Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Aug. 01, 2015 | Aug. 27, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Aug. 1, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | ULTA | |
Entity Registrant Name | Ulta Salon, Cosmetics & Fragrance, Inc. | |
Entity Central Index Key | 1,403,568 | |
Current Fiscal Year End Date | --01-30 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 63,939,120 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Aug. 01, 2015 | Jan. 31, 2015 | Aug. 02, 2014 |
Current assets: | |||
Cash and cash equivalents | $ 325,214 | $ 389,149 | $ 363,058 |
Short-term investments | 150,209 | 150,209 | 100,146 |
Receivables, net | 45,277 | 52,440 | 42,110 |
Merchandise inventories, net | 705,660 | 581,229 | 541,508 |
Prepaid expenses and other current assets | 67,076 | 66,548 | 58,859 |
Prepaid income taxes | 1,883 | ||
Deferred income taxes | 20,766 | 20,780 | 22,012 |
Total current assets | 1,316,085 | 1,260,355 | 1,127,693 |
Property and equipment, net | 791,904 | 717,159 | 646,890 |
Deferred compensation plan assets | 7,921 | 5,656 | 5,229 |
Total assets | 2,115,910 | 1,983,170 | 1,779,812 |
Current liabilities: | |||
Accounts payable | 215,720 | 190,778 | 163,459 |
Accrued liabilities | 154,494 | 149,412 | 126,792 |
Accrued income taxes | 19,404 | 9,890 | |
Total current liabilities | 370,214 | 359,594 | 300,141 |
Deferred rent | 315,931 | 294,127 | 281,348 |
Deferred income taxes | 75,167 | 74,498 | 65,842 |
Other long-term liabilities | 10,809 | 7,442 | 6,440 |
Total liabilities | $ 772,121 | $ 735,661 | $ 653,771 |
Commitments and contingencies (Note 3) | |||
Stockholders' equity: | |||
Common stock, $.01 par value, 400,000 shares authorized; 64,595, 64,762 and 64,951 shares issued; 64,007, 64,184 and 64,375 shares outstanding; at August 1, 2015 (unaudited), January 31, 2015 and August 2, 2014 (unaudited), respectively | $ 646 | $ 647 | $ 650 |
Treasury stock-common, at cost | (11,191) | (9,713) | (9,461) |
Additional paid-in capital | 607,375 | 576,982 | 561,727 |
Retained earnings | 746,959 | 679,593 | 573,125 |
Total stockholders' equity | 1,343,789 | 1,247,509 | 1,126,041 |
Total liabilities and stockholders' equity | $ 2,115,910 | $ 1,983,170 | $ 1,779,812 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Aug. 01, 2015 | Jan. 31, 2015 | Aug. 02, 2014 |
Statement of Financial Position [Abstract] | |||
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 400,000,000 | 400,000,000 | 400,000,000 |
Common stock, shares issued | 64,595,000 | 64,762,000 | 64,951,000 |
Common stock, shares outstanding | 64,007,000 | 64,184,000 | 64,375,000 |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2015 | Aug. 02, 2014 | Aug. 01, 2015 | Aug. 02, 2014 | |
Income Statement [Abstract] | ||||
Net sales | $ 876,999 | $ 734,236 | $ 1,745,121 | $ 1,448,006 |
Cost of sales | 570,524 | 474,894 | 1,135,462 | 942,711 |
Gross profit | 306,475 | 259,342 | 609,659 | 505,295 |
Selling, general and administrative expenses | 183,937 | 157,768 | 376,422 | 320,211 |
Pre-opening expenses | 4,078 | 3,595 | 7,195 | 6,224 |
Operating income | 118,460 | 97,979 | 226,042 | 178,860 |
Interest income, net | (276) | (209) | (587) | (409) |
Income before income taxes | 118,736 | 98,188 | 226,629 | 179,269 |
Income tax expense | 44,567 | 37,394 | 85,514 | 68,522 |
Net income | $ 74,169 | $ 60,794 | $ 141,115 | $ 110,747 |
Net income per common share: | ||||
Basic | $ 1.16 | $ 0.94 | $ 2.20 | $ 1.72 |
Diluted | $ 1.15 | $ 0.94 | $ 2.19 | $ 1.71 |
Weighted average common shares outstanding: | ||||
Basic | 64,087 | 64,349 | 64,134 | 64,311 |
Diluted | 64,410 | 64,636 | 64,484 | 64,618 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Aug. 01, 2015 | Aug. 02, 2014 | |
Operating activities | ||
Net income | $ 141,115 | $ 110,747 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 76,738 | 62,372 |
Deferred income taxes | 683 | (642) |
Non-cash stock compensation charges | 7,578 | 7,603 |
Excess tax benefits from stock-based compensation | (7,257) | (1,423) |
Loss on disposal of property and equipment | 1,629 | 2,582 |
Change in operating assets and liabilities: | ||
Receivables | 7,163 | 4,939 |
Merchandise inventories | (124,431) | (83,575) |
Prepaid expenses and other current assets | (528) | (2,866) |
Income taxes | (14,030) | (4,036) |
Accounts payable | 24,942 | 15,177 |
Accrued liabilities | (10,812) | 1,601 |
Deferred rent | 21,804 | 19,718 |
Other assets and liabilities | 1,102 | 1,031 |
Net cash provided by operating activities | 125,696 | 133,228 |
Investing activities | ||
Purchases of short-term investments | (50,000) | (100,146) |
Proceeds from short-term investments | 50,000 | |
