Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 30, 2022 | May 23, 2022 | |
Cover [Abstract] | ||
Entity Registrant Name | ULTA BEAUTY, INC. | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Central Index Key | 0001403568 | |
Document Type | 10-Q | |
Document Period End Date | Apr. 30, 2022 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-28 | |
Entity File Number | 001-33764 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 38-4022268 | |
Entity Address, Address Line One | 1000 Remington Blvd., Suite 120 | |
Entity Address, City or Town | Bolingbrook | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60440 | |
City Area Code | 630 | |
Local Phone Number | 410-4800 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 51,818,071 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | ULTA |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 30, 2022 | Jan. 29, 2022 | May 01, 2021 |
Current assets: | |||
Cash and cash equivalents | $ 654,486 | $ 431,560 | $ 947,456 |
Receivables, net | 192,754 | 233,682 | 154,342 |
Merchandise inventories, net | 1,570,552 | 1,499,218 | 1,353,565 |
Prepaid expenses and other current assets | 114,075 | 110,814 | 108,393 |
Prepaid income taxes | 5,909 | ||
Total current assets | 2,531,867 | 2,281,183 | 2,563,756 |
Property and equipment, net | 909,543 | 914,476 | 960,440 |
Operating lease assets | 1,488,040 | 1,482,256 | 1,487,616 |
Goodwill | 10,870 | 10,870 | 10,870 |
Other intangible assets, net | 1,307 | 1,538 | 2,233 |
Deferred compensation plan assets | 35,978 | 38,409 | 34,279 |
Other long-term assets | 34,431 | 35,647 | 28,350 |
Total assets | 5,012,036 | 4,764,379 | 5,087,544 |
Current liabilities: | |||
Accounts payable | 585,500 | 552,730 | 552,837 |
Accrued liabilities | 305,000 | 364,797 | 322,676 |
Deferred revenue | 324,694 | 353,579 | 270,090 |
Current operating lease liabilities | 276,440 | 274,118 | 263,200 |
Accrued income taxes | 108,113 | 12,786 | 113,960 |
Total current liabilities | 1,599,747 | 1,558,010 | 1,522,763 |
Non-current operating lease liabilities | 1,568,356 | 1,572,638 | 1,613,309 |
Deferred income taxes | 40,702 | 39,693 | 66,483 |
Other long-term liabilities | 57,611 | 58,665 | 40,272 |
Total liabilities | 3,266,416 | 3,229,006 | 3,242,827 |
Commitments and contingencies (Note 6) | |||
Stockholders' equity: | |||
Common stock, $0.01 par value, 400,000 shares authorized; 52,790, 53,049, and 55,803 shares issued; 52,038, 52,311, and 55,090 shares outstanding; at April 30, 2022 (unaudited), January 29, 2022, and May 1, 2021 (unaudited), respectively | 528 | 530 | 558 |
Treasury stock-common, at cost | (58,650) | (53,478) | (44,567) |
Additional paid-in capital | 951,802 | 934,945 | 861,312 |
Retained earnings | 851,940 | 653,376 | 1,027,414 |
Total stockholders' equity | 1,745,620 | 1,535,373 | 1,844,717 |
Total liabilities and stockholders' equity | $ 5,012,036 | $ 4,764,379 | $ 5,087,544 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Apr. 30, 2022 | Jan. 29, 2022 | May 01, 2021 |
Consolidated Balance Sheets | |||
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 400,000 | 400,000 | 400,000 |
Common stock, shares issued | 52,790 | 53,049 | 55,803 |
Common stock, shares outstanding | 52,038 | 52,311 | 55,090 |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Consolidated Statements of Income (Unaudited) | ||
Net sales | $ 2,345,901 | $ 1,938,519 |
Cost of sales | 1,404,875 | 1,184,731 |
Gross profit | 941,026 | 753,788 |
Selling, general and administrative expenses | 500,970 | 443,875 |
Pre-opening expenses | 2,348 | 4,589 |
Operating income | 437,708 | 305,324 |
Interest expense, net | 401 | 358 |
Income before income taxes | 437,307 | 304,966 |
Income tax expense | 105,912 | 74,677 |
Net income | $ 331,395 | $ 230,289 |
Net income per common share: | ||
Basic | $ 6.34 | $ 4.13 |
Diluted | $ 6.30 | $ 4.10 |
Weighted average common shares outstanding: | ||
Basic | 52,250 | 55,795 |
Diluted | 52,582 | 56,172 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Operating activities | ||
Net income | $ 331,395 | $ 230,289 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 62,839 | 70,599 |
Non-cash lease expense | 72,192 | 68,881 |
Deferred income taxes | 1,009 | 1,124 |
Stock-based compensation expense | 10,356 | 8,978 |
Loss on disposal of property and equipment | 1,002 | 1,089 |
Change in operating assets and liabilities: | ||
Receivables | 40,928 | 38,767 |
Merchandise inventories | (71,334) | (185,350) |
Prepaid expenses and other current assets | (3,261) | (991) |
Income taxes | 101,236 | 71,431 |
Accounts payable | 42,586 | 76,580 |
Accrued liabilities | (57,214) | 23,209 |
Deferred revenue | (28,885) | (4,293) |
Operating lease liabilities | (79,936) | (72,175) |
Other assets and liabilities | 3,390 | 1,929 |
Net cash provided by operating activities | 426,303 | 330,067 |
Investing activities | ||
Capital expenditures | (71,076) | (34,563) |
Other investments | (797) | |
Net cash used in investing activities | (71,873) | (34,563) |
Financing activities | ||
