Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 30, 2016 | May. 26, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Apr. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
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 | 62,454,627 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 30, 2016 | Jan. 30, 2016 | May. 02, 2015 |
Current assets: | |||
Cash and cash equivalents | $ 239,254 | $ 345,840 | $ 386,007 |
Short-term investments | 130,000 | 130,000 | 150,209 |
Receivables, net | 54,112 | 64,992 | 43,558 |
Merchandise inventories, net | 843,490 | 761,793 | 662,936 |
Prepaid expenses and other current assets | 71,561 | 72,548 | 61,725 |
Deferred income taxes | 20,766 | ||
Total current assets | 1,338,417 | 1,375,173 | 1,325,201 |
Property and equipment, net | 870,835 | 847,600 | 744,665 |
Deferred compensation plan assets | 9,698 | 8,145 | 8,085 |
Total assets | 2,218,950 | 2,230,918 | 2,077,951 |
Current liabilities: | |||
Accounts payable | 266,278 | 196,174 | 209,509 |
Accrued liabilities | 179,300 | 187,351 | 139,284 |
Accrued income taxes | 50,156 | 12,702 | 34,871 |
Total current liabilities | 495,734 | 396,227 | 383,664 |
Deferred rent | 330,121 | 321,789 | 305,355 |
Deferred income taxes | 59,977 | 59,527 | 75,135 |
Other long-term liabilities | 13,430 | 10,489 | 10,812 |
Total liabilities | $ 899,262 | $ 788,032 | $ 774,966 |
Commitments and contingencies (Note 3) | |||
Stockholders' equity: | |||
Common stock, $.01 par value, 400,000 shares authorized; 63,226, 64,131 and 64,770 shares issued; 62,625, 63,540 and 64,185 shares outstanding; at April 30, 2016 (unaudited), January 30, 2016 and May 2, 2015 (unaudited), respectively | $ 632 | $ 641 | $ 647 |
Treasury stock-common, at cost | (13,627) | (11,685) | (10,726) |
Additional paid-in capital | 595,148 | 621,715 | 594,479 |
Retained earnings | 737,535 | 832,215 | 718,585 |
Total stockholders' equity | 1,319,688 | 1,442,886 | 1,302,985 |
Total liabilities and stockholders' equity | $ 2,218,950 | $ 2,230,918 | $ 2,077,951 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Apr. 30, 2016 | Jan. 30, 2016 | May. 02, 2015 |
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 | 63,226,000 | 64,131,000 | 64,770,000 |
Common stock, shares outstanding | 62,625,000 | 63,540,000 | 64,185,000 |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 30, 2016 | May. 02, 2015 | |
Income Statement [Abstract] | ||
Net sales | $ 1,073,716 | $ 868,122 |
Cost of sales | 683,286 | 564,938 |
Gross profit | 390,430 | 303,184 |
Selling, general and administrative expenses | 240,724 | 192,485 |
Pre-opening expenses | 2,542 | 3,117 |
Operating income | 147,164 | 107,582 |
Interest income, net | (315) | (311) |
Income before income taxes | 147,479 | 107,893 |
Income tax expense | 55,503 | 40,947 |
Net income | $ 91,976 | $ 66,946 |
Net income per common share: | ||
Basic | $ 1.46 | $ 1.04 |
Diluted | $ 1.45 | $ 1.04 |
Weighted average common shares outstanding: | ||
Basic | 63,031 | 64,180 |
Diluted | 63,335 | 64,555 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2016 | May. 02, 2015 | |
Operating activities | ||
Net income | $ 91,976 | $ 66,946 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 47,887 | 37,967 |
Deferred income taxes | 450 | 651 |
Non-cash stock compensation charges | 4,022 | 3,342 |
Excess tax benefits from stock-based compensation | (3,203) | (4,003) |
Loss on disposal of property and equipment | 812 | 1,121 |
Change in operating assets and liabilities: | ||
Receivables | 10,880 | 8,882 |
Merchandise inventories | (81,697) | (81,707) |
Prepaid expenses and other current assets | 987 | 4,823 |
Income taxes | 40,657 | 19,470 |
Accounts payable | 70,104 | 18,731 |
Accrued liabilities | (25,664) | (20,100) |
Deferred rent | 8,332 | 11,228 |
Other assets and liabilities | 1,388 | 941 |
Net cash provided by operating activities | 166,931 | 68,292 |
Investing activities | ||
Purchases of property and equipment | (54,321) | (56,622) |
Net cash used in investing activities | (54,321) | (56,622) |
Financing activities | ||
Repurchase of common shares | (226,666) | (27,956) |
Stock options exercised | 6,209 | 10,154 |
Excess tax benefits from stock-based compensation | 3,203 | 4,003 |
Purchase of treasury shares | (1,942) | (1,013) |
Net cash used in financing activities | (219,196) | (14,812) |
Net decrease in cash and cash equivalents | (106,586) | (3,142) |
Cash and cash equivalents at beginning of period | 345,840 | 389,149 |
Cash and cash equivalents at end of period | 239,254 | 386,007 |
Supplemental cash flow information | ||
Cash paid for income taxes (net of refunds) | 14,154 | 20,645 |
Non-cash investing activities: | ||
Change in property and equipment included in accrued liabilities | $ 17,613 | $ 9,972 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity (Unaudited) - 3 months ended Apr. 30, 2016 - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] |