Purchases of property and equipment | (137,218) | (94,097) |
Net cash used in investing activities | (137,218) | (194,243) |
Financing activities | ||
Repurchase of common shares | (73,753) | |
Stock options exercised | 15,561 | 4,510 |
Excess tax benefits from stock-based compensation | 7,257 | 1,423 |
Purchase of treasury shares | (1,478) | (1,336) |
Net cash (used in) provided by financing activities | (52,413) | 4,597 |
Net decrease in cash and cash equivalents | (63,935) | (56,418) |
Cash and cash equivalents at beginning of period | 389,149 | 419,476 |
Cash and cash equivalents at end of period | 325,214 | 363,058 |
Supplemental cash flow information | ||
Cash paid for income taxes (net of refunds) | 98,437 | 72,855 |
Non-cash investing activities: | ||
Change in property and equipment included in accrued liabilities | $ 15,893 | $ 22,010 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity (Unaudited) - 6 months ended Aug. 01, 2015 - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Treasury - Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] |
Balance at Jan. 31, 2015 | $ 1,247,509 | $ 647 | $ (9,713) | $ 576,982 | $ 679,593 |
Balance, Shares at Jan. 31, 2015 | 64,762 | ||||
Balance, Shares at Jan. 31, 2015 | (578) | ||||
Stock options exercised and other awards | 15,561 | $ 3 | 15,558 | ||
Stock options exercised and other awards, Shares | 317 | ||||
Purchase of treasury shares | (1,478) | $ (1,478) | |||
Purchase of treasury shares, Shares | (10) | ||||
Net income | 141,115 | 141,115 | |||
Excess tax benefits from stock-based compensation | 7,257 | 7,257 | |||
Stock compensation charge | 7,578 | 7,578 | |||
Repurchase of common shares | (73,753) | $ (4) | (73,749) | ||
Repurchase of common shares, Shares | (484) | ||||
Balance at Aug. 01, 2015 | $ 1,343,789 | $ 646 | $ (11,191) | $ 607,375 | $ 746,959 |
Balance, Shares at Aug. 01, 2015 | 64,595 | ||||
Balance, Shares at Aug. 01, 2015 | (588) |
Business and Basis of Presentat
Business and Basis of Presentation | 6 Months Ended |
Aug. 01, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Basis of Presentation | 1. Business and basis of presentation Ulta Salon, Cosmetics & Fragrance, Inc. was incorporated in the state of Delaware on January 9, 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 August 1, 2015, the Company operated 817 stores in 48 states, as shown in the table below. As used in these notes and throughout this Quarterly Report on Form 10-Q, all references to “we,” “us,” “our,” “Ulta,” “Ulta Beauty” or “the Company” refer to Ulta Salon, Cosmetics & Fragrance, Inc. and its consolidated subsidiary, Ulta Inc. State Number of State Number of Alabama 12 Montana 5 Alaska 2 Nebraska 3 Arizona 24 Nevada 10 Arkansas 6 New Hampshire 6 California 97 New Jersey 21 Colorado 17 New Mexico 4 Connecticut 9 New York 29 Delaware 1 North Carolina 25 Florida 57 North Dakota 1 Georgia 26 Ohio 29 Idaho 6 Oklahoma 10 Illinois 45 Oregon 9 Indiana 15 Pennsylvania 29 Iowa 8 Rhode Island 2 Kansas 6 South Carolina 14 Kentucky 10 South Dakota 2 Louisiana 16 Tennessee 13 Maine 3 Texas 80 Maryland 13 Utah 11 Massachusetts 13 Virginia 21 Michigan 38 Washington 17 Minnesota 12 West Virginia 4 Mississippi 5 Wisconsin 14 Missouri 16 Wyoming 1 Total 817 The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) 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 consolidated financial statements were prepared on a consolidated basis to include the accounts of the Company and its wholly owned subsidiary. All significant intercompany accounts, transactions and unrealized profit were eliminated in consolidation. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary to fairly state the financial position and results of operations and cash flows for the interim periods presented. The Company’s business is subject to seasonal fluctuation. Significant portions of the Company’s net sales and net income are realized during the fourth quarter of the fiscal year due to the holiday selling season. The results for the 13 and 26 weeks ended August 1, 2015 are not necessarily indicative of the results to be expected for the fiscal year ending January 30, 2016, or for any other future interim period or for any future year. These 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 January 31, 2015. All amounts are stated in thousands, with the exception of per share amounts and number of stores. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Aug. 01, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 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 financial statements in the Company’s Annual Report on Form 10-K for the year ended January 31, 2015. Presented below and in the following notes is supplemental information that should be read in conjunction with “Notes to 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 second quarters in fiscal 2015 and 2014 ended on August 1, 2015 and August 2, 2014, respectively. Share-based compensation The Company measures share-based compensation cost on the grant date, based on the fair value of the award, and recognizes the expense on a straight-line method over the requisite service period for awards expected to vest. The Company estimated the grant date fair value of stock options using a Black-Scholes valuation model using the following weighted-average assumptions for the periods indicated: 26 Weeks Ended August 1, 2015 August 2, 2014 Volatility rate 38.0 % 40.9 % Average risk-free interest rate 1.1 % 1.4 % Average expected life (in years) 3.6 3.8 Dividend yield None None The Company granted 89 and 320 stock options during the 26 weeks ended August 1, 2015 and August 2, 2014, respectively. The compensation cost that has been charged against operating income was $1,908 and $2,471 for the 13 weeks ended August 1, 2015 and August 2, 2014, respectively. The compensation cost that has been charged against operating income was $3,939 and $4,604 for the 26 weeks ended August 1, 2015 and August 2, 2014, respectively. The weighted-average grant date fair value of these options was $44.79 and $31.74, respectively. At August 1, 2015, there was approximately $32,441 of unrecognized compensation expense related to unvested stock options. The Company issued 73 and 68 restricted stock awards during 26 weeks ended August 1, 2015 and August 2, 2014, respectively. The compensation cost that has been charged against operating income was $2,328 and $1,069 for the 13 weeks ended August 1, 2015 and August 2, 2014, respectively. The compensation cost that has been charged against operating income was $3,639 and $2,999 for the 26 weeks ended August 1, 2015 and August 2, 2014, respectively. At August 1, 2015, there was approximately $29,931 of unrecognized compensation expense related to restricted stock awards. Recent accounting pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, issued as a new Topic, Accounting Standards Codification Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that the Company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 Revenue from Contracts with Customers (Topic 606), which delayed the effective date of ASU 2014-09 by one year. With the deferral, the revenue recognition standard is effective beginning in fiscal year 2018 with early adoption permitted beginning in fiscal 2017. The standard allows for either full retrospective or modified retrospective adoption. The Company is currently evaluating the application method and the impact of this new standard on its consolidated financial position, results of operations and cash flows. In April 2015, the FASB issued Accounting Standards Update No. 2015-05, Customers’ Accounting for Fees Paid in a Cloud Computing Arrangement. This standard provides guidance to determine whether a cloud-based computing arrangement includes a software license. If a cloud-based computing arrangement includes a software license, the customer must account for the software element of the arrangement consistent with the acquisition of other software licenses. Otherwise, the customer must account for the arrangement as a service contract. The standard will take effect for public companies for annual reporting periods beginning after December 15, 2015, including interim reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial position, results of operations and cash flows. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Aug. 01, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 3. Commitments and contingencies Leases General litigation Moore v. Ulta The Company has not recorded any accruals for this matter because the Company’s potential liability for the matter is not probable and cannot be reasonably estimated based on currently available information and early stage of the pending litigation. Although the maximum amount of liability that may ultimately result from this matter cannot be predicted with certainty, management expects that this matter, when ultimately resolved, will not have a material adverse effect on the Company’s consolidated financial position or liquidity. It is possible, however, that the ultimate resolution of this matter could have a material adverse effect on the Company’s results of operations in a particular quarter or year if such resolution results in a significant liability for the Company. On December 4, 2013, a putative employment class action lawsuit ( Galvez v. Ulta