded credit card programs, as well as 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		39 Weeks Ended
	13 Weeks Ended		39 Weeks Ended		October 30,	October 31,	October 30,	October 31,
(Percentage of net sales)	October 31, 2020	November 2, 2019	October 31, 2020	November 2, 2019	2021	2020	2021	2020
Cosmetics	45%	51%	46%	50%
Skincare, bath, and fragrance	26%	21%	26%	21%
Cosmetics (1)					45%	47%	44%	47%
Haircare products and styling tools(1)	21%	18%	20%	19%	21%	20%	20%	20%
Skincare (1)					16%	16%	17%	17%
Fragrance and bath					12%	10%	12%	9%
Services	4%	6%	4%	6%	3%	4%	4%	4%
Other (nail products, accessories, and other)	4%	4%	4%	4%
Accessories and other (1)					3%	3%	3%	3%
	100%	100%	100%	100%	100%	100%	100%	100%

(1)	Certain sales departments were reclassified between categories in the prior year to conform to current year presentation.

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Deferred revenue

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

The following table provides a summary of the changes included in deferred ~~revenue:~~revenue during the 13 and 39 weeks ended October 30, 2021 and October 31, 2020:


									13 weeks ended				39 weeks ended
	13 Weeks Ended				39 Weeks Ended				October 30,		October 31,		October 30,		October 31,
(In thousands)	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019		2021		2020		2021		2020
Beginning balance	$	207,746	$	171,953	$	230,011	$	193,585	$	256,227	$	207,746	$	269,032	$	230,011
Additions to contract liabilities (1)		40,932		66,167		128,402		145,728		92,074		40,932		201,106		128,402
Deductions to contract liabilities (2)		(39,032)		(62,816)		(148,767)		(164,009)		(85,078)		(39,032)		(206,915)		(148,767)
Ending balance	$	209,646	$	175,304	$	209,646	$	175,304	$	263,223	$	209,646	$	263,223	$	209,646

(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 $9,405 and $15,216 at October 30, 2021 and ~~$14,884 at~~ October 31, 2020, ~~and November 2, 2019,~~ respectively.

5.~~Impairment, restructuring and other costs~~

~~Impairment of long-lived tangible assets~~

The asset group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets. The asset group identified is at the store level and includes both property and equipment and operating lease assets.

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Significant estimates are used in determining future cash flows of each store over its remaining lease term including our expectations of future projected cash flows including revenues, operating expenses,4.Impairment, restructuring and ~~market conditions. An impairment loss is recorded if the carrying amount~~other costs

The following table provides a summary of the impairment, restructuring and other costs in the consolidated statements of income:


	13 weeks ended		39 weeks ended
	October 31,		October 31,
(In thousands)	2020		2020
Impairment of long-lived tangible and right-of-use assets (1)	$	—	$	40,428

Store closures
Impairment of long-lived tangible and right-of-use assets (1)	$	—	$	19,569
Lease termination costs		1,844		1,844
Severance (2)		186		489
Total store closures		2,030		21,902

Suspension of Canadian expansion
Impairment of long-lived tangible and right-of-use assets (1)	$	9,935	$	9,935
Lease termination costs		5,317		5,317
Severance (2)		634		634
Total suspension of Canadian expansion		15,886		15,886

Other severance (2)	$	5,708	$	5,708
Total (3)	$	23,624	$	83,924

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(1)	Amount included in the non-cash $69,932 long-lived asset impairment charge on the consolidated statements of cash flows for the 39 weeks ended October 31, 2020.

(2)	As of October 31, 2020, there was $6,202 in accrued liabilities on the consolidated balance sheets for restructuring and was primarily for severance. There was 0 liability for restructuring as of October 30, 2021.

(3)	There were 0 impairment, restructuring and other costs recognized during the 13 and 39 weeks ended October 30, 2021.

Impairment of long-lived ~~asset exceeds its fair value.~~

The Company evaluates long-lived assets for indicators of impairment quarterly or when events or changes in circumstances indicate that their carrying amounts may not be recoverable. The Company performs an undiscounted cash flow analysis over the long-livedtangible and right-of-use assets. Asset groups are written down only to the extent that their carrying value is lower than their respective fair value. Fair values of the asset group are determined by discounting the cash flows at a rate that approximates the cost of capital of a market participant. Management’s forecast of future cash flows is based on the income approach. The fair value of individual operating lease assets is determined using estimated market rent assessments.

As a result of the COVID-19 pandemic, the Company experienced lower than projected revenues and identified indicators of impairment for certain ~~stores.~~retail stores during the 39 weeks ended October 31, 2020. The Company’s analysis indicated that the carrying values of certain long-lived tangible and right-of-use assets exceeded their respective fair values. As a result, the Company recognized an impairment ~~charge of $40,428 for~~charges related to certain retail stores during the 26 weeks ended August 1, 2020. There were 0no asset impairment charges recognized during the 13 weeks ended October 31, 2020. These ~~charges are recorded in~~ impairment ~~restructuring and other~~ costs ~~in the consolidated statements of operations. These impairment charges~~ were primarily driven by lower than projected revenues, lower market rate assessments, and the effect of temporary store closures as a result of the COVID-19 pandemic. The Company also recorded long-lived tangible and right-of-use asset impairment charges related to store closures during the 39 weeks ended October 31, 2020 as described below.

The determination of estimated market rent used in the fair value estimate of the Company’s operating lease assets included within the respective store asset group requires significant management judgment. Changes in these estimates could have a significant impact on whether long-lived store assets should be further evaluated for impairment and could have a significant impact on the resulting impairment charge.

The significant estimates, all of which are considered Level 3 inputs, used in the fair value methodology include: the Company’s expectations for future operations and projected cash flows, including revenues, operating expenses, and market conditions.

~~Restructuring~~Store closures and other ~~costs~~

~~The following table provides a summary of the restructuring and other charges included in impairment, restructuring and other costs in the consolidated statements of operations:~~

13 Weeks Ended

39 Weeks Ended

October 31,

October 31,
(In thousands)

2020

2020
Store Closures

Long-lived asset impairment charges (1)

$
—

$
19,569
Lease termination costs

1,844

1,844
Severance (2)

186

489
Suspension of Canadian expansion

Long-lived asset impairment charges (1)

$
9,935

$
9,935
Lease termination costs

5,317

5,317
Severance (2)

634

634
Other Severance (2)

$
5,708

$
5,708
Total

$
23,624

$
43,496

~~(1)~~

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~~(2)~~

~~As of October 31, 2020, the Company's restructuring accrual recorded in accrued liabilities on the consolidated balance sheets was $6,202 and is primarily for severance.~~

~~Store closures.~~costs. During the second quarter of fiscal 2020, the Company announced that after evaluating its store portfolio, it would permanently close 19 stores in the third quarter of fiscal 2020. Accordingly, for the 13 and 39 weeks ended October 31, 2020, the Company recognized impairment, restructuring ~~charges~~and other costs related to store ~~closures of $2,030 and $21,902, respectively. There were 0 related restructuring charges for the 13 and 39 weeks ended November 2, 2019.~~closures. The impairment charges reduced the carrying value of the ~~lease asset~~long-lived tangible and right-of-use assets to ~~its estimated~~their fair value. ~~Fair value was estimated using an income-approach based on management's forecast of future cash flows expected to be derived from the property based on current sublease market rent.~~

~~Suspension of Canadian expansion.~~ In 2019, the Company announced plans to expand internationally with an initial launch into Canada. The Company continues to believe international markets provide a long-term growth opportunity for the Company. However, given the current operating environment, in September 2020 the Company decided to prioritize growth of its U.S. operations at this time and suspended its planned expansion to Canada. Investments to support the expansion into Canada have largely been limited to early-stage infrastructure buildout and lease obligations for a small number of stores. In conjunction with this decision, the Company expects to incur pre-tax costs in the range of $30,000 to $40,000, the majority of which will be recognized in fiscal 2020. During the 13 and 39 weeks ended October 31, 2020, the Company recognized restructuring charges related to suspension of the Canada expansion of $15,886. The remaining estimated charges primarily relate to lease termination costs. There were 0 related restructuring charges for the 13 and 39 weeks ended November 2, 2019.

~~Other severance.~~ As part of the efforts to optimize its cost structure, the Company eliminated the salon manager and prestige manager roles and created a new, single service manager. During the 13 and 39 weeks ended October 31, 2020, the Company recognized severance charges of ~~$5,708. There were 0 related severance charges for the 13 and 39 weeks ended November 2, 2019.~~

6.5.Goodwill and other intangible assets

Goodwill, which represents the excess of cost over the fair value of net assets acquired, ~~amounted to~~was $10,870 at October 30, 2021, January 30, 2021, and October 31, ~~2020, February 1, 2020, and November 2, 2019.~~2020. NaN additional goodwill was recognized during the 13 and 39 weeks ended October ~~31, 2020.~~30, 2021. The ~~Company reviews 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 ~~with finite useful lives~~ are amortized over their useful lives. The ~~Company reviews the~~ recoverability of ~~long-lived~~intangible assets is reviewed whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.

As a result of the COVID-19 pandemic and decline in the macroeconomic environment, the Company performed an interim impairment analysis as of October 31, 2020, which indicated that no impairment existed for goodwill or other intangible assets.