Balance at Jan. 30, 2016 | $ 1,442,886 | $ 641 | $ (11,685) | $ 621,715 | $ 832,215 |
Balance, Shares at Jan. 30, 2016 | 64,131 | ||||
Balance, Shares at Jan. 30, 2016 | (591) | ||||
Stock options exercised and other awards | 6,209 | $ 1 | 6,208 | ||
Stock options exercised and other awards, Shares | 104 | ||||
Purchase of treasury shares | (1,942) | $ (1,942) | |||
Purchase of treasury shares, Shares | (10) | ||||
Net income for the 13 weeks ended April 30, 2016 | 91,976 | 91,976 | |||
Excess tax benefits from stock-based compensation | 3,203 | 3,203 | |||
Stock compensation charge | 4,022 | 4,022 | |||
Repurchase of common shares | (226,666) | $ (10) | (40,000) | (186,656) | |
Repurchase of common shares, Shares | (1,009) | ||||
Balance at Apr. 30, 2016 | $ 1,319,688 | $ 632 | $ (13,627) | $ 595,148 | $ 737,535 |
Balance, Shares at Apr. 30, 2016 | 63,226 | ||||
Balance, Shares at Apr. 30, 2016 | (601) |
Business and basis of presentat
Business and basis of presentation | 3 Months Ended |
Apr. 30, 2016 | |
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 April 30, 2016, the Company operated 886 stores in 48 states and the District of Columbia, 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 subsidiaries. Location Number of Location Number of Alabama 14 Montana 5 Alaska 3 Nebraska 3 Arizona 25 Nevada 11 Arkansas 6 New Hampshire 6 California 105 New Jersey 23 Colorado 18 New Mexico 4 Connecticut 10 New York 32 Delaware 3 North Carolina 25 District of Columbia 1 North Dakota 2 Florida 62 Ohio 34 Georgia 27 Oklahoma 12 Idaho 6 Oregon 11 Illinois 46 Pennsylvania 32 Indiana 16 Rhode Island 2 Iowa 8 South Carolina 15 Kansas 7 South Dakota 2 Kentucky 10 Tennessee 16 Louisiana 16 Texas 85 Maine 3 Utah 11 Maryland 15 Virginia 24 Massachusetts 13 Washington 20 Michigan 39 West Virginia 6 Minnesota 12 Wisconsin 16 Mississippi 7 Wyoming 1 Missouri 16 Total 886 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 subsidiaries. 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 weeks ended April 30, 2016 are not necessarily indicative of the results to be expected for the fiscal year ending January 28, 2017, 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 30, 2016. 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 | 3 Months Ended |
Apr. 30, 2016 | |
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 30, 2016. 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 first quarters in fiscal 2016 and 2015 ended on April 30, 2016 and May 2, 2015, 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: 13 Weeks Ended April 30, 2016 May 2, 2015 Volatility rate 35.0% 38.0% Average risk-free interest rate 1.2% 1.1% Average expected life (in years) 3.5 3.6 Dividend yield None None The Company granted 105 and 87 stock options during the 13 weeks ended April 30, 2016 and May 2, 2015, respectively. The compensation cost that has been charged against operating income for stock option grants was $1,983 and $2,031 for the 13 weeks ended April 30, 2016 and May 2, 2015, respectively. The weighted-average grant date fair value of these options was $52.55 and $44.84, respectively. At April 30, 2016, there was approximately $26,208 of unrecognized compensation expense related to unvested stock options. The Company issued 41 and 42 restricted stock units during the 13 weeks ended April 30, 2016 and May 2, 2015, respectively. The compensation cost that has been charged against operating income for restricted stock units was $1,561 and $1,211 for the 13 weeks ended April 30, 2016 and May 2, 2015, respectively. At April 30, 2016, there was approximately $15,354 of unrecognized compensation expense related to restricted stock units. The Company issued 24 and 21 performance-based restricted stock units during the 13 weeks ended April 30, 2016 and May 2, 2015, respectively. The compensation cost that has been charged against operating income for performance-based restricted stock units was $478 and $100 for the 13 weeks ended April 30, 2016 and May 2, 2015, respectively. At April 30, 2016, there was approximately $8,082 of unrecognized compensation expense related to performance-based restricted stock units. Recent accounting pronouncements not yet adopted In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, issued as a new Topic, Accounting Standards Codification Topic 606 (ASC 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 we will recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect 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 for annual reporting periods beginning after December 15, 2017, including interim reporting periods with early adoption permitted for annual reporting periods beginning after December 15, 2016, including interim reporting