Although the maximum amount of liability that may ultimately result from this matter cannot be predicted with certainty, management expects that this matter, when ultimately resolved, will not have a material adverse effect on the Company’s consolidated financial position or liquidity. It is possible, however, that the ultimate resolution of this matter could have a material adverse effect on the Company’s results of operations in a particular quarter or year if such resolution results in a significant liability for the Company. On May 19, 2015, a putative employment class action lawsuit ( Paez v. Ulta Moore The Company has not recorded any accruals for this matter because the Company’s potential liability for the matter is not probable and cannot be reasonably estimated based on currently available information and the early stage of the pending litigation. Although the maximum amount of liability that may ultimately result from this matter cannot be predicted with certainty, management expects that this matter, when ultimately resolved, will not have a material adverse effect on the Company’s consolidated financial position or liquidity. It is possible, however, that the ultimate resolution of this matter could have a material adverse effect on the Company’s results of operations in a particular quarter or year if such resolution results in a significant liability for the Company. The Company is also involved in various legal proceedings that are incidental to the conduct of its business. In the opinion of management, the amount of any liability with respect to these proceedings, either individually or in the aggregate, will not be material. |
Notes Payable
Notes Payable | 6 Months Ended |
Aug. 01, 2015 | |
Debt Disclosure [Abstract] | |
Notes Payable | 4. Notes payable On October 19, 2011, the Company entered into an Amended and Restated Loan and Security Agreement (the Loan Agreement) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and a Lender thereunder, Wells Fargo Capital Finance LLC as a Lender, J.P. Morgan Securities LLC as a Lender, JP Morgan Chase Bank, N.A. as a Lender and PNC Bank, National Association, as a Lender. The Loan Agreement amended and restated the Loan and Security Agreement, dated as of August 31, 2010, by and among the lenders. The Loan Agreement extended the maturity of the Company’s credit facility to October 2016, provides maximum revolving loans equal to the lesser of $200,000 or a percentage of eligible owned inventory, contains a $10,000 subfacility for letters of credit and allows the Company to increase the revolving facility by an additional $50,000, subject to consent by each lender and other conditions. The Loan Agreement contains a requirement to maintain a minimum amount of excess borrowing availability at all times. On September 5, 2012, the Company entered into Amendment No. 1 to Amended and Restated Loan and Security Agreement (the First Amendment) with the lender group. The First Amendment updated certain administrative terms and conditions and provides the Company greater flexibility to take certain corporate actions. There were no changes to the revolving loan amounts available, interest rates, covenants or maturity date under terms of the Loan Agreement. On December 6, 2013, the Company entered into Amendment No. 2 to the Amended and Restated Loan and Security Agreement (the Second Amendment) with the lender group. The Second Amendment extended the maturity of the facility to December 2018. Substantially all of the Company’s assets are pledged as collateral for outstanding borrowings under the facility. Outstanding borrowings will bear interest at the prime rate or LIBOR plus 1.50% and the unused line fee is 0.20%. As of August 1, 2015, January 31, 2015 and August 2, 2014, the Company had no borrowings outstanding under the credit facility and the Company was in compliance with all terms and covenants of the agreement. |
Investments
Investments | 6 Months Ended |
Aug. 01, 2015 | |
Investments Schedule [Abstract] | |