Repurchase of common shares | (132,834) | (392,309) |
Stock options exercised | 6,502 | 5,032 |
Purchase of treasury shares | (5,172) | (6,766) |
Net cash used in financing activities | (131,504) | (394,043) |
Effect of exchange rate changes on cash and cash equivalents | (56) | |
Net increase (decrease) in cash and cash equivalents | 222,926 | (98,595) |
Cash and cash equivalents at beginning of period | 431,560 | 1,046,051 |
Cash and cash equivalents at end of period | 654,486 | 947,456 |
Supplemental information | ||
Cash paid for interest | 524 | 526 |
Income taxes paid, net of refunds | 3,357 | 1,725 |
Non-cash capital expenditures | $ 27,475 | $ 22,825 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Common Stock | Treasury - Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income | Total |
Balance at Jan. 30, 2021 | $ 569 | $ (37,801) | $ 847,303 | $ 1,189,422 | $ 56 | $ 1,999,549 |
Balance (in shares) at Jan. 30, 2021 | 56,952 | (692) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 230,289 | 230,289 | ||||
Stock-based compensation | 8,978 | 8,978 | ||||
Foreign currency translation adjustments | $ (56) | (56) | ||||
Stock options exercised and other awards | $ 1 | 5,031 | 5,032 | |||
Stock options exercised and other awards (in shares) | 94 | |||||
Purchase of treasury shares | $ (6,766) | (6,766) | ||||
Purchase of treasury shares (in shares) | (21) | |||||
Repurchase of common shares | $ (12) | (392,297) | (392,309) | |||
Repurchase of common shares (in shares) | (1,243) | |||||
Balance at May. 01, 2021 | $ 558 | $ (44,567) | 861,312 | 1,027,414 | $ 1,844,717 | |
Balance (in shares) at May. 01, 2021 | 55,803 | (713) | 55,090 | |||
Balance at Jan. 29, 2022 | $ 530 | $ (53,478) | 934,945 | 653,376 | $ 1,535,373 | |
Balance (in shares) at Jan. 29, 2022 | 53,049 | (738) | 52,311 | |||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 331,395 | $ 331,395 | ||||
Stock-based compensation | 10,356 | 10,356 | ||||
Stock options exercised and other awards | $ 1 | 6,501 | 6,502 | |||
Stock options exercised and other awards (in shares) | 73 | |||||
Purchase of treasury shares | $ (5,172) | (5,172) | ||||
Purchase of treasury shares (in shares) | (14) | |||||
Repurchase of common shares | $ (3) | (132,831) | (132,834) | |||
Repurchase of common shares (in shares) | (332) | |||||
Balance at Apr. 30, 2022 | $ 528 | $ (58,650) | $ 951,802 | $ 851,940 | $ 1,745,620 | |
Balance (in shares) at Apr. 30, 2022 | 52,790 | (752) | 52,038 |
Business and basis of presentat
Business and basis of presentation | 3 Months Ended |
Apr. 30, 2022 | |
Business and basis of presentation | |
Business and basis of presentation | 1. Business and basis of presentation Ulta Beauty, Inc. was founded in 1990 to operate specialty retail stores selling cosmetics, fragrance, haircare and skincare products, and related accessories and services. The stores also feature full-service salons. As used in these notes and throughout this Quarterly Report on Form 10-Q, all references to “we,” “us,” “our,” “Ulta Beauty,” or the “Company” refer to Ulta Beauty, Inc. and its consolidated subsidiaries. As of April 30, 2022, the Company operated 1,318 stores across 50 states, as shown in the table below. Number of Number of Location stores Location stores Alabama 24 Montana 6 Alaska 3 Nebraska 5 Arizona 30 Nevada 16 Arkansas 11 New Hampshire 8 California 165 New Jersey 44 Colorado 26 New Mexico 7 Connecticut 19 New York 52 Delaware 3 North Carolina 40 Florida 90 North Dakota 3 Georgia 42 Ohio 45 Hawaii 4 Oklahoma 21 Idaho 9 Oregon 16 Illinois 55 Pennsylvania 45 Indiana 24 Rhode Island 4 Iowa 11 South Carolina 22 Kansas 13 South Dakota 3 Kentucky 15 Tennessee 28 Louisiana 18 Texas 120 Maine 3 Utah 14 Maryland 28 Vermont 1 Massachusetts 23 Virginia 32 Michigan 49 Washington 36 Minnesota 19 West Virginia 7 Mississippi 11 Wisconsin 20 Missouri 25 Wyoming 3 Total 1,318 The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and the U.S. Securities and Exchange Commission’s Article 10, Regulation S-X. These financial statements were prepared on a consolidated basis to include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts, transactions, and unrealized profit were eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, which are of a normal 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, with significant portions of net sales and net income being realized during the fourth quarter of the fiscal year due to the holiday selling season. The results for the 13 weeks ended April 30, 2022 are not necessarily indicative of the results to be expected for the fiscal year ending January 28, 2023, or for any other future interim period or for any future year, in particular as a result of the uncertainty around the continuing effects of the COVID-19 pandemic, geo-political events, and inflationary cost pressures on future periods. These unaudited interim consolidated financial statements and the related notes should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended January 29, 2022. 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, 2022 | |