7.6.Leases

The Company leases retail stores, distribution ~~and~~centers, fast fulfillment centers, corporate offices, and certain equipment under ~~non-cancellable~~non-cancelable operating leases with various expiration dates through 2033. ~~Leases~~All leases are classified as operating leases and generally have an initial lease ~~term~~terms of 10 years and, 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.

~~All retail store, distribution and fast fulfillment center, and corporate office leases are classified as operating leases. The Company does not have any finance leases.~~

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Lease cost

The majority of operating lease cost relates to retail stores, ~~and~~ distribution centers, and fast 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. ~~Operating~~

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The following table presents a summary of operating lease ~~cost was $75,649 and $72,467~~costs for the 13 ~~weeks ended October 31, 2020~~ and ~~November 2, 2019, respectively. Operating lease cost was $228,881 and $215,388 for the~~ 39 weeks ended October 30, 2021 and October 31, ~~2020 and November 2, 2019, respectively.~~2020:


	13 weeks ended				39 weeks ended
	October 30,		October 31,		October 30,		October 31,
(In thousands)	2021		2020		2021		2020
Operating lease cost	$	77,976	$	75,649	$	233,488	$	228,881

Other information

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


					39 Weeks Ended
	39 Weeks Ended				October 30,		October 31,
(In thousands)	October 31, 2020		November 2, 2019		2021		2020
Cash paid for operating lease liabilities (1)	$	263,893	$	251,468	$	275,016	$	263,893
Operating lease assets obtained in exchange for operating lease liabilities (non-cash)		188,240		287,645		165,936		188,240

(1)	Excludes $24,570 and $22,789 related to cash received for tenant incentives ~~of $22,789 and $57,160~~ for the 39 weeks ended October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ respectively.

8.7.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.

9.8.Debt

On March 11, 2020, the Company entered into Amendment No. 1 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 11, 2025, provides maximum revolving loans equal to the lesser of $1,000,000 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 $100,000, 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% to 0.125% or the London Interbank Offered Rate plus a margin of 1.125% to 1.250%, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.20% per annum.

As of October 30, 2021, January 30, 2021, and October 31, 2020, ~~February 1, 2020, and November 2, 2019, the Company had no~~there were 0 borrowings outstanding under the credit ~~facility and the~~facility. The weighted average interest rate was 1.56% for the 39 weeks ended October 31, 2020.

As of October ~~31, 2020,~~30, 2021, the Company was in compliance with all terms and covenants of the Loan Agreement.

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~~10.~~9.Fair value measurements

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

~~Table~~ The carrying value of ~~Contents~~long-term debt also approximates its fair value.

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.

●

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 October 30, 2021, January 30, 2021, and October 31, 2020, ~~February 1, 2020, and November 2, 2019,~~there were liabilities related to the ~~Company held financial liabilities~~non-qualified deferred compensation plan included in other long-term liabilities on the consolidated balance sheets of $38,333, $32,909, and $29,240, ~~$29,442, and $27,417, respectively, related to its non-qualified deferred compensation plan.~~respectively. The liabilities ~~have been~~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.

Some assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. These assets can include long-lived assets and goodwill that are reduced to fair value when impaired. Assets that are written down to fair value when impaired are not subsequently adjusted to fair value unless further impairment occurs.

1110. Investments

Short-term investments typically consist of certificates of deposit and are carried at cost, which approximates fair value and are recorded in the consolidated balance sheets in short-term investments. The Company did not have short-term investments as of October 31, 2020 and November 2, 2019. The Company’s short-term investments were $110,000 as of February 1, 2020.

~~The Company’s investments~~Investments in renewable energy projects are accounted for under the equity method of accounting. The balance of these investments was ~~$3,642, $3,936,~~$2,815, $3,174, and ~~$11,000~~$3,642 as of October 30, 2021, January 30, 2021, and October 31, 2020, ~~February 1, 2020, and November 2, 2019,~~ respectively, and is included in other long-term assets on the consolidated balance sheets. The Company did not contribute capital or receive investment tax credits during the 39 weeks ended October 30, 2021. The Company contributed capital of $5,665 and received distributions including $1,690 of investment tax credits during the 39 weeks ended October 31, 2020. ~~The Company contributed capital of $43,757 and received distributions including $31,554 of investment tax credits during the 39 weeks ended November 2, 2019.~~

~~12.~~11.Stock-based compensation

~~The Company measures stock-based~~Stock-based compensation expense is measured on the grant date based on the fair value of the ~~award, and recognizes the~~award. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period for awards expected to vest. The ~~Company~~ estimated ~~the~~ 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:



	39 Weeks Ended		39 Weeks Ended
	October 31,	November 2,	October 30,	October 31,
	2020	2019	2021	2020
Volatility rate	43.0%	31.0%	46.9%	43.0%
Average risk-free interest rate	0.3%	2.3%	0.4%	0.3%
Average expected life (in years)	3.4	3.5	3.9	3.4
Dividend yield	NaN	NaN	NaN	NaN

The Company granted ~~248~~61 and 97248 stock options during the 39 weeks ended October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ respectively. ~~The stock-based~~Stock-based compensation expense for stock options was ~~$2,900~~$2,712 and ~~$2,204~~$2,900 for the 13 weeks ended October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ respectively. ~~The stock-based~~Stock-based compensation expense for stock options was ~~$8,247~~$8,710 and ~~$6,523~~$8,247 for the 39 weeks ended October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ respectively. The weighted-average grant date fair value of these stock options was ~~$54.40~~$109.72 and ~~$89.91~~$54.40 for the 39 weeks ended October 30, 2021 and October 31, ~~2020 and~~

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~~November 2, 2019,~~2020, respectively. At October ~~31, 2020,~~30, 2021, there was approximately ~~$20,691~~$14,108 of unrecognized stock-based compensation expense related to unvested stock options.

~~The Company issued~~There were 60 and 161 ~~and 52~~ restricted stock units issued during the 39 weeks ended October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ respectively. ~~The stock-based~~Stock-based compensation expense for restricted stock units was ~~$5,098~~$4,622 and ~~$3,429~~$5,098 for the 13 weeks ended October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ respectively. ~~The stock-based~~Stock-based compensation expense for restricted stock units was ~~$14,446~~$14,606 and ~~$9,672~~$14,446 for the 39 weeks ended October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ respectively. At October ~~31, 2020,~~30, 2021, there was approximately ~~$34,048~~$27,111 of unrecognized stock-based compensation expense related to restricted stock units.

There were 46 performance-based restricted stock units issued during the 39 weeks ended October 30, 2021. The Company did not issue any performance-based restricted stock units during the 39 weeks ended October 31, 2020. ~~The Company issued 21 performance-based restricted stock units during the 39 weeks ended November 2, 2019. The stock-based~~Stock-based compensation expense for performance-based restricted stock units was $1,786 and $386 for the 13 weeks ended October 30, 2021 and October 31, ~~2020. The stock-based compensation benefit for performance-based restricted stock units was $122 for the 13 weeks ended November 2, 2019. The stock-based~~2020, respectively. Stock-based compensation expense for performance-based restricted stock units was ~~$286~~$4,901 and ~~$2,979~~$286 for the 39 weeks ended October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ respectively. At October ~~31, 2020,~~30, 2021, there was approximately ~~$613~~$15,898 of unrecognized stock-based compensation expense related to performance-based restricted stock units.

Awards with market conditions are classified as liability awards and the fair value is determined using a Monte Carlo simulation. Market-based restricted stock units were granted to the former CEO in fiscal 2018 and settled during the 39 weeks ended October 30, 2021. Compensation expense for liability awards was $3,289 and $198 for the 13 weeks ended October 30, 2021 and October 31, 2020, respectively. Compensation expense (benefit) for liability awards was $7,671 and ($331) for the 39 weeks ended October 30, 2021 and October 31, 2020, respectively. The total compensation expense for this award was $10,000 and 28 shares were settled during the 39 weeks ended October 30, 2021.

~~13.~~12.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 ~~$25,096~~$68,537 for the 13 weeks ended October ~~31, 2020~~30, 2021 represents an effective tax rate of ~~25.1%~~24.1%, compared to ~~$38,933~~$25,096 of tax expense representing an effective tax rate of ~~23.1~~%25.1% for the 13 weeks ended ~~November 2, 2019.~~October 31, 2020. The ~~higher~~lower effective tax rate is primarily due to ~~less investment~~favorable provision to tax return adjustments, driven by federal employment tax credits, ~~received.~~compared to third quarter of fiscal 2020.

Income tax expense of ~~$2,935~~$224,203 for the 39 weeks ended October ~~31, 2020~~30, 2021 represents an effective tax rate of ~~40.3%~~24.4%, compared to ~~$134,729~~$2,935 of tax expense representing an effective tax rate of ~~21.8%~~40.3% for the 39 weeks ended ~~November 2, 2019.~~October 31, 2020. The ~~higher~~lower effective tax rate is primarily due to a ~~near break-even pre-tax operating income in fiscal 2020, less investment tax credits received, and tax expense~~benefit from the income tax accounting for share-based compensation and favorable provision to tax return adjustments, driven by federal employment tax credits, compared to ~~a tax benefit in~~ fiscal ~~2019.~~2020.