periods. This 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 February 2016, the FASB issued ASU 2016-02, Leases, Accounting Standards Codification Topic 842. This standard will change the way all leases of one year or more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on the balance sheet as a right-of-use asset and an associated financing lease liability or capital lease liability. The right-of-use asset represents the lessee’s right to use, or control the use of, a specified asset for the specified lease term. The lease liability represents the lessee’s obligation to make lease payments arising from the lease, measured on a discounted basis. Based on certain characteristics, leases are classified as financing leases or operating leases. Financing lease liabilities, those that contain provisions similar to capitalized leases, are amortized like capital leases under current accounting, as amortization expense and interest expense in the statement of operations. Operating lease liabilities are amortized on a straight-line basis over the life of the lease as lease expense in the statement of operations. ASU 2016-02 is effective for public companies for annual reporting periods beginning after December 15, 2018, including interim reporting periods. The Company is currently evaluating the impact of this new standard on its consolidated financial position, results of operations and cash flows. In March 2016, the FASB issued ASU 2016-04, Liabilities - Extinguishments of Liabilities (Subtopic 405-20) - Recognition of Breakage for Certain Prepaid Stored - Value Products. This update entitles a company to derecognize amounts related to expected breakage to the extent that it is probable a significant reversal of the recognized breakage amount will not subsequently occur. ASU 2016-04 is effective for annual and interim periods beginning after December 15, 2017, and 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. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers Topic 606 (Principal versus Agent Considerations). This update clarifies how to implement revenue recognition guidance related to determining whether an entity is a principal or an agent in a revenue transaction. The guidance requires an entity to determine whether the nature of its promise is to provide goods or services to its customer (the entity is a principal) or to arrange for goods or services to be provided to the customer by the other parties (the entity is an agent). This determination is based upon whether the entity controls the goods or the services before it is transferred to the customer. An entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The effective date and transition requirements are the same as the effective date and transition requirements in ASC 606. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718). This guidance will change how companies account for certain aspects of share-based payments to employees. Companies will have to recognize all income tax effects of awards in the income statement when the awards vest or are settled, and additional paid-in capital pools will be eliminated. The guidance on employer’s accounting for an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation and for forfeitures is changing, and two practical expedients for non-public entities have been added. ASU 2016-09 is effective for annual and interim reporting periods beginning after December 15, 2016, and 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. In April 2016, the FASB issued ASU 2016-10, an amendment to ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. Additionally, this guidance expands related disclosure requirements. The amendment addressed the potential for diversity in practice at initial application. The effective date and transition requirements are the same as the effective date and transition requirements in ASC 606. Recently adopted accounting pronouncements In June 2014, the FASB issued ASU 2014-12, Compensation – Stock Compensation, Accounting Standards Codification Topic 718. This update clarifies the accounting for share-based awards with performance targets. ASU 2014-12 is effective for public companies for annual reporting periods beginning after December 15, 2015, including interim reporting periods. As permitted, the Company adopted this standard, prospectively, in its first quarter ended April 30, 2016 and its adoption had no impact on its consolidated financial position, results of operations and cash flows. In April 2015, the FASB issued ASU 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. As permitted, the Company adopted this standard, prospectively, in its first quarter ended April 30, 2016 and its adoption had no impact on its consolidated financial position, results of operations and cash flows. |