Investments | 5. Investments The Company’s short-term investments as of August 1, 2015 consist of $150,209 in certificates of deposit. These short-term investments are carried at cost, which approximates fair value and are recorded in the Consolidated Balance Sheets in Short-term investments. The contractual maturity of the Company’s investments was less than twelve months at August 1, 2015. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Aug. 01, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 6. Fair Value Measurements The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximates their estimated fair values due to the short maturities of these instruments. Fair value is measured using inputs from the three levels of the fair value hierarchy, which are described as follows: • Level 1 – observable inputs such as quoted prices for identical instruments in active markets. • Level 2 – inputs other than quoted prices in active markets that are observable either directly or indirectly through corroboration with observable market data. • Level 3 – unobservable inputs in which there is little or no market data, which would require the Company to develop its own assumptions. As of August 1, 2015, January 31, 2015 and August 2, 2014, the Company held financial liabilities of $8,026, $5,574 and $4,494, respectively, related to its non-qualified deferred compensation plan. The liabilities have been categorized as Level 2 as they are based on third-party reported net asset values, which are based primarily on quoted market prices of underlying assets of the funds within the plan. |
Net Income Per Common Share
Net Income Per Common Share | 6 Months Ended |
Aug. 01, 2015 | |
Earnings Per Share [Abstract] | |
Net Income Per Common Share | 7. 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 share: 13 Weeks Ended 26 Weeks Ended (In thousands, except per share data) August 1, August 2, August 1, August 2, Numerator for diluted net income per share – net income $ 74,169 $ 60,794 $ 141,115 $ 110,747 Denominator for basic net income per share – weighted-average common shares 64,087 64,349 64,134 64,311 Dilutive effect of stock options and non-vested stock 323 287 350 307 Denominator for diluted net income per share 64,410 64,636 64,484 64,618 Net income per common share: Basic $ 1.16 $ 0.94 $ 2.20 $ 1.72 Diluted $ 1.15 $ 0.94 $ 2.19 $ 1.71 The denominators for diluted net income per common share for the 13 weeks ended August 1, 2015 and August 2, 2014 exclude 119 and 621 employee stock options and restricted stock, respectively, due to their anti-dilutive effects. The denominators for diluted net income per common share for the 26 weeks ended August 1, 2015 and August 2, 2014 exclude 185 and 743 employee stock options and restricted stock, respectively, due to their anti-dilutive effects. |
Share Repurchase Program
Share Repurchase Program | 6 Months Ended |
Aug. 01, 2015 | |
Equity [Abstract] | |
Share Repurchase Program | 8. Share repurchase program On September 11, 2014, the Company announced that our Board of Directors authorized a new share repurchase program (the 2014 Share Repurchase Program) pursuant to which the Company may repurchase up to $300,000 of the Company’s common stock. The 2014 Share Repurchase Program authorization revoked the previously authorized but unused amount of $112,664 from the share repurchase program adopted in 2013. The 2014 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time. On March 12, 2015, the Company announced that our Board of Directors authorized an increase of $100 million to the 2014 Share Repurchase Program effective March 17, 2015. During the 26 weeks ended August 1, 2015, we purchased 484 shares of common stock for $73,753 at an average price of $152.48. There were no repurchases during the 26 weeks ended August 2, 2014. |
Summary of Significant Accoun15
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Aug. 01, 2015 | |
Accounting Policies [Abstract] | |
Fiscal quarter | 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 second quarters in fiscal 2015 and 2014 ended on August 1, 2015 and August 2, 2014, respectively. |
Share-based compensation | Share-based compensation The Company measures share-based compensation cost on the grant date, based on the fair value of the award, and recognizes the expense on a straight-line method over the requisite service period for awards expected to vest. The Company estimated the grant date fair value of stock options using a Black-Scholes valuation model using the following weighted-average assumptions for the periods indicated: 26 Weeks Ended August 1, 2015 August 2, 2014 Volatility rate 38.0 % 40.9 % Average risk-free interest rate 1.1 % 1.4 % Average expected life (in years) 3.6 3.8 Dividend yield None None The Company granted 89 and 320 stock options during the 26 weeks ended August 1, 2015 and August 2, 2014, respectively. The compensation cost that has been charged against operating income was $1,908 and $2,471 for the 13 weeks ended August 1, 2015 and August 2, 2014, respectively. The compensation cost that has been charged against operating income was $3,939 and $4,604 for the 26 weeks ended August 1, 2015 and August 2, 2014, respectively. The weighted-average grant date fair value of these options was $44.79 and $31.74, respectively. At August 1, 2015, there was approximately $32,441 of unrecognized compensation expense related to unvested stock options. The Company issued 73 and 68 restricted stock awards during 26 weeks ended August 1, 2015 and August 2, 2014, respectively. The compensation cost that has been charged against operating income was $2,328 and $1,069 for the 13 weeks ended August 1, 2015 and August 2, 2014, respectively. The compensation cost that has been charged against operating income was $3,639 and $2,999 for the 26 weeks ended August 1, 2015 and August 2, 2014, respectively. At August 1, 2015, there was approximately $29,931 of unrecognized compensation expense related to restricted stock awards. |