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~~14.~~13.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				39 Weeks Ended				13 Weeks Ended				39 Weeks Ended
	October 31,		November 2,		October 31,		November 2,		October 30,		October 31,		October 30,		October 31,
(In thousands, except per share data)	2020		2019		2020		2019		2021		2020		2021		2020
Numerator:
Net income	$	74,798	$	129,747	$	4,341	$	483,226	$	215,289	$	74,798	$	696,471	$	4,341

Denominator:
Weighted-average common shares – Basic		56,327		57,568		56,355		58,123		54,291		56,327		54,921		56,355
Dilutive effect of stock options and non-vested stock		219		195		169		273		369		219		359		169
Weighted-average common shares – Diluted		56,546		57,763		56,524		58,396		54,660		56,546		55,280		56,524

Net income per common share:
Basic	$	1.33	$	2.25	$	0.08	$	8.31	$	3.97	$	1.33	$	12.68	$	0.08
Diluted	$	1.32	$	2.25	$	0.08	$	8.27	$	3.94	$	1.32	$	12.60	$	0.08

The denominator for diluted net income per common share for the 13 weeks ended October 30, 2021 and October 31, 2020 excludes 144 and ~~November 2, 2019 excludes~~ 246 ~~and 219~~ employee stock options and restricted stock units, respectively, due to their anti-dilutive

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effects. The denominator for diluted net income per common share for the 39 weeks ended October 30, 2021 and October 31, 2020 excludes 173 and ~~November 2, 2019 excludes~~ 562 ~~and 217~~ 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.

~~15.~~14.Share repurchase program

On March ~~15, 2018, the Company announced that~~14, 2019, the Board of Directors authorized a share repurchase program (the 2018 Share Repurchase Program) pursuant to which the Company could repurchase up to $625,000 of the Company’s common stock. The 2018 Share Repurchase Program authorization revoked the previously authorized but unused amount of $41,317 from the earlier share repurchase program. The 2018 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

~~On March 14, 2019, the Company announced that the Board of Directors authorized a new~~ share repurchase program (the 2019 Share Repurchase Program) pursuant to which the Company could repurchase up to $875,000 of the Company’s common stock. The 2019 Share Repurchase Program authorization revoked the previously authorized but unused amount of $25,435 from the ~~2018 Share Repurchase Program.~~earlier share repurchase program. The 2019 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

On March 12, 2020, the ~~Company announced that the~~ Board of Directors authorized a ~~new~~ share repurchase program (the 2020 Share Repurchase Program) pursuant to which the Company may repurchase up to $1,600,000 of the Company’s common stock. The 2020 Share Repurchase Program authorization revoked the previously authorized but unused ~~amounts~~amount of ~~$165,309~~$177,805 from the 2019 Share Repurchase Program. The 2020 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time. On April 2, 2020, the Company announced that the share repurchase program had been suspended in order to strengthen its liquidity and preserve cash in the early stages of the COVID-19 pandemic. The Company may resume the 2020 Share Repurchase Program in the fourth quarter of fiscal 2020.

A summary of ~~the Company’s~~ common stock repurchase activity is presented in the following table:


					39 Weeks Ended
	39 Weeks Ended				October 30,		October 31,
(In thousands)	October 31, 2020		November 2, 2019		2021		2020
Shares repurchased		327		1,639		2,330		327
Total cost of shares repurchased	$	72,981	$	506,868	$	762,167	$	72,981

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this quarterly report. This discussion 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 with respect to, among other things, future events and financial performance. You can identify these forward-looking statements 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 Form 10-Q are based upon our historical performance and on current plans, estimates, and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates, targets, strategies, or expectations

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contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties, which include, without limitation:

●

~~the~~The negative impacts the ~~coronavirus (COVID-19)~~COVID-19 pandemic has had, and will continue to have, on our business, financial condition, profitability, cash flows, and supply chain, as well as consumer spending (including future uncertain impacts);

●

epidemics, pandemics like COVID-19 or natural disasters that have and could continue to negatively impact sales;

●

changes in the overall level of consumer spending and volatility in the economy, including as a result of the COVID-19 ~~pandemic;~~pandemic and/or government aid programs;

●

a decline in operating results that has and may continue to lead to asset impairment and store ~~closures~~closure charges;

●

our ability to sustain our growth plans and successfully implement our long-range strategic and financial plan;

●

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;

●

our ability to execute our ~~Efficiencies for Growth cost optimization program;~~operational excellence priorities, including continuous improvement, Project SOAR (our replacement enterprise resource planning platform), and supply chain optimization;

●

the possibility that cybersecurity 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 possibility that the capacity of our distribution and order fulfillment infrastructure and the performance of our ~~newly opened~~distribution centers and ~~to be opened distribution~~fast fulfillment centers may not be adequate to support our ~~recent growth and~~ expected future growth plans;

●

changes in the wholesale cost of our products;

●

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;

●

our ability to successfully execute our common stock repurchase program or implement future common stock repurchase programs; and

●

other risk factors detailed in our public filings with the Securities and Exchange Commission (the SEC), including risk factors contained in Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended ~~February 1, 2020,~~January 30, 2021, as such ~~were amended and supplemented in Part II, Item 1A, “Risk Factors” of our Quarterly Report on Form 10-Q for the fiscal quarter ended May 2, 2020, and which~~ may be ~~further~~ amended or supplemented in our subsequently filed Quarterly Reports on Form 10-Q (including this report).

Except to the extent required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

References in the following discussion to “we,” “us,” “our,” “Ulta Beauty,” the “Company,” and similar references mean Ulta Beauty, Inc. and its consolidated subsidiaries, unless otherwise expressly stated or the context otherwise requires.

Overview

We were founded in 1990 as a beauty retailer at a time when prestige, mass, and salon products were sold through distinct channels – department stores for prestige products; drug stores and mass merchandisers for mass products; and salons and authorized retail outlets for professional hair care products. We developed a unique specialty retail concept

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that offers a broad range of brands and price points, a compelling value proposition, and a convenient and welcoming shopping environment. We define our target consumer as a beauty enthusiast, a consumer who is passionate about the beauty category and has high expectations for the shopping experience. We believe our strategy provides us with the competitive advantages that have contributed to our financial performance.

We are the largest beauty retailer in the United States and the premier beauty destination for cosmetics, fragrance, skin care products, hair care products, and salon services. We provide unmatched product breadth, value, and convenience in a distinctive specialty retail environment. Key aspects of our business include: our ability to offer our guests a unique combination of more than 25,000 beauty products from across the categories of prestige and mass cosmetics, fragrance, haircare, prestige and mass skincare, bath and body products, and salon styling tools, as well as a full-service salon in every store featuring hair, skin, and brow services; our focus on delivering a compelling value proposition to our guests across all of our

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product categories; and convenience, as our stores are predominantly located in convenient, high-traffic locations such as power centers.

The continued growth of our business and any future increases in net sales, net income, and cash flows is dependent on our ability to execute our strategic ~~imperatives:~~priorities: 1) drive growth through an expanded definition of all things beauty, 2) evolve the omnichannel experience through connected physical and digital ecosystems all in your world, 3) expand and deepen our presence across the beauty ~~enthusiast consumer groups, 2) deepen Ulta Beauty love and loyalty, 3) deliver a one~~journey as the heart of ~~a kind, world class~~the beauty ~~assortment,~~community, 4) ~~lead the in-store and beauty services experience transformation, 5) reinvent beauty digital engagement, 6) deliver~~drive operational excellence and ~~drive efficiencies,~~optimization, 5) develop our talent and ~~7) invest in talent that drives a winning culture. Over the long term, we~~strengthen our culture, and 6) expand our environmental and social impact. We believe that the ~~expansion of the~~attractive and growing U.S. beauty products and salon services industry, ~~the shift~~expanding definition of beauty and role that omnichannel capabilities play in ~~distribution channel of prestige beauty products from department stores to specialty retail stores,~~consumers’ lives, coupled with Ulta Beauty’s competitive strengths, ~~positions~~position us to capture additional market share in the industry.

Comparable sales is a key metric that is monitored closely within the retail industry. Our comparable sales have fluctuated in the past, and we expect them to continue to fluctuate in the future. A variety of factors affect our comparable sales, including general U.S. economic conditions, changes in merchandise strategy or mix, and timing and effectiveness of our marketing activities, among others.

Over the long term, our growth strategy is to increase total net sales through ~~increases in our~~growing comparable sales, expanding omnichannel capabilities and opening new ~~stores, and increasing omnichannel capabilities.~~stores. Long term operating profit is expected to increase as a result of our ~~ability~~efforts to optimize our real estate portfolio, expand merchandise margin and leverage our fixed store costs with comparable sales increases and operating efficiencies, partially offset by incremental investments in people, systems, and supply chain required to support a 1,500 to 1,700 store chain in the U.S. with successful e-commerce and competitive omnichannel capabilities.