Commitments and contingencies
Commitments and contingencies | 3 Months Ended |
Apr. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | 3. Commitments and contingencies Leases General litigation |
Notes payable
Notes payable | 3 Months Ended |
Apr. 30, 2016 | |
Debt Disclosure [Abstract] | |
Notes payable | 4. Notes payable In 2011, the Company entered into an Amended and Restated Loan and Security 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, which has been amended multiple times since 2011 (as amended, the Loan Agreement). The Loan Agreement currently matures in December 2018, 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. 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 London Interbank Offered Rate plus 1.50% and the unused line fee is 0.20%. As of April 30, 2016, January 30, 2016 and May 2, 2015, 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 | 3 Months Ended |
Apr. 30, 2016 | |
Investments Schedule [Abstract] | |
Investments | 5. Investments The Company’s short-term investments as of April 30, 2016, January 30, 2016 and May 2, 2015 consist of $130,000, $130,000 and $150,209, respectively, 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 April 30, 2016. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Apr. 30, 2016 | |
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 April 30, 2016, January 30, 2016 and May 2, 2015, the Company held financial liabilities of $10,191, $7,491 and $8,269, 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 | 3 Months Ended |
Apr. 30, 2016 | |
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 April 30, May 2, (In thousands, except per share data) 2016 2015 Numerator for diluted net income per share – net income $ 91,976 $ 66,946 Denominator for basic net income per share – weighted-average common shares 63,031 64,180 Dilutive effect of stock options and non-vested stock 304 375 Denominator for diluted net income per share 63,335 64,555 Net income per common share: Basic $ 1.46 $ 1.04 Diluted $ 1.45 $ 1.04 The denominators for diluted net income per common share for the 13 weeks ended April 30, 2016 and May 2, 2015 exclude 386 and 200 employee stock options, respectively, due to their anti-dilutive effects. As of April 30, 2016, outstanding performance-based restricted stock units were excluded from the computation of diluted shares because the number of shares ultimately issued is contingent on the achievement of certain performance targets of the Company for which the performance targets have not yet been met. |
Share repurchase program
Share repurchase program | 3 Months Ended |
Apr. 30, 2016 | |
Federal Home Loan Banks [Abstract] | |
Share repurchase program | 8. Share repurchase program On September 11, 2014, the Company announced that the Board of Directors authorized a share repurchase program (the 2014 Share Repurchase Program) pursuant to which the Company could repurchase up to $300,000 of the Company’s common stock. The 2014 Share Repurchase Program authorization revoked the previously authorized, but unused amounts of $112,664 from the share repurchase program adopted in 2013. On March 12, 2015, the Company announced that the Board of Directors authorized an increase of $100,000 to the 2014 Share Repurchase Program effective March 17, 2015. The 2014 Share Repurchase Program did not have an expiration date, but provided for suspension or discontinuation at any time. On March 10, 2016, the Company announced that the Board of Directors authorized a new share repurchase program (the 2016 Share Repurchase Program) pursuant to which the Company may repurchase up to $425,000 of the Company’s common stock. The 2016 Share Repurchase Program authorization revokes the previously authorized, but unused amounts of $172,386 from the 2014 Share Repurchase Program. The 2016 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time. As part of the 2016 Share Repurchase Program, the Company entered into an Accelerated Share Repurchase (ASR) agreement with Goldman, Sachs & Co. to repurchase $200,000 of the Company’s common stock. Under the ASR agreement, the Company paid $200,000 to Goldman, Sachs & Co. and received an initial delivery of 852 shares in the first quarter of 2016, which represents 80% of the total shares the Company expects to receive based on the market price at the time of the initial delivery. The final number of shares delivered upon settlement of the agreement will be determined with reference to the average price of the Company’s common stock over the term of the ASR agreement. The transaction is accounted for as an equity transaction. The par value of shares received was recorded as a reduction to common stock with the remainder recorded as a reduction to additional paid-in capital and retained earnings. Upon initial receipt of the shares, there was an immediate reduction in the weighted average common shares calculation for basic and diluted earnings per share. During the 13 weeks ended April 30, 2016, excluding the shares repurchase under the ASR, we purchased 158 shares of common stock for $26,667 at an average price of $169.02. During the 13 weeks ended May 2, 2015, we purchased 192 shares of common stock for $27,956 at an average price of $145.26. |