Recent accounting pronouncements | Recent accounting pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, issued as a new Topic, Accounting Standards Codification Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that the Company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 Revenue from Contracts with Customers (Topic 606), which delayed the effective date of ASU 2014-09 by one year. With the deferral, the revenue recognition standard is effective beginning in fiscal year 2018 with early adoption permitted beginning in fiscal 2017. The standard allows for either full retrospective or modified retrospective adoption. The Company is currently evaluating the application method and the impact of this new standard on its consolidated financial position, results of operations and cash flows. In April 2015, the FASB issued Accounting Standards Update No. 2015-05, Customers’ Accounting for Fees Paid in a Cloud Computing Arrangement. This standard provides guidance to determine whether a cloud-based computing arrangement includes a software license. If a cloud-based computing arrangement includes a software license, the customer must account for the software element of the arrangement consistent with the acquisition of other software licenses. Otherwise, the customer must account for the arrangement as a service contract. The standard will take effect for public companies for annual reporting periods beginning after December 15, 2015, including interim reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial position, results of operations and cash flows. |
Business and Basis of Present16
Business and Basis of Presentation (Tables) | 6 Months Ended |
Aug. 01, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Details of Company Operated Stores | As of August 1, 2015, the Company operated 817 stores in 48 states, as shown in the table below. As used in these notes and throughout this Quarterly Report on Form 10-Q, all references to “we,” “us,” “our,” “Ulta,” “Ulta Beauty” or “the Company” refer to Ulta Salon, Cosmetics & Fragrance, Inc. and its consolidated subsidiary, Ulta Inc. State Number of State Number of Alabama 12 Montana 5 Alaska 2 Nebraska 3 Arizona 24 Nevada 10 Arkansas 6 New Hampshire 6 California 97 New Jersey 21 Colorado 17 New Mexico 4 Connecticut 9 New York 29 Delaware 1 North Carolina 25 Florida 57 North Dakota 1 Georgia 26 Ohio 29 Idaho 6 Oklahoma 10 Illinois 45 Oregon 9 Indiana 15 Pennsylvania 29 Iowa 8 Rhode Island 2 Kansas 6 South Carolina 14 Kentucky 10 South Dakota 2 Louisiana 16 Tennessee 13 Maine 3 Texas 80 Maryland 13 Utah 11 Massachusetts 13 Virginia 21 Michigan 38 Washington 17 Minnesota 12 West Virginia 4 Mississippi 5 Wisconsin 14 Missouri 16 Wyoming 1 Total 817 |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Aug. 01, 2015 | |
Accounting Policies [Abstract] | |
Black-Scholes Valuation Model Weighted-Average Assumptions | The Company estimated the grant date fair value of stock options using a Black-Scholes valuation model using the following weighted-average assumptions for the periods indicated: 26 Weeks Ended August 1, 2015 August 2, 2014 Volatility rate 38.0 % 40.9 % Average risk-free interest rate 1.1 % 1.4 % Average expected life (in years) 3.6 3.8 Dividend yield None None |
Net Income Per Common Share (Ta
Net Income Per Common Share (Tables) | 6 Months Ended |
Aug. 01, 2015 | |
Earnings Per Share [Abstract] | |
Net Income Per Basic and Diluted 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 share: 13 Weeks Ended 26 Weeks Ended (In thousands, except per share data) August 1, August 2, August 1, August 2, Numerator for diluted net income per share – net income $ 74,169 $ 60,794 $ 141,115 $ 110,747 Denominator for basic net income per share – weighted-average common shares 64,087 64,349 64,134 64,311 Dilutive effect of stock options and non-vested stock 323 287 350 307 Denominator for diluted net income per share 64,410 64,636 64,484 64,618 Net income per common share: Basic $ 1.16 $ 0.94 $ 2.20 $ 1.72 Diluted $ 1.15 $ 0.94 $ 2.19 $ 1.71 |