Impact of COVID-19 ~~Response~~

W~~We have been and~~e continue to closely monitor the impact of ~~the~~ COVID-19 ~~outbreak~~ on all facets of our business. ~~We have taken decisive actions to protect~~As we navigated the ~~safety of our associates and guests and to manage the business through the fluid and challenging environment resulting from the COVID-19 pandemic.~~

In late 2019, COVID-19 was detected in Wuhan, China and other jurisdictions, prompting the Chinese government to quarantine certain affected regions and impose both internal and external travel restrictions within the country. The virus has since spread to almost every other partimpact of the ~~world, including the U.S., and~~COVID pandemic, we proactively took steps to optimize our cost structure, while also investing in March 2020, the World Health Organization declared COVID-19 a global pandemic. Federal, state, and local governments implemented various restrictions, including travel restrictions, border closings, restrictions on public gatherings, quarantining of people who may have been exposed to the virus, shelter-in-place restrictions and limitations on business operations.

~~In response to government recommendations and for the health and safety of our associates and guests, on March 19, 2020 we temporarily closed all stores across the U.S., while continuing~~new capabilities to support future growth. As of October 30, 2021, all our ~~essential e-commerce operations. Effective April 19, 2020,~~stores, salons and brow service offerings were open and operating under our Shop Safe Standards. During the third quarter, we ~~temporarily furloughed many~~resumed skin and make-up services in select locations. Additionally, during the first half of fiscal 2021, as local restrictions lifted, we increased our operating hours and, as store ~~and salon associates and introduced curbside pickup. Throughout~~traffic trends improved, we adjusted staffing levels to support the ~~second quarter, stores were reopened on a phased timeline,~~increased demand.

During the first nine months of fiscal 2021, we experienced an increase in sales driven primarily by ~~taking a thoughtful, measured approach based on a variety of criteria, including state and local guidelines~~the favorable impact from stronger consumer confidence, government stimulus payments, and the ~~adoption~~easing of ~~our new Shop Safe Standards related safety protocols. As~~COVID-19 restrictions. While operations during the first nine months of ~~July 20, 2020, we completed our phased reopening process.~~ ~~By October 31, 2020, salon and brow services had resumed in almost all stores. Reflecting operational limitations related~~fiscal 2021 did not appear to ~~COVID-19 and the partial resumption of services, the Company has reactivated more than half of the furloughed associates.~~

~~Our results of operations for the 13 and 39 weeks ended October 31, 2020, were significantly~~be negatively impacted, ~~by the effects of COVID-19. Comparable sales decreased 8.9% and 23.8% for the 13 and 39 weeks ended October 31, 2020, respectively, as a result of~~ the COVID-19 pandemic ~~but the~~ ~~multi-year, strategic investments we~~had a material negative impact on fiscal 2020 operations and financial results and could have made to enhance our omnichannel and supply chain capabilities, combined with the ongoing commitment of our distribution associates, have enabled us to support increased e-commerce demand and guest engagement. In addition to decreases in net revenue, our overall profitability also decreased as compared to the prior year. These developments have further required us to recognize certain long-lived asset impairment charges and restructuring charges. ~~Further, in connection with the Coronavirus Aid, Relief, and Economic Security (CARES) Act, we recognized payroll subsidies as a reduction of selling, general and administrative expenses~~additional negative impacts in the ~~consolidated statement~~future. The extent of ~~operations.~~

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~~As we navigate these unprecedented circumstances, we continue to focus~~pandemic on our business and financial ~~flexibility, including drawing down $800.0 million under our $1.0 billion revolving credit facility~~results will depend on ~~March 18, 2020, which was repaid in full on September 2, 2020. In addition,~~ ~~since the onset of the COVID-19 pandemic,~~ ~~we have taken the following steps to preserve financial liquidity:~~

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~~limited new hires and delayed merit increases for all corporate, store, and salon associates;~~

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~~reduced marketing, travel and controllable expenses;~~

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~~aligned inventory receipts with current sales trends;~~

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~~prioritized payment obligations;~~

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~~reduced new store openings, relocations and remodel projects; and~~

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~~suspended our stock repurchase program, which may be resumed in the fourth quarter of fiscal 2020.~~

To help support our associates through this crisis, we expanded the criteria for our Associate Relief Program to include those who need assistance due to a personal hardship as a result of COVID-19. The Ulta Beauty executive team and Board of Directors have each made personal donations to the program.

~~While sales are expected to be challenged as events continue to change, we are unable to accurately predict the impact that COVID-19 will have on our results of operations due to uncertainties~~future developments, including, but not limited to, the potential temporary reclosing of certain ~~of our~~ stores, the potential temporary restrictions on certain store operating hours and/or in-store capacity, the duration of potential future quarantines, shelter-in-place and other travel restrictions within the U.S. and other affected countries, supply chain disruptions, the ~~severity~~potential for increased freight costs and higher wholesale costs, the duration of the pandemic and any variants of the virus, the ~~duration and spread~~

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duration, timing and severity of the impact on consumer spending, the timing and effectiveness of vaccine distribution, vaccination rates, and how quickly and to what extent normal economic and operating conditions can ~~resume, and the public’s response to resurgences of the virus and its eventual aftermath.~~resume.

Industry trends

Our research indicates that Ulta Beauty has captured meaningful market share across all categories over the last several years. However, ~~our research also suggests that~~ the cosmetics category in the overall U.S. market experienced mid-single digit declines through fiscal 2019 and into 2020. Beauty cycles are impacted by demographics and innovation. While demographic trends continue to be favorable, we believe a lack of incremental innovation has resulted in a challenging cycle for the cosmetics category, as innovation brought to the market has not resulted in incremental product purchases. In addition, COVID-19 pandemic and its various impacts have changed consumer behavior and consumption of beauty products due to the closures of offices, retail stores and other businesses and the significant decline in social gatherings. WeDespite the overall beauty market decline in 2020, we expect the beauty category will return to growth in 2021 as consumers recover from the impacts of COVID-19, and we remain confident that our differentiated and diverse business model, our commitment to strategic investments, and our highly engaged associates will continue to drive market share gains over the long term.

Basis of presentation

The Company has one reportable segment, which includes retail stores, salon services, and e-commerce.

We recognize merchandise revenue at the point of sale in our retail stores. E-commerce ~~merchandise~~ sales are recognized ~~based~~ upon shipment or guest pickup of ~~merchandise to~~ the ~~guest~~merchandise based on meeting the transfer of control criteria. Retail store and e-commerce sales are recorded net of estimated returns. Shipping and handling are treated as costs to fulfill the contract and not a separate performance obligation. Accordingly, we recognize revenue for our single performance obligation related to online sales at the time control of the merchandise passes to the customer, which is at the time of ~~shipment.~~shipment or guest pickup. We provide refunds for merchandise returns within 60 days from the original purchase ~~date; however, due to store closures during the first half of fiscal 2020, we extended our return policy to 180 days.~~date. State sales taxes are presented on a net basis as we consider our self a pass-through conduit for collecting and remitting state sales tax. Salon service revenue is recognized at the time the service is provided to the guest. Gift card sales revenue is deferred until the guest redeems the gift card. Company coupons and other incentives are recorded as a reduction of net sales. Other revenue sources include the private label ~~credit card~~ and co-branded credit card programs, as well as deferred revenue related to the loyalty program and gift card breakage.

Comparable sales reflect sales for stores beginning on the first day of the 14^th month of operation. Therefore, a store is included in our comparable store base on the first day of the period after one year of operations plus the initial ~~one-~~

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~~month~~one-month grand opening period. Non-comparable store sales include sales from new stores that have not yet completed their 13^th month of operation and stores that were closed for part or all of the period in either year. Remodeled stores are included in comparable sales unless the store was closed for a portion of the current or prior period. Comparable sales include retail sales and salon services (including stores temporarily closed due to COVID-19), and e-commerce. There may be variations in the way in which some of our competitors and other retailers calculate comparable or same store sales.

Measuring comparable sales allows us to evaluate the performance of our store base as well as several other aspects of our overall strategy. Several factors could positively or negatively impact our comparable sales results:

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the general national, regional, and local economic conditions and corresponding impact on customer spending levels;

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the introduction of new products or brands;

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the location of new stores in existing store markets;

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competition;

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our ability to respond on a timely basis to changes in consumer preferences;

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the effectiveness of our various merchandising and marketing activities; and

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the number of new stores opened and the impact on the average age of all of our comparable stores.

Cost of sales includes:

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the cost of merchandise sold, including substantially all vendor allowances, which are treated as a reduction of merchandise costs;

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distribution costs including labor and related benefits, freight, rent, depreciation and amortization, real estate taxes, utilities, and insurance;

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shipping and handling costs;

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retail stores occupancy costs including rent, depreciation and amortization, real estate taxes, utilities, repairs and maintenance, insurance, ~~licenses,~~ and ~~cleaning expenses;~~licenses;

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salon services payroll and benefits; and

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shrink and inventory valuation reserves.

Our cost of sales may be negatively impacted as we open new stores. Changes in our merchandise mix may also have an impact on cost of sales. This presentation of items included in cost of sales may not be comparable to the way in which our competitors or other retailers compute their cost of sales.

Selling, general and administrative expenses include:

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payroll, bonus, and benefit costs for retail ~~stores~~store and corporate employees;

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advertising and marketing costs;

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occupancy costs related to our corporate office facilities;

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stock-based compensation expense;

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depreciation and amortization for all assets, except those related to our retail stores and distribution operations, which are included in cost of sales; and

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legal, finance, information systems, and other corporate overhead costs.