Summary of significant accounting policies | |
Summary of significant accounting policies | 2. Summary of significant accounting policies Information regarding significant accounting policies is contained in Note 2, “Summary of significant accounting policies,” to the consolidated financial statements in the Annual Report on Form 10-K for the year ended January 29, 2022. Presented below and in the following notes is supplemental information that should be read in conjunction with “Notes to Consolidated Financial Statements” in the Annual Report. Fiscal quarter The Company’s quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31. The first quarter in fiscal 2022 and 2021 ended on April 30, 2022 and May 1, 2021, respectively. Use of estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the accounting period. Actual results could differ from those estimates. The Company considers its accounting policies relating to inventory valuations, vendor allowances, impairment of long-lived tangible and right-of-use assets, loyalty program and income taxes to be the most significant accounting policies that involve management estimates and judgments. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment, including those related to the impacts of the COVID-19 pandemic, geo-political events, and inflationary cost pressures, will be reflected in the consolidated financial statements in future periods. |
Revenue
Revenue | 3 Months Ended |
Apr. 30, 2022 | |
Revenue | |
Revenue | 3. Revenue Disaggregated revenue The following table sets forth the approximate percentage of net sales by primary category: 13 Weeks Ended April 30, May 1, (Percentage of net sales) 2022 2021 Cosmetics 44% 45% Haircare products and styling tools 20% 19% Skincare 18% 19% Fragrance and bath 12% 11% Services 3% 3% Accessories and other 3% 3% 100% 100% Deferred revenue Deferred revenue primarily represents contract liabilities for the Company’s obligation to transfer additional goods or services to a guest for which the Company has received consideration, such as unredeemed Ultamate Rewards loyalty points and unredeemed Ulta Beauty gift cards. In addition, breakage on gift cards is recognized proportionately as redemption occurs. The following table provides a summary of the changes included in deferred revenue during the 13 weeks ended April 30, 2022 and May 1, 2021: April 30, May 1, (In thousands) 2022 2021 Beginning balance $ 345,206 $ 269,032 Additions to contract liabilities (1) 114,005 97,681 Deductions to contract liabilities (2) (146,852) (113,541) Ending balance $ 312,359 $ 253,172 (1) Loyalty points and gift cards issued in the current period but not redeemed or expired. (2) Revenue recognized in the current period related to the beginning liability . Other amounts included in deferred revenue were $12,335 and $16,918 at April 30, 2022 and May 1, 2021, respectively. |
Goodwill and other intangible a
Goodwill and other intangible assets | 3 Months Ended |
Apr. 30, 2022 | |
Goodwill and Other Intangible Assets | |
Goodwill and other intangible assets | 4. Goodwill and other intangible assets Goodwill, which represents the excess of cost over the fair value of net assets acquired, was $10,870 at April 30, 2022, January 29, 2022, and May 1, 2021. No additional goodwill was recognized during the 13 weeks ended April 30, 2022. The recoverability of goodwill is reviewed annually during the fourth quarter or more frequently if an event occurs or circumstances change that would indicate that impairment may exist. Other definite-lived intangible assets are amortized over their useful lives. The recoverability of intangible assets is reviewed whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. |
Leases
Leases | 3 Months Ended |
Apr. 30, 2022 | |
Leases | |
Leases | 5. Leases The Company leases retail stores, distribution centers, fast fulfillment centers, corporate offices, and certain equipment under non-cancelable operating leases with various expiration dates through 2033. All leases are classified as operating leases and generally have initial lease terms of 10 years and when determined applicable, include renewal options under substantially the same terms and conditions as the original leases. Leases do not contain any material residual value guarantees or material restrictive covenants. Lease cost The majority of operating lease cost relates to retail stores, distribution centers, and fast fulfillment centers and is classified within cost of sales. Operating lease cost for corporate offices is classified within selling, general and administrative expenses. Operating lease cost from the control date through store opening date is classified within pre-opening expenses. The following table presents a summary of operating lease costs: 13 Weeks Ended April 30, May 1, (In thousands) 2022 2021 Operating lease cost $ 80,901 $ 78,736 Other information The following table presents supplemental disclosures of cash flow information related to operating leases: 13 Weeks Ended April 30, May 1, (In thousands) 2022 2021 Cash paid for operating lease liabilities (1) $ 94,745 $ 90,227 Operating lease assets obtained in exchange for operating lease liabilities (non-cash) 77,976 51,883 (1) Excludes $6,701 and $7,986 related to cash received for tenant incentives for the 13 weeks ended April 30, 2022 and May 1, 2021, respectively. |