Summary of significant accoun15
Summary of significant accounting policies (Policies) | 3 Months Ended |
Apr. 30, 2016 | |
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 first quarters in fiscal 2016 and 2015 ended on April 30, 2016 and May 2, 2015, 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: 13 Weeks Ended April 30, 2016 May 2, 2015 Volatility rate 35.0% 38.0% Average risk-free interest rate 1.2% 1.1% Average expected life (in years) 3.5 3.6 Dividend yield None None The Company granted 105 and 87 stock options during the 13 weeks ended April 30, 2016 and May 2, 2015, respectively. The compensation cost that has been charged against operating income for stock option grants was $1,983 and $2,031 for the 13 weeks ended April 30, 2016 and May 2, 2015, respectively. The weighted-average grant date fair value of these options was $52.55 and $44.84, respectively. At April 30, 2016, there was approximately $26,208 of unrecognized compensation expense related to unvested stock options. The Company issued 41 and 42 restricted stock units during the 13 weeks ended April 30, 2016 and May 2, 2015, respectively. The compensation cost that has been charged against operating income for restricted stock units was $1,561 and $1,211 for the 13 weeks ended April 30, 2016 and May 2, 2015, respectively. At April 30, 2016, there was approximately $15,354 of unrecognized compensation expense related to restricted stock units. The Company issued 24 and 21 performance-based restricted stock units during the 13 weeks ended April 30, 2016 and May 2, 2015, respectively. The compensation cost that has been charged against operating income for performance-based restricted stock units was $478 and $100 for the 13 weeks ended April 30, 2016 and May 2, 2015, respectively. At April 30, 2016, there was approximately $8,082 of unrecognized compensation expense related to performance-based restricted stock units. |
Recent accounting pronouncements not yet adopted | Recent accounting pronouncements not yet adopted In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, issued as a new Topic, Accounting Standards Codification Topic 606 (ASC 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 we will recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect 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 for annual reporting periods beginning after December 15, 2017, including interim reporting periods with early adoption permitted for annual reporting periods beginning after December 15, 2016, including interim reporting periods. This 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 February 2016, the FASB issued ASU 2016-02, Leases, Accounting Standards Codification Topic 842. This standard will change the way all leases of one year or more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on the balance sheet as a right-of-use asset and an associated financing lease liability or capital lease liability. The right-of-use asset represents the lessee’s right to use, or control the use of, a specified asset for the specified lease term. The lease liability represents the lessee’s obligation to make lease payments arising from the lease, measured on a discounted basis. Based on certain characteristics, leases are classified as financing leases or operating leases. Financing lease liabilities, those that contain provisions similar to capitalized leases, are amortized like capital leases under current accounting, as amortization expense and interest expense in the statement of operations. Operating lease liabilities are amortized on a straight-line basis over the life of the lease as lease expense in the statement of operations. ASU 2016-02 is effective for public companies for annual reporting periods beginning after December 15, 2018, including interim reporting periods. The Company is currently evaluating the impact of this new standard on its consolidated financial position, results of operations and cash flows. In March 2016, the FASB issued ASU 2016-04, Liabilities - Extinguishments of Liabilities (Subtopic 405-20) - Recognition of Breakage for Certain Prepaid Stored - Value Products. This update entitles a company to derecognize amounts related to expected breakage to the extent that it is probable a significant reversal of the recognized breakage amount will not subsequently occur. ASU 2016-04 is effective for annual and interim periods beginning after December 15, 2017, and 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. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers Topic 606 (Principal versus Agent Considerations). This update clarifies how to implement revenue recognition guidance related to determining whether an entity is a principal or an agent in a revenue transaction. The guidance requires an entity to determine whether the nature of its promise is to provide goods or services to its customer (the entity is a principal) or to arrange for goods or services to be provided to the customer by the other parties (the entity is an agent). This determination is based upon whether the entity controls the goods or the services before it is transferred to the customer. An entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The effective date and transition requirements are the same as the effective date and transition requirements in ASC 606. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718). This guidance will change how companies account for certain aspects of share-based payments to employees. Companies will have to recognize all income tax effects of awards in the income statement when the awards vest or are settled, and additional paid-in capital pools will be eliminated. The guidance on employer’s accounting for an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation and for forfeitures is changing, and two practical expedients for non-public entities have been added. ASU 2016-09 is effective for annual and interim reporting periods beginning after December 15, 2016, and 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. In April 2016, the FASB issued ASU 2016-10, an amendment to ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. Additionally, this guidance expands related disclosure requirements. The amendment addressed the potential for diversity in practice at initial application. The effective date and transition requirements are the same as the effective date and transition requirements in ASC 606. Recently adopted accounting pronouncements In June 2014, the FASB issued ASU 2014-12, Compensation – Stock Compensation, Accounting Standards Codification Topic 718. This update clarifies the accounting for share-based awards with performance targets. ASU 2014-12 is effective for public companies for annual reporting periods beginning after December 15, 2015, including interim reporting periods. As permitted, the Company adopted this standard, prospectively, in its first quarter ended April 30, 2016 and its adoption had no impact on its consolidated financial position, results of operations and cash flows. In April 2015, the FASB issued ASU 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. As permitted, the Company adopted this standard, prospectively, in its first quarter ended April 30, 2016 and its adoption had no impact on its consolidated financial position, results of operations and cash flows. |
Business and basis of present16
Business and basis of presentation (Tables) | 3 Months Ended |
Apr. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Details of Company Operated Stores | As of April 30, 2016, the Company operated 886 stores in 48 states and the District of Columbia, 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 subsidiaries. Location Number of Location Number of Alabama 14 Montana 5 Alaska 3 Nebraska 3 Arizona 25 Nevada 11 Arkansas 6 New Hampshire 6 California 105 New Jersey 23 Colorado 18 New Mexico 4 Connecticut 10 New York 32 Delaware 3 North Carolina 25 District of Columbia 1 North Dakota 2 Florida 62 Ohio 34 Georgia 27 Oklahoma 12 Idaho 6 Oregon 11 Illinois 46 Pennsylvania 32 Indiana 16 Rhode Island 2 Iowa 8 South Carolina 15 Kansas 7 South Dakota 2 Kentucky 10 Tennessee 16 Louisiana 16 Texas 85 Maine 3 Utah 11 Maryland 15 Virginia 24 Massachusetts 13 Washington 20 Michigan 39 West Virginia 6 Minnesota 12 Wisconsin 16 Mississippi 7 Wyoming 1 Missouri 16 Total 886 |
Summary of significant accoun17
Summary of significant accounting policies (Tables) | 3 Months Ended |
Apr. 30, 2016 | |
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: 13 Weeks Ended April 30, 2016 May 2, 2015 Volatility rate 35.0% 38.0% Average risk-free interest rate 1.2% 1.1% Average expected life (in years) 3.5 3.6 Dividend yield None None |
Net income per common share (Ta
Net income per common share (Tables) | 3 Months Ended |
Apr. 30, 2016 | |
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 April 30, May 2, (In thousands, except per share data) 2016 2015 Numerator for diluted net income per share – net income $ 91,976 $ 66,946 Denominator for basic net income per share – weighted-average common shares 63,031 64,180 Dilutive effect of stock options and non-vested stock 304 375 Denominator for diluted net income per share 63,335 64,555 Net income per common share: Basic $ 1.46 $ 1.04 Diluted $ 1.45 $ 1.04 |