This presentation of items in selling, general and administrative expenses may not be comparable to the way in which our competitors or other retailers compute their selling, general and administrative expenses.

Impairment, restructuring and other costs include long-lived asset impairment charges and restructuring costs associated with store ~~closings, costs associated with the suspension of our Canadian expansion, and employee related severance costs.~~closings.

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Pre-opening expenses include non-capital expenditures during the period prior to store opening for new, remodeled, and relocated stores including rent ~~from~~during the ~~control date through store opening date~~construction period for new and relocated stores, store set-up labor, management and employee training, and grand opening advertising.

Interest expense (income), net includes both interest ~~income~~expense and ~~expense.~~income. Interest expense includes interest costs and facility fees associated with our credit facility, which is structured as an asset-based lending instrument. Our credit facility interest is based on a variable interest rate structure which can result in increased cost in periods of rising interest rates. Interest income represents interest from cash equivalents and short-term investments with maturities of twelve months or less from the date of purchase.

Income tax expense reflects the federal statutory tax rate and the weighted average state statutory tax rate for the states in which we operate stores.

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Results of operations

Our quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31. The Company’s third quarter in fiscal ~~2020~~2021 and ~~2019~~2020 ended on October ~~31, 2020~~30, 2021 and ~~November 2, 2019, respectively. Our operating results for the 13 and 39 weeks ended~~ October 31, 2020, ~~may not be indicative of the results that may be expected for the fiscal year ending January 30, 2021 because of the COVID-19 pandemic. In addition, our~~respectively. Our quarterly results of operations have varied in the past and are likely to do so again in the future. As such, we believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of our future performance.

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The following ~~table presents~~tables present the components of our consolidated results of operations for the periods indicated:


	13 Weeks Ended				39 Weeks Ended				13 Weeks Ended				39 Weeks Ended
	October 31,		November 2,		October 31,		November 2,		October 30,		October 31,		October 30,		October 31,
(Dollars in thousands)	2020		2019		2020		2019		2021		2020		2021		2020
Net sales	$	1,552,033	$	1,682,514	$	3,953,252	$	5,092,150	$	1,995,775	$	1,552,033	$	5,901,501	$	3,953,252
Cost of sales		1,006,514		1,059,081		2,775,121		3,217,971		1,206,301		1,006,514		3,560,276		2,775,121
Gross profit		545,519		623,433		1,178,131		1,874,179		789,474		545,519		2,341,225		1,178,131

Selling, general and administrative expenses		416,378		449,198		1,068,877		1,245,174		503,403		416,378		1,411,577		1,068,877
Impairment, restructuring and other costs		23,624		—		83,924		—		—		23,624		—		83,924
Pre-opening expenses		4,240		6,455		12,782		15,667		1,832		4,240		7,778		12,782
Operating income		101,277		167,780		12,548		613,338		284,239		101,277		921,870		12,548
Interest expense (income), net		1,383		(900)		5,272		(4,617)
Interest expense, net										413		1,383		1,196		5,272
Income before income taxes		99,894		168,680		7,276		617,955		283,826		99,894		920,674		7,276
Income tax expense		25,096		38,933		2,935		134,729		68,537		25,096		224,203		2,935
Net income	$	74,798	$	129,747	$	4,341	$	483,226	$	215,289	$	74,798	$	696,471	$	4,341

Other operating data:
Number of stores end of period		1,262		1,241		1,262		1,241		1,302		1,262		1,302		1,262
Comparable sales increase (decrease)		(8.9%)		3.2%		(23.8%)		5.4%		25.8%		(8.9)%		47.1%		(23.8)%


	13 Weeks Ended				39 Weeks Ended				13 Weeks Ended				39 Weeks Ended
	October 31,		November 2,		October 31,		November 2,		October 30,		October 31,		October 30,		October 31,
(Percentage of net sales)	2020		2019		2020		2019		2021		2020		2021		2020
Net sales		100.0%		100.0%		100.0%		100.0%		100.0%		100.0%		100.0%		100.0%
Cost of sales		64.9%		62.9%		70.2%		63.2%		60.4%		64.9%		60.3%		70.2%
Gross profit		35.1%		37.1%		29.8%		36.8%		39.6%		35.1%		39.7%		29.8%

Selling, general and administrative expenses		26.8%		26.7%		27.1%		24.5%		25.2%		26.8%		23.9%		27.1%
Impairment, restructuring and other costs		1.5%		0.0%		2.1%		0.0%		0.0%		1.5%		0.0%		2.1%
Pre-opening expenses		0.3%		0.4%		0.3%		0.3%		0.1%		0.3%		0.1%		0.3%
Operating income		6.5%		10.0%		0.3%		12.0%		14.2%		6.5%		15.6%		0.3%
Interest expense (income), net		0.1%		(0.1%)		0.1%		(0.1%)
Interest expense, net										0.0%		0.1%		0.0%		0.1%
Income before income taxes		6.4%		10.1%		0.2%		12.1%		14.2%		6.4%		15.6%		0.2%
Income tax expense		1.6%		2.3%		0.1%		2.6%		3.4%		1.6%		3.8%		0.1%
Net income		4.8%		7.7%		0.1%		9.5%		10.8%		4.8%		11.8%		0.1%

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Comparison of 13 weeks ended October ~~31, 2020~~30, 2021 to 13 weeks ended ~~November 2, 2019~~October 31, 2020

Net sales

Net sales ~~decreased $130.5~~increased $443.7 million or ~~7.8%~~28.6%, to $2.0 billion for the 13 weeks ended October 30, 2021, compared to $1.6 billion for the 13 weeks ended October 31, ~~2020, compared~~2020. The net sales increase was primarily due to ~~$1.7 billion for~~the favorable impact from improving consumer confidence and the easing of COVID-19 restrictions. The total comparable sales increase of 25.8% during the 13 weeks ended ~~November 2, 2019. The net sales decrease~~October 30, 2021 was driven by ~~the negative impacts of the COVID-19 pandemic, including social distancing, reduction of operating hours, limitations on in-store capacity~~a16.8% increase in transactions and a7.7% increase in ~~some cases, mandated store closures and a decrease of $2.5~~average ticket.

Gross profit

Gross profit increased $244.0 million ~~in other revenue. Total comparable sales~~or 44.7%, to $789.5 million for the 13 weeks ended October ~~31, 2020, decreased 8.9%~~30, 2021, compared ~~to an increase of 3.2% for the 13 weeks ended November 2, 2019. During the 13 weeks ended October 31, 2020, transactions declined 15.4% and average ticket increased 7.6%.~~

~~Gross profit~~

~~Gross profit decreased $77.9 million or 12.5%,~~ to $545.5 million for the 13 weeks ended October 31, ~~2020, compared to $623.4 million for the 13 weeks ended November 2, 2019.~~2020. Gross profit as a percentage of net sales ~~decreased~~increased to 39.6% for the 13 weeks ended October 30, 2021, compared to 35.1% for the 13 weeks ended October 31, ~~2020, compared to 37.1% for the 13 weeks ended November 2, 2019.~~2020. The ~~decrease~~increase in gross profit margin was primarily due to ~~deleverage~~leverage of fixed costs, ~~due to lower sales and~~favorable channel mix ~~shifts. These pressures were partially offset by higher~~shifts, leverage of salon expenses, and improvement in merchandise ~~margins primarily due to lower promotional activity.~~margins.

Selling, general and administrative expenses

Selling, general and administrative (SG&A) expenses ~~decreased $32.8~~increased $87.0 million or ~~7.3%~~20.9%, to $503.4 million for the 13 weeks ended October 30, 2021, compared to $416.4 million for the 13 weeks ended October 31, 2020, compared to $449.2 million for the 13 weeks ended November 2, 2019. Lower store payroll and benefits, store expenses, and marketing expenses were partially offset by higher corporate overhead expense and personal protective equipment (PPE) and COVID-related expenses.2020. SG&A expenses as a percentage of net sales ~~increased~~decreased to 25.2% for the 13 weeks ended October 30, 2021, compared to 26.8% for the 13 weeks ended October 31, 2020, ~~compared to 26.7% for the 13 weeks ended November 2, 2019,~~primarily due to ~~lower~~leverage of corporate overhead, store expenses and store payroll and benefits due to higher sales, ~~resulting from the impact of COVID-19.~~partially offset by higher marketing expenses.

Impairment, restructuring and other costs

~~Impairment,~~There were no impairment, restructuring and other costs ~~were~~recognized in the 13 weeks ended October 30, 2021, compared to $23.6 million for the 13 weeks ended October 31, 2020, which consisted of $15.9 million related to the suspension of our planned expansion to Canada. We expect to incur pre-tax costs in the range of $30,000 to $40,000 as a result of the suspension, the majority of which will be recognized in fiscal 2020. The remaining estimated charges primarily relate to lease termination costs. During the 13 weeks ended October 31, 2020, impairment, restructuring and other costs also included $5.7 million of severance charges and $2.0 million of lease terminations costs related to the previously announced permanent closure of 19 stores. There was no impairment, restructuring and other costs for the 13 weeks ended November 2, 2019.