Business and Basis of Present19
Business and Basis of Presentation - Additional Information (Detail) - Aug. 01, 2015 | StoreState |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of stores | 817 |
Number of states in which entity operates | State | 48 |
Business and Basis of Present20
Business and Basis of Presentation - Details of Company Operated Stores (Detail) | Aug. 01, 2015Store |
Product Information [Line Items] | |
Number of stores | 817 |
Alabama [Member] | |
Product Information [Line Items] | |
Number of stores | 12 |
Alaska [Member] | |
Product Information [Line Items] | |
Number of stores | 2 |
Arizona [Member] | |
Product Information [Line Items] | |
Number of stores | 24 |
Arkansas [Member] | |
Product Information [Line Items] | |
Number of stores | 6 |
California [Member] | |
Product Information [Line Items] | |
Number of stores | 97 |
Colorado [Member] | |
Product Information [Line Items] | |
Number of stores | 17 |
Connecticut [Member] | |
Product Information [Line Items] | |
Number of stores | 9 |
Delaware [Member] | |
Product Information [Line Items] | |
Number of stores | 1 |
Florida [Member] | |
Product Information [Line Items] | |
Number of stores | 57 |
Georgia [Member] | |
Product Information [Line Items] | |
Number of stores | 26 |
Idaho [Member] | |
Product Information [Line Items] | |
Number of stores | 6 |
Illinois [Member] | |
Product Information [Line Items] | |
Number of stores | 45 |
Indiana [Member] | |
Product Information [Line Items] | |
Number of stores | 15 |
Iowa [Member] | |
Product Information [Line Items] | |
Number of stores | 8 |
Kansas [Member] | |
Product Information [Line Items] | |
Number of stores | 6 |
Kentucky [Member] | |
Product Information [Line Items] | |
Number of stores | 10 |
Louisiana [Member] | |
Product Information [Line Items] | |
Number of stores | 16 |
Maine [Member] | |
Product Information [Line Items] | |
Number of stores | 3 |
Maryland [Member] | |
Product Information [Line Items] | |
Number of stores | 13 |
Massachusetts [Member] | |
Product Information [Line Items] | |
Number of stores | 13 |
Michigan [Member] | |
Product Information [Line Items] | |
Number of stores | 38 |
Minnesota [Member] | |
Product Information [Line Items] | |
Number of stores | 12 |
Mississippi [Member] | |
Product Information [Line Items] | |
Number of stores | 5 |
Missouri [Member] | |
Product Information [Line Items] | |
Number of stores | 16 |
Montana [Member] | |
Product Information [Line Items] | |
Number of stores | 5 |
Nebraska [Member] | |
Product Information [Line Items] | |
Number of stores | 3 |
Nevada [Member] | |
Product Information [Line Items] | |
Number of stores | 10 |
New Hampshire [Member] | |
Product Information [Line Items] | |
Number of stores | 6 |
New Jersey [Member] | |
Product Information [Line Items] | |
Number of stores | 21 |
New Mexico [Member] | |
Product Information [Line Items] | |
Number of stores | 4 |
New York [Member] | |
Product Information [Line Items] | |
Number of stores | 29 |
North Carolina [Member] | |
Product Information [Line Items] | |
Number of stores | 25 |
North Dakota [Member] | |
Product Information [Line Items] | |
Number of stores | 1 |
Ohio [Member] | |
Product Information [Line Items] | |
Number of stores | 29 |
Oklahoma [Member] | |
Product Information [Line Items] | |
Number of stores | 10 |
Oregon [Member] | |
Product Information [Line Items] | |
Number of stores | 9 |
Pennsylvania [Member] | |
Product Information [Line Items] | |
Number of stores | 29 |
Rhode Island [Member] | |
Product Information [Line Items] | |
Number of stores | 2 |
South Carolina [Member] | |
Product Information [Line Items] | |
Number of stores | 14 |
South Dakota [Member] | |
Product Information [Line Items] | |
Number of stores | 2 |
Tennessee [Member] | |
Product Information [Line Items] | |
Number of stores | 13 |
Texas [Member] | |
Product Information [Line Items] | |
Number of stores | 80 |
Utah [Member] | |
Product Information [Line Items] | |
Number of stores | 11 |
Virginia [Member] | |
Product Information [Line Items] | |
Number of stores | 21 |
Washington [Member] | |
Product Information [Line Items] | |
Number of stores | 17 |
West Virginia [Member] | |
Product Information [Line Items] | |
Number of stores | 4 |
Wisconsin [Member] | |
Product Information [Line Items] | |
Number of stores | 14 |
Wyoming [Member] | |
Product Information [Line Items] | |
Number of stores | 1 |
Summary of Significant Accoun21
Summary of Significant Accounting Policies - Black-Scholes Valuation Model Weighted-Average Assumptions (Detail) | 6 Months Ended | |
Aug. 01, 2015 | Aug. 02, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||