Commitments and contingencies
Commitments and contingencies | 3 Months Ended |
Apr. 30, 2022 | |
Commitments and contingencies | |
Commitments and contingencies | 6. Commitments and contingencies The Company is involved in various legal proceedings that are incidental to the conduct of the business including both class action and single plaintiff litigation. In the opinion of management, the amount of any liability with respect to these proceedings, either individually or in the aggregate, will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. |
Debt
Debt | 3 Months Ended |
Apr. 30, 2022 | |
Debt | |
Debt | 7. Debt On March 11, 2020, the Company entered into Amendment No. 1 to the Second Amended and Restated Loan Agreement (as so amended, the Loan Agreement) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and a Lender thereunder; Wells Fargo Bank, National Association and JPMorgan Chase Bank, N.A., as Lead Arrangers and Bookrunners; JPMorgan Chase Bank, N.A., as Syndication Agent and a Lender; PNC Bank, National Association, as Documentation Agent and a Lender; and the other lenders party thereto. The Loan Agreement matures on March 11, 2025, provides maximum revolving loans equal to the lesser of $1,000,000 or a percentage of eligible owned inventory and eligible owned receivables (which borrowing base may, at the election of the Company and satisfaction of certain conditions, include a percentage of qualified cash), contains a $50,000 subfacility for letters of credit and allows the Company to increase the revolving facility by an additional $100,000, subject to the consent by each lender and other conditions. The Loan Agreement contains a requirement to maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 during such periods when availability under the Loan Agreement falls below a specified threshold. Substantially all of the Company’s assets are pledged as collateral for outstanding borrowings under the Loan Agreement. Outstanding borrowings bear interest, at the Company’s election, at either a base rate plus a margin of 0% to 0.125% or the London Interbank Offered Rate plus a margin of 1.125% to 1.250%, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.20% per annum. As of April 30, 2022, January 29, 2022, and May 1, 2021, there were no borrowings outstanding under the credit facility. As of April 30, 2022, the Company was in compliance with all terms and covenants of the Loan Agreement. |
Fair value measurements
Fair value measurements | 3 Months Ended |
Apr. 30, 2022 | |
Fair value measurements | |
Fair value measurements | 8. 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, 2022, January 29, 2022 and May 1, 2021, there were liabilities related to the non-qualified deferred compensation plan included in other long-term liabilities on the consolidated balance sheets of $40,792, $40,839, and $35,449, respectively. The liabilities are categorized as Level 2 as they are based on third-party reported values, which are based primarily on quoted market prices of underlying assets of the funds within the plan. |
Stock-based compensation
Stock-based compensation | 3 Months Ended |
Apr. 30, 2022 | |
Stock-based compensation | |
Stock-based compensation | 9. Stock-based compensation Stock-based compensation expense is measured on the grant date based on the fair value of the award. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period for awards expected to vest. The estimated grant date fair value of stock options was determined using a Black-Scholes valuation model using the following weighted-average assumptions: 13 Weeks Ended April 30, May 1, 2022 2021 Volatility rate 49.0% 46.9% Average risk-free interest rate 2.4% 0.4% Average expected life (in years) 3.4 3.9 Dividend yield None None The expected volatility is based on the historical volatility of the Company’s common stock. The risk-free interest rate is based on the United States Treasury yield curve in effect on the date of grant for the respective expected life of the option. The expected life represents the time the options granted are expected to be outstanding. The expected life of options granted is derived from historical data on Ulta Beauty stock option exercises. Forfeitures of stock options are estimated at the grant date based on historical rates of stock option activity and reduce the stock-based compensation expense recognized. The Company does not currently pay a regular dividend. The Company granted 48 and 61 stock options during the 13 weeks ended April 30, 2022 and May 1, 2021, respectively. Stock-based compensation expense for stock options was $2,342 and $2,897 for the 13 weeks ended April 30, 2022 and May 1, 2021, respectively. The weighted-average grant date fair value of these