Pre-opening expenses

Pre-opening expenses decreased ~~$2.2~~$2.4 million to $1.8 million for the 13 weeks ended October 30, 2021 compared to $4.2 million for the 13 weeks ended October 31, 2020, compared to $6.5 million for the 13 weeks ended November 2, 2019. During the 13 weeks ended October 31, 2020, we opened 17 new stores and relocated two stores, compared to the 13 weeks ended November 2, 2019, when we opened 31 new stores, remodeled three stores, and relocated two stores.2020.

Interest expense, ~~(income),~~ net

Interest expense, net was ~~$1.4~~$0.4 million for the 13 weeks ended October ~~31, 2020~~30, 2021 compared to ~~$0.9~~$1.4 million of interest ~~income~~expense, net for the 13 weeks ended ~~November 2, 2019.~~October 31, 2020. Interest expense represents interest on borrowings and fees related to the credit facility. Interest income results from cash equivalents and short-term investments with maturities of twelve months or less from the date of purchase. We did not have any outstanding borrowings on our credit facility as of October 30, 2021, January 30, 2021, and October 31, ~~2020~~2020.

Income tax expense

Income tax expense of $68.5 million for the 13 weeks ended October 30, 2021 represents an effective tax rate of 24.1%, compared to $25.1 million of tax expense representing an effective tax rate of 25.1% for the 13 weeks ended October 31, 2020. The lower effective tax rate is primarily due to favorable provision to tax return adjustments, driven by federal employment tax credits, compared to third quarter of fiscal 2020.

Net income

Net income was $215.3 million for the 13 weeks ended October 30, 2021, compared to $74.8 million for the 13 weeks ended October 31, 2020. The increase in net income is primarily due to the $244.0 million increase in gross profit and ~~November 2, 2019.~~$23.6 million decrease in impairment, restructuring and other costs, partially offset by a $87.0 million increase in SG&A expenses and a $43.4 million increase in income taxes.

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~~Income tax expense~~

Income tax expense of $25.1 million for the 13 weeks ended October 31, 2020 represents an effective tax rate of 25.1%, compared to $38.9 million of tax expense representing an effective tax rate of 23.1% for the 13 weeks ended November 2, 2019. The higher effective tax rate is primarily due to less investment tax credits received.

~~Net income~~

Net income was $74.8 million for the 13 weeks ended October 31, 2020, compared to $129.7 million for the 13 weeks ended November 2, 2019. The decrease in net income is primarily due to the $77.9 million decrease in gross profit partially offset by a decrease in SG&A expenses of $32.8 million and $13.8 million decrease in income taxes. These decreases were partially offset by a $23.6 million increase in impairment, restructuring and other costs.

Comparison of 39 weeks ended October ~~31, 2020~~30, 2021 to 39 weeks ended ~~November 2, 2019~~October 31, 2020

Net sales

Net sales ~~decreased $1.1~~increased $1.9 billion or ~~22.4%~~49.3%, to $5.9 billion for the 39 weeks ended October 30, 2021, compared to $4.0 billion for the 39 weeks ended October 31, ~~2020, compared to $5.1 billion for the 39 weeks ended November 2, 2019.~~2020. The net sales ~~decrease~~increase was ~~driven by~~primarily due to the ~~negative impacts~~favorable impact from stronger consumer confidence, government stimulus payments, and the easing of ~~the~~ COVID-19 ~~pandemic, including the temporary closing of our brick-and-mortar retail stores, shelter in place orders, social distancing and quarantines, and a decrease of $4.5 million in other revenue. Total~~restrictions. The total comparable sales ~~for~~increase of 47.1% during the 39 weeks ended October ~~31, 2020, decreased 23.8% compared to an~~30, 2021 was driven by a 40.7% increase ~~of 5.4% for the 39 weeks ended November 2, 2019. During the 39 weeks ended October 31, 2020,~~in transactions ~~declined~~ ~~30.1%~~ and a4.6% increase in average ~~ticket increased 9.0%.~~ticket.

Gross profit

Gross profit ~~decreased $696.0 million~~increased $1.2 billion or ~~37.1%~~98.7%, to $2.3 billion for the 39 weeks ended October 30, 2021, compared to $1.2 billion for the 39 weeks ended October 31, ~~2020, compared to $1.9 billion for the 39 weeks ended November 2, 2019.~~2020. Gross profit as a percentage of net sales ~~decreased~~increased to 39.7% for the 39 weeks ended October 30, 2021, compared to 29.8% for the 39 weeks ended October 31, ~~2020, compared to 36.8% for the 39 weeks ended November 2, 2019.~~2020. The ~~decrease~~increase in gross profit margin was primarily due to ~~deleverage~~leverage of fixed costs, ~~due to lower sales, channel mix shifts, and deleverage~~improvement in merchandise margins, leverage of salon expenses, ~~due to lower sales. These pressures were partially offset by lower promotional activity.~~and favorable channel mix shifts.

Selling, general and administrative expenses

SG&A expenses ~~decreased $176.3~~increased $342.7 million or ~~14.2%~~32.1%, to $1.4 billion for the 39 weeks ended October 30, 2021, compared to $1.1 billion for the 39 weeks ended October 31, ~~2020, compared to $1.2 billion for the 39 weeks ended November 2, 2019.~~2020. SG&A expenses as a percentage of net sales ~~increased~~decreased to 23.9% for the 39 weeks ended October 30, 2021, compared to 27.1% for the 39 weeks ended October 31, 2020, ~~compared to 24.5% for the 39 weeks ended November 2, 2019. The increase was primarily~~ due to ~~higher expenses related to strategic growth investments made in 2019, PPE~~leverage of corporate overhead and ~~COVID-related expenses, and the deleverage of~~ store expenses due to ~~lower~~higher sales, ~~resulting from the impact of COVID-19,~~ partially offset by ~~leverage~~deleverage related to ~~the~~higher store payroll and benefits ~~including the~~primarily due to less employee retention credits ~~made available~~received under the CARES ~~Act.~~Act, and higher marketing expenses.

Impairment, restructuring and other costs

~~Impairment,~~There were no impairment, restructuring and other costs ~~were~~recognized in the 39 weeks ended October 30, 2021, compared to $83.9 million for the 39 weeks ended October 31, 2020, which consisted of $40.4 million due to the impairment of tangible long-lived assets and operating lease assets associated with certain retail stores, $21.9 million related to the permanent closure of 19 stores, and $5.7 million of severance charges. During the 39 weeks ended October 31, 2020, impairment, restructuring and other costs also included $15.9 million related to the suspension of our planned expansion to Canada. We expect to incur pre-tax costs in the range of $30,000 to $40,000 as a result of the suspension, the majority of which will be recognized in fiscal 2020. ~~The remaining estimated charges primarily relate to lease termination costs. There was no impairment, restructuring and other costs for the 39 weeks ended November 2, 2019.~~

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Pre-opening expenses

Pre-opening expenses decreased ~~$2.9~~$5.0 million to $7.8 million for the 39 weeks ended October 30, 2021, compared to $12.8 million for the 39 weeks ended October 31, 2020, compared to $15.7 million for the 39 weeks ended November 2, 2019. During the 39 weeks ended October 31, 2020, we opened 28 new stores and relocated three stores, compared to the 39 weeks ended November 2, 2019, when we opened 73 new stores, remodeled 12 stores, and relocated six stores.2020.

Interest expense, ~~(income),~~ net

Interest expense, net was ~~$5.3~~$1.2 million for the 39 weeks ended October ~~31, 2020~~30, 2021 compared to ~~$4.6~~$5.3 million of interest ~~income,~~expense, net for the 39 weeks ended ~~November 2, 2019.~~October 31, 2020. Interest expense represents interest on borrowings and fees related to the credit facility. Interest income results from cash equivalents and short-term investments with maturities of twelve months or less from the date of purchase. We did not have any outstanding borrowings on our credit facility as of October 30, 2021, January 30, 2021, and October 31, ~~2020 and November 2, 2019.~~2020.

Income tax expense

Income tax expense of ~~$2.9~~$224.2 million for the 39 weeks ended October ~~31, 2020~~30, 2021 represents an effective tax rate of ~~40.3%~~24.4%, compared to ~~$134.7~~$2.9 million of tax expense representing an effective tax rate of ~~21.8%~~40.3% for the 39 weeks ended ~~November 2, 2019.~~October 31, 2020. The ~~higher~~lower effective tax rate is primarily due to a ~~near break-even pre-tax operating income in fiscal 2020, less investment tax credits received, and tax expense~~benefit from the income tax accounting for share-based compensation and favorable provision to tax return adjustments, driven by federal employment tax credits, compared to ~~a tax benefit in~~ fiscal ~~2019.~~2020.

Net income

Net income was $696.5 million for the 39 weeks ended October 30, 2021 compared to $4.3 million for the 39 weeks ended October 31, ~~2020, compared to $483.2 million for the 39 weeks ended November 2, 2019.~~2020. The ~~decrease~~increase in net income is primarily due to ~~the $696.0 million decrease~~a $1.2 billion increase in gross profit ~~partially offset by a $176.3~~and an

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$83.9 million decrease ~~in SG&A expenses and $131.8 million decrease to income taxes. These decreases were partially offset by an $83.9 million increase~~ in impairment, restructuring and other ~~costs.~~costs, partially offset by a $342.7 million increase in SG&A expenses and a $221.3 million increase in income taxes.