Business and Basis of Present19
Business and Basis of Presentation - Additional Information (Detail) | Apr. 30, 2016StateStore |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of stores | Store | 886 |
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) | Apr. 30, 2016Store |
Product Information [Line Items] | |
Number of stores | 886 |
Alabama [Member] | |
Product Information [Line Items] | |
Number of stores | 14 |
Alaska [Member] | |
Product Information [Line Items] | |
Number of stores | 3 |
Arizona [Member] | |
Product Information [Line Items] | |
Number of stores | 25 |
Arkansas [Member] | |
Product Information [Line Items] | |
Number of stores | 6 |
California [Member] | |
Product Information [Line Items] | |
Number of stores | 105 |
Colorado [Member] | |
Product Information [Line Items] | |
Number of stores | 18 |
Connecticut [Member] | |
Product Information [Line Items] | |
Number of stores | 10 |
Delaware [Member] | |
Product Information [Line Items] | |
Number of stores | 3 |
District of Columbia [Member] | |
Product Information [Line Items] | |
Number of stores | 1 |
Florida [Member] | |
Product Information [Line Items] | |
Number of stores | 62 |
Georgia [Member] | |
Product Information [Line Items] | |
Number of stores | 27 |
Idaho [Member] | |
Product Information [Line Items] | |
Number of stores | 6 |
Illinois [Member] | |
Product Information [Line Items] | |
Number of stores | 46 |
Indiana [Member] | |
Product Information [Line Items] | |
Number of stores | 16 |
Iowa [Member] | |
Product Information [Line Items] | |
Number of stores | 8 |
Kansas [Member] | |
Product Information [Line Items] | |
Number of stores | 7 |
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 | 15 |
Massachusetts [Member] | |
Product Information [Line Items] | |
Number of stores | 13 |
Michigan [Member] | |
Product Information [Line Items] | |
Number of stores | 39 |
Minnesota [Member] | |
Product Information [Line Items] | |
Number of stores | 12 |
Mississippi [Member] | |
Product Information [Line Items] | |
Number of stores | 7 |
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 | 11 |
New Hampshire [Member] | |
Product Information [Line Items] | |
Number of stores | 6 |
New Jersey [Member] | |
Product Information [Line Items] | |
Number of stores | 23 |
New Mexico [Member] | |
Product Information [Line Items] | |
Number of stores | 4 |
New York [Member] | |
Product Information [Line Items] | |
Number of stores | 32 |
North Carolina [Member] | |
Product Information [Line Items] | |
Number of stores | 25 |
North Dakota [Member] | |
Product Information [Line Items] | |
Number of stores | 2 |
Ohio [Member] | |
Product Information [Line Items] | |
Number of stores | 34 |
Oklahoma [Member] | |
Product Information [Line Items] | |
Number of stores | 12 |
Oregon [Member] | |
Product Information [Line Items] | |
Number of stores | 11 |
Pennsylvania [Member] | |
Product Information [Line Items] | |
Number of stores | 32 |
Rhode Island [Member] | |
Product Information [Line Items] | |
Number of stores | 2 |
South Carolina [Member] | |
Product Information [Line Items] | |
Number of stores | 15 |
South Dakota [Member] | |
Product Information [Line Items] | |
Number of stores | 2 |
Tennessee [Member] | |
Product Information [Line Items] | |
Number of stores | 16 |
Texas [Member] | |
Product Information [Line Items] | |
Number of stores | 85 |
Utah [Member] | |
Product Information [Line Items] | |
Number of stores | 11 |
Virginia [Member] | |
Product Information [Line Items] | |
Number of stores | 24 |
Washington [Member] | |
Product Information [Line Items] | |
Number of stores | 20 |
West Virginia [Member] | |
Product Information [Line Items] | |
Number of stores | 6 |
Wisconsin [Member] | |
Product Information [Line Items] | |
Number of stores | 16 |
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) | 3 Months Ended | |
Apr. 30, 2016 | May. 02, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||
Volatility rate | 35.00% | 38.00% |
Average risk-free interest rate | 1.20% | 1.10% |
Average expected life (in years) | 3 years 6 months | 3 years 7 months 6 days |
Dividend yield | 0.00% | 0.00% |
Summary of Significant Accoun22
Summary of Significant Accounting Policies - Additional Information - Share-based Compensation (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 30, 2016 | May. 02, 2015 | |
Employee Stock Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares granted | 105 | 87 |
Weighted-average fair value of stock option | $ 52.55 | $ 44.84 |
Compensation expenses | $ 1,983 | $ 2,031 |
Unrecognized compensation cost | $ 26,208 | |
Restricted Stock Award [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares granted | 41 | 42 |
Unrecognized compensation cost | $ 15,354 | |