Volatility rate | 38.00% | 40.90% |
Average risk-free interest rate | 1.10% | 1.40% |
Average expected life (in years) | 3 years 7 months 6 days | 3 years 9 months 18 days |
Dividend yield | 0.00% | 0.00% |
Summary of Significant Accoun22
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2015 | Aug. 02, 2014 | Aug. 01, 2015 | Aug. 02, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expenses | $ 7,578 | $ 7,603 | ||
Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares granted | 89 | 320 | ||
Weighted-average fair value of stock option | $ 44.79 | $ 31.74 | ||
Compensation expenses | $ 1,908 | $ 2,471 | $ 3,939 | $ 4,604 |
Unrecognized compensation expense | 32,441 | $ 32,441 | ||
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares granted | 73 | 68 | ||
Compensation expenses | 2,328 | $ 1,069 | $ 3,639 | $ 2,999 |
Unrecognized compensation expense | $ 29,931 | $ 29,931 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2015 | Aug. 02, 2014 | Aug. 01, 2015 | Aug. 02, 2014 | |
Long-term Purchase Commitment [Line Items] | ||||
Total rent expense under operating leases | $ 43,743 | $ 38,941 | $ 88,301 | $ 77,480 |
Minimum [Member] | ||||
Long-term Purchase Commitment [Line Items] | ||||
Non-cancelable operating lease terms | 3 years | |||
Maximum [Member] | ||||
Long-term Purchase Commitment [Line Items] | ||||
Non-cancelable operating lease terms | 10 years |
Notes Payable - Additional Info
Notes Payable - Additional Information (Detail) - USD ($) | 6 Months Ended | ||
Aug. 01, 2015 | Jan. 31, 2015 | Aug. 02, 2014 | |
Line of Credit Facility [Line Items] | |||
Letters of credit, maximum borrowing capacity | $ 200,000,000 | ||
Additional credit available under the revolving facility with consent by each lender and other conditions | $ 50,000,000 | ||
Interest rate on outstanding borrowing under facility | LIBOR plus 1.50% | ||
Percentage of unused Line of Credit Facility Fee | 0.20% | ||
Outstanding debt under credit facility | $ 0 | $ 0 | $ 0 |
Subfacility for Standby Letters of Credit [Member] | |||
Line of Credit Facility [Line Items] | |||
Letters of credit, maximum borrowing capacity | $ 10,000,000 |
Investments - Additional Inform
Investments - Additional Information (Detail) $ in Thousands | Aug. 01, 2015USD ($) |
Investments Schedule [Abstract] | |
Certificates of deposit | $ 150,209 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Thousands | Aug. 01, 2015 | Jan. 31, 2015 | Aug. 02, 2014 |
Fair Value, Inputs, Level 2 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Deferred compensation plan liability | $ 8,026 | $ 5,574 | $ 4,494 |
Net Income Per Common Share - N
Net Income Per Common Share - Net Income Per Basic and Diluted Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2015 | Aug. 02, 2014 | Aug. 01, 2015 | Aug. 02, 2014 | |
Earnings Per Share [Abstract] | ||||
Numerator for diluted net income per share - net income | $ 74,169 | $ 60,794 | $ 141,115 | $ 110,747 |
Denominator for basic net income per share - weighted-average common shares | 64,087 | 64,349 | 64,134 | 64,311 |
Dilutive effect of stock options and non-vested stock | 323 | 287 | 350 | 307 |
Denominator for diluted net income per share | 64,410 | 64,636 | 64,484 | 64,618 |
Net income per common share: | ||||
Basic | $ 1.16 | $ 0.94 | $ 2.20 | $ 1.72 |
Diluted | $ 1.15 | $ 0.94 | $ 2.19 | $ 1.71 |
Net Income Per Common Share - A
Net Income Per Common Share - Additional Information (Detail) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 01, 2015 | Aug. 02, 2014 | Aug. 01, 2015 | Aug. 02, 2014 | |
Earnings Per Share [Abstract] | ||||
Employee stock options and restricted stock excluded from the computation of net income per common share | 119 | 621 | 185 | 743 |
Share Repurchase Program - Addi
Share Repurchase Program - Additional Information (Detail) - USD ($) | 6 Months Ended | |||
Aug. 01, 2015 | Aug. 02, 2014 | Mar. 12, 2015 | Sep. 11, 2014 | |
Stock Repurchase Program [Line Items] | ||||
Repurchase of common stock | $ 73,753,000 | |||
2013 Share Repurchase Program [Member] | ||||
Stock Repurchase Program [Line Items] | ||||
Shares authorized but unused amount revoked | $ 112,664,000 | |||
2014 Share Repurchase Program [Member] | ||||
Stock Repurchase Program [Line Items] | ||||
Repurchase of common stock authorized increase | 100,000,000 | |||
Repurchase of common stock, shares | 484,000 | 0 | ||
Repurchase of common stock | $ 73,753,000 | |||
Repurchase of common stock, average price per share | $ 152.48 | |||
2014 Share Repurchase Program [Member] | Maximum [Member] | ||||
Stock Repurchase Program [Line Items] | ||||
Repurchase of common stock authorized amount | $ 300,000,000 |