Liquidity and capital resources

Our primary cash needs are for rent, capital expenditures for new, remodeled, and relocated ~~and refreshed~~ stores, ~~(prestige boutiques and related in-store merchandising upgrades),~~ increased merchandise inventories related to store expansion and new brand additions, ~~in-store boutiques (sets of custom-designed fixtures configured to prominently display certain prestige brands within our stores),~~ supply chain improvements, share repurchases, and continued improvement in our information technology systems.

Our primary sources of liquidity are cash and cash equivalents, short-term investments, cash flows from operations, including changes in working capital, and borrowings under our credit facility. As of October 30, 2021, January 30, 2021, and October 31, 2020, ~~February 1, 2020, and November 2, 2019,~~ we had cash and cash equivalents of $605.1 million, $1.0 billion, and ~~short-term investments of~~ $560.9 million, ~~$502.3 million, and $208.8 million,~~ respectively. As part of our response to the continued spread of COVID-19 and to improve our financial flexibility, we drew down $800.0 million under our $1.0 billion revolving credit facility on March 18, 2020. On September 2, 2020, we repaid the $800 million of borrowing that was outstanding under the facility.

The most significant components of our working capital are merchandise inventories and cash and cash equivalents reduced by related accounts payable and accrued expenses. Our working capital needs are greatest from August through November each year as a result of our inventory build-up during this period for the approaching holiday season. ~~This is also the time of year when we are at maximum investment levels in our new store class and may not have collected all of the landlord allowances due to us as part of our lease agreements.~~ Based on past performance and current expectations, we believe that cash and cash equivalents, short-term investments, cash generated from operations, and borrowings under the credit facility will satisfy the Company’s working capital needs, capital expenditure needs, commitments, and other liquidity requirements through at least the next twelve months.

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The following table presents a summary of our cash flows for the ~~periods indicated:~~39 weeks ended October 30, 2021 and October 31, 2020:


	39 Weeks Ended				39 Weeks Ended
	October 31,		November 2,		October 30,		October 31,
(In thousands)	2020		2019		2021		2020
Net cash provided by operating activities	$	259,045	$	557,506	$	414,857	$	259,045
Net cash used in investing activities		(13,630)		(284,893)		(108,418)		(13,630)
Net cash used in financing activities		(76,752)		(473,021)		(747,381)		(76,752)
Effect of exchange rate changes on cash and cash equivalents		(86)		—		(56)		(86)
Net increase (decrease) in cash and cash equivalents	$	168,577	$	(200,408)	$	(440,998)	$	168,577

Operating activities

Operating activities consist of net income adjusted for certain non-cash items, including depreciation and amortization, non-cash lease expense, long-lived asset impairment ~~charge,~~charges, deferred income taxes, stock-based compensation expense, realized gains or losses on disposal of property and equipment, and the effect of working capital changes. The ~~decrease over the prior period~~increase in net cash provided by operating activities in fiscal 2021 is mainly due to the ~~decrease~~increase in net income ~~merchandise inventories,~~ and the timing of accounts ~~payable.~~ payable, partially offset by higher merchandise inventories, higher prepaid income taxes and lower long-lived asset impairment charges compared to fiscal 2020.

The ~~decrease~~increase in net income was primarily due to ~~a decrease~~an increase in gross profit resulting from ~~lower~~higher sales asand a ~~result of the COVID-19 pandemic and an increase~~decrease in impairment, restructuring and other costs, partially offset by ~~a decrease~~an increase in SG&A expenses and income taxes.

Merchandise inventories, net were ~~$1.4~~$1.92 billion at October 30, 2021, compared to $1.44 billion at October 31, 2020, ~~compared to $1.6 billion at November 2, 2019,~~ representing ~~a decrease~~an increase of ~~$177.8~~$477.2 million or ~~11.0%~~33.2%. The ~~decrease~~increase in total inventory was primarily driven by the ~~decline in sales due to COVID-19 and lower holiday receipts, partially offset by an increase due to 21~~addition of 40 net new stores opened since ~~November 2, 2019~~October 31, 2020 and the ~~opening~~acceleration of ~~our Jacksonville, FL fast fulfillment center. Average~~ inventory ~~per store was down 12.5% compared~~receipts to ~~prior year.~~support expected demand and mitigate anticipated global supply chain disruptions.

Investing activities

We have historically used cash primarily for new, remodeled, relocated, and refreshed stores, supply chain investments, short-term investments, and investments in information technology systems. Investment activities for capital expenditures were ~~$116.7~~$108.4 million during the 39 weeks ended October ~~31, 2020,~~30, 2021, compared to ~~$241.1~~$116.7 million during the

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39 weeks ended ~~November 2, 2019.~~October 31, 2020. During the 39 weeks ended October 31, 2020, we received $110.0 million in short-term investments and we contributed $5.7 million to equity ~~method~~ investments.

During the 39 weeks ended October 30, 2021, we opened 42 new stores, relocated four stores and remodeled eight stores, compared to the 39 weeks ended October 31, 2020, when we opened 28 new stores and relocated three stores.

Our future investments will depend primarily on the number of new, remodeled, and relocated stores, information technology systems, and supply chain investments we undertake and the timing of these expenditures. ~~In light~~Based on past performance and current expectations, we believe our sources of ~~the pandemic, we reduced our capital expenditure plan for fiscal 2020, and anticipate capital expenditures~~liquidity will be ~~between $150 million and $160 million.~~sufficient to fund future capital expenditures.

Financing activities

Financing activities consist principally of borrowings on our revolving credit facility, share repurchases, and capital stock transactions. Purchases of treasury shares represent the fair value of common shares repurchased from plan participants in connection with shares withheld to satisfy minimum statutory tax obligations upon the vesting of restricted stock. ~~As of October 31, 2020, February 1, 2020, and November 2, 2019, we~~

We had no borrowings outstanding under the credit facility as of October 30, 2021, January 30, 2021, and October 31, 2020. The zero outstanding borrowings position continues to be due to a combination of factors including strong sales growth, overall performance of management initiatives including expense control. We may require borrowings under the facility from time to time in future periods for unexpected business disruptions, to support our ~~credit facility.~~new store program, share repurchases, and seasonal inventory needs.

Share repurchase ~~plan~~program

On March ~~15, 2018, we announced that~~14, 2019, the Board of Directors authorized a share repurchase program (the 2018 Share Repurchase Program) pursuant to which the Company could repurchase up to $625.0 million of the Company’s common stock. The 2018 Share Repurchase Program authorization revoked the previously authorized but unused amount of $41.3 million from the earlier share repurchase program. The 2018 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

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~~On March 14, 2019, we announced that the Board of Directors authorized a new~~ share repurchase program (the 2019 Share Repurchase Program) pursuant to which the Company could repurchase up to $875.0 million of the Company’s common stock. The 2019 Share Repurchase Program authorization revoked the previously authorized but unused amount of $25.4 million from the ~~2018 Share Repurchase Program.~~earlier share repurchase program. The 2019 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

On March 12, 2020, ~~we announced that~~ the Board of Directors authorized a ~~new~~ share repurchase program (the 2020 Share Repurchase Program) pursuant to which the Company may repurchase up to $1.6 billion of the Company’s common stock. The 2020 Share Repurchase Program authorization revoked the previously authorized but unused ~~amounts~~amount of ~~$165.3~~$177.8 million from the 2019 Share Repurchase Program. The 2020 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time. On April 2, 2020, we announced that the share repurchase program had been suspended in order to strengthen our liquidity and preserve cash in the early stages of the COVID-19 pandemic. While no shares were repurchased in the third quarter, the Company may resume its stock repurchase program in the fourth quarter of fiscal 2020.

A summary of ~~the Company’s~~ common stock repurchase activity is presented in the following table:


					39 Weeks Ended
	39 Weeks Ended				October 30,		October 31,
(Dollars in millions)	October 31, 2020		November 2, 2019		2021		2020
Shares repurchased		326,970		1,639,438		2,330,244		326,970
Total cost of shares repurchased	$	73.0	$	506.9	$	762.2	$	73.0

Credit facility

On March 11, 2020, we entered into Amendment No. 1 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 11, 2025, provides maximum revolving loans equal to the lesser of $1.0 billion 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 $50.0 million subfacility for letters of credit and allows the

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Company to increase the revolving facility by an additional $100.0 million, 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% to 0.125% or the London Interbank Offered Rate plus a margin of 1.125% to 1.250%, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.20% per annum.

As of October 30, 2021, January 30, 2021, and October 31, 2020, ~~February 1, 2020, and November 2, 2019,~~ we had no borrowings outstanding under the credit facility. As of October 31, 2020, the weighted average interest rate was 1.56% ~~and~~.

As of October 30, 2021, we were in compliance with all terms and covenants of the Loan Agreement.

Seasonality

Our business is subject to seasonal fluctuation. Significant portions of our net sales and profits are realized during the fourth quarter of the fiscal year due to the holiday selling season. To a lesser extent, our business is also affected by Mother’s Day and Valentine’s Day. Any decrease in sales during these higher sales volume periods could have an adverse effect on our business, financial condition, or operating results for the entire fiscal year. Our quarterly results of operations have varied in the past and are likely to do so again in the future. As such, we believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of our future performance.