Compensation expense | $ 1,561 | $ 1,211 |
Performance Based Restricted Stock Units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares granted | 24 | 21 |
Unrecognized compensation cost | $ 8,082 | |
Compensation expense | $ 478 | $ 100 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information - Leases (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2016 | May. 02, 2015 | |
Long-term Purchase Commitment [Line Items] | ||
Total rent expense under operating leases | $ 49,159 | $ 44,558 |
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 |
Commitments and Contingencies24
Commitments and Contingencies - Additional Information - General Litigation (Detail) | Apr. 30, 2016Lawsuits |
Commitments and Contingencies Disclosure [Abstract] | |
Putative employment class action lawsuits | 4 |
Notes Payable - Additional Info
Notes Payable - Additional Information (Detail) - USD ($) | 3 Months Ended | ||
Apr. 30, 2016 | Jan. 30, 2016 | May. 02, 2015 | |
Line of Credit Facility [Line Items] | |||
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 | London Interbank Offered Rate plus 1.50% | ||
Percentage of unused Line of Credit Facility Fee | 0.20% | ||
Outstanding debt under credit facility | $ 0 | $ 0 | $ 0 |
Amended and Restated Loan and Security Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Loan Agreement maturity date | Dec. 31, 2018 | ||
Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, maximum borrowing capacity | $ 200,000,000 | ||
Subfacility for Standby Letters of Credit [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, maximum borrowing capacity | $ 10,000,000 |
Investments - Additional Inform
Investments - Additional Information (Detail) - USD ($) $ in Thousands | Apr. 30, 2016 | Jan. 30, 2016 | May. 02, 2015 |
Investments Schedule [Abstract] | |||
Certificates of deposit | $ 130,000 | $ 130,000 | $ 150,209 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Thousands | Apr. 30, 2016 | Jan. 30, 2016 | May. 02, 2015 |
Fair Value, Inputs, Level 2 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Deferred compensation plan liability | $ 10,191 | $ 7,491 | $ 8,269 |
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 | |
Apr. 30, 2016 | May. 02, 2015 | |
Earnings Per Share [Abstract] | ||
Numerator for diluted net income per share - net income | $ 91,976 | $ 66,946 |
Denominator for basic net income per share - weighted-average common shares | 63,031 | 64,180 |
Dilutive effect of stock options and non-vested stock | 304 | 375 |
Denominator for diluted net income per share | 63,335 | 64,555 |
Net income per common share: | ||
Basic | $ 1.46 | $ 1.04 |
Diluted | $ 1.45 | $ 1.04 |
Net Income Per Common Share - A
Net Income Per Common Share - Additional Information (Detail) - shares shares in Thousands | 3 Months Ended | |
Apr. 30, 2016 | May. 02, 2015 | |
Earnings Per Share [Abstract] | ||
Employee stock options and restricted stock excluded from the computation of net income per common share | 386 | 200 |
Share Repurchase Program - Addi
Share Repurchase Program - Additional Information (Detail) - USD ($) | Mar. 10, 2016 | Apr. 30, 2016 | May. 02, 2015 | Mar. 12, 2015 | Sep. 11, 2014 |
Stock Repurchase Program [Line Items] | |||||
Repurchase of common stock | $ 226,666,000 | $ 27,956,000 | |||
2014 Share Repurchase Program [Member] | |||||
Stock Repurchase Program [Line Items] | |||||
Shares authorized but unused amount revoked | $ 172,386,000 | ||||
Repurchase of common stock | $ 27,956,000 | ||||
Repurchase of common stock, shares | 192,000 | ||||
Repurchase of common stock, average price per share | $ 145.26 | ||||
2014 Share Repurchase Program [Member] | Maximum [Member] | |||||
Stock Repurchase Program [Line Items] | |||||
Repurchase of common stock authorized amount | 300,000,000 | ||||
Stock repurchase program, increase in authorized amount | $ 100,000,000 | ||||
2013 Share Repurchase Program [Member] | |||||
Stock Repurchase Program [Line Items] | |||||
Shares authorized but unused amount revoked | $ 112,664,000 | ||||
2016 Share Repurchase Program [Member] | |||||
Stock Repurchase Program [Line Items] | |||||
Repurchase of common stock | $ 26,667,000 | ||||
Repurchase of common stock, shares | 158,000 | ||||
Repurchase of common stock, average price per share | $ 169.02 | ||||
2016 Share Repurchase Program [Member] | Maximum [Member] | |||||
Stock Repurchase Program [Line Items] | |||||
Repurchase of common stock authorized amount | 425,000,000 | ||||
Accelerated Share Repurchase [Member] | |||||
Stock Repurchase Program [Line Items] | |||||
Repurchase of common stock authorized amount | 200,000,000 | ||||
Repurchase of common stock | $ 200,000,000 | ||||
Share Repurchase, Initial Shares Delivered | 852,000 | ||||
Stock repurchase, percentage of initial shares received from expected shares | 80.00% |