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Off-balance sheet arrangements

As of October ~~31, 2020,~~30, 2021, we have not entered into any “off-balance sheet” arrangements, as that term is described by the SEC. We do, however, have off-balance sheet purchase obligations incurred in the ordinary course of business.

Contractual obligations

Our contractual obligations consist of operating lease obligations, purchase obligations, and our revolving line of credit. ~~During~~No material changes outside the ordinary course of business have occurred in our contractual obligations during the 39 weeks ended October ~~31, 2020, we drew down and repaid $800 million of borrowing under the facility.~~30, 2021.

Critical accounting policies and estimates

Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements required the use of estimates and judgments that affect the reported amounts of our assets, liabilities, revenues, and expenses. Management bases estimates on historical experience and other assumptions it believes to be reasonable under the circumstances and evaluates these estimates on an on-going basis. Actual results may differ from these estimates. There have been no significant changes to the critical accounting policies and estimates included in our Annual Report on Form 10-K for the fiscal year ended ~~February 1, 2020.~~

~~Recent accounting pronouncements not yet adopted~~

~~See Note 2 to our consolidated financial statements, “Summary of significant accounting policies – Recent accounting pronouncements not yet adopted.”~~January 30, 2021.

Recently adopted accounting pronouncements

See Note 2 to our consolidated financial statements, “Summary of significant accounting policies – Recently adopted accounting pronouncements.”

Item 3.Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest ~~rates and foreign currency exchange~~ rates. We do not hold or issue financial instruments for trading purposes.

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Interest rate risk

We are exposed to interest rate risks primarily through borrowings under our credit facility. Interest on our borrowings is based upon variable rates. We did not have any outstanding borrowings on ~~our~~the credit facility as of October ~~31, 2020~~30, 2021, January 30, 2021, and ~~November 2, 2019.~~

~~A hypothetical 1% increase in interest rates on variable rate debt would have increased interest expense for the 39 weeks ended~~ October 31, ~~2020 by approximately $3.7 million.~~

~~Foreign currency exchange rate risk~~

We are exposed to risks from foreign currency exchange rate fluctuations on the translation of our foreign operations into U.S. dollars and on the purchase of goods by these foreign operations that are not denominated in their local currencies. Our exposure to foreign currency rate fluctuations is not material to our financial condition or results of operations.2020.

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Item 4.Controls and Procedures

Evaluation of disclosure controls and procedures over financial reporting

We have established disclosure controls and procedures to ensure that material information relating to the Company is made known to the officers who certify our financial reports and to the members of our senior management and Board of Directors.

Based on management’s evaluation as of October ~~31, 2020,~~30, 2021, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of ~~1934,~~1934), are effective to ensure that the information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting

There were no changes to our internal controls over financial reporting during the 13 weeks ended October ~~31, 2020~~30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Part II - Other Information

Item 1.Legal Proceedings

See Note 87 to our consolidated financial statements, “Commitments and contingencies,” for information on legal proceedings.

Item 1A.Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended ~~February 1, 2020, as such were amended and supplemented in Part II, Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q for the fiscal quarter ended May 2, 2020,~~January 30, 2021, which could materially affect our business, financial condition, financial results, or future performance. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended ~~February 1, 2020 other than as such were previously supplemented and amended in our Quarterly Report on Form 10-Q for the fiscal quarter ended May 2, 2020.~~January 30, 2021.

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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth repurchases of our common stock during the third quarter of ~~2020:~~2021:

Period

Total number
of shares
purchased (1)

Average
price paid
per share

Total number
of shares
purchased as
part of publicly
announced
plans or
programs (2)

Approximate
dollar value of
shares that may yet
be purchased
under plans or programs
(in thousands) (2)
August 2, 2020 to August 29, 2020

615

$
203.88

–

$
1,576,360
August 30, 2020 to September 26, 2020

464

228.90

–

1,576,360
September 27, 2020 to October 31, 2020

239

233.55

–

1,576,360
13 weeks ended October 31, 2020

1,318

218.07

–

1,576,360


Period	Total number of shares purchased (1)	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs (2)	Approximate dollar value of shares that may yet be purchased under plans or programs (in thousands) (2)
August 1, 2021 to August 28, 2021	123,265	$	361.72	123,047	$	841,646
August 29, 2021 to September 25, 2021	106,816		377.96	106,507		801,390
September 26, 2021 to October 30, 2021	134,233		372.13	111,114		759,782
13 weeks ended October 30, 2021	364,314		370.32	340,668		759,782

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(1)

There were no340,668 shares repurchased as part of our publicly announced share repurchase program during the 13 weeks ended October ~~31, 2020~~30, 2021 and there were ~~1,318~~23,646 shares transferred from employees in satisfaction of minimum statutory tax withholding obligations upon the vesting of restricted stock during the period.

(2)

~~On March 12, 2020, we announced the~~The 2020 Share Repurchase Program ~~pursuant to which~~authorizes the ~~Company may~~ repurchase of up to $1.6 billion of the Company’s common ~~stock. The 2020 Share Repurchase Program authorization~~stock and revoked the previously authorized but unused amount of ~~$165.3~~$177.8 million from the 2019 Share Repurchase Program. As of October ~~31, 2020, $1.58 billion~~30, 2021, $759.8 million remained available under the ~~$1.6 billion~~ 2020 Share Repurchase Program.

Item 3.Defaults Upon Senior Securities

None

Item 4.Mine Safety Disclosures

None

Item 5.Other Information

None

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Item 6.Exhibits

The exhibits listed in the Exhibit Index below are filed as part of this Quarterly Report on Form 10-Q.

EXHIBIT INDEX


			Incorporated by Reference
Exhibit Number	Description of document	Filed Herewith	Form	Exhibit Number	File Number	Filing Date

3.1	Certificate of Incorporation of Ulta Beauty, Inc.		8-K	3.1	001-33764	1/30/2017
3.2	Bylaws of Ulta Beauty, Inc., as amended through June 3, 2020		8-K	3.2	001-33764	6/8/2020
31.1	Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002	X
31.2	Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002	X
32	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101.INS	Inline XBRL Instance	X
101.SCH	Inline XBRL Taxonomy Extension Schema	X
101.CAL	Inline XBRL Taxonomy Extension Calculation	X
101.LAB	Inline XBRL Taxonomy Extension Labels	X
101.PRE	Inline XBRL Taxonomy Extension Presentation	X
101.DEF	Inline XBRL Taxonomy Extension Definition	X
104	Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on December ~~3, 2020~~2, 2021 on its behalf by the undersigned, thereunto duly authorized.


	ULTA BEAUTY, INC.

	By:	/s/ ~~Mary N. Dillon~~David C. Kimbell
		~~Mary N. Dillon~~David C. Kimbell Chief Executive Officer and Director

	By:	/s/ Scott M. Settersten
		Scott M. Settersten Chief Financial Officer, Treasurer and Assistant Secretary

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	October 31,		February 1,		November 2,
(In thousands, except per share data)	2020		2020		2019
Assets		(Unaudited)				(Unaudited)
Current assets:
Cash and cash equivalents	$	560,902	$	392,325	$	208,843
Short-term investments		—		110,000		—
Receivables, net		136,271		139,337		112,888
Merchandise inventories, net		1,439,098		1,293,701		1,616,920
Prepaid expenses and other current assets		99,810		103,567		118,343
Prepaid income taxes		8,928		16,387		40,474
Total current assets		2,245,009		2,055,317		2,097,468

Property and equipment, net		1,042,262		1,205,524		1,233,412
Operating lease assets		1,510,030		1,537,565		1,529,524
Goodwill		10,870		10,870		10,870
Other intangible assets, net		2,696		3,391		3,622
Deferred compensation plan assets		30,141		27,849		26,269
Other long-term assets		29,986		23,356		27,683
Total assets	$	4,870,994	$	4,863,872	$	4,928,848

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	478,501	$	414,009	$	594,993
Accrued liabilities		268,310		246,088		249,112
Deferred revenue		224,862		237,535		190,188
Current operating lease liabilities		252,171		239,629		222,627
Accrued income taxes		6,499		—		—
Total current liabilities		1,230,343		1,137,261		1,256,920

Non-current operating lease liabilities		1,661,750		1,698,718		1,706,806
Deferred income taxes		89,112		89,367		83,856
Other long-term liabilities		35,352		36,432		34,110
Total liabilities		3,016,557		2,961,778		3,081,692

Commitments and contingencies (Note 8)

Stockholders' equity:
Common stock, $0.01 par value, 400,000 shares authorized; 57,024, 57,285 and 57,959 shares issued; 56,332, 56,609 and 57,283 shares outstanding; at October 31, 2020 (unaudited), February 1, 2020, and November 2, 2019 (unaudited), respectively		570		573		580
Treasury stock-common, at cost		(37,704)		(34,448)		(34,272)
Additional paid-in capital		831,817		807,492		800,986
Retained earnings		1,059,840		1,128,477		1,079,862
Accumulated other comprehensive income (loss)		(86)		—		—
Total stockholders’ equity		1,854,437		1,902,094		1,847,156
Total liabilities and stockholders’ equity	$	4,870,994	$	4,863,872	$	4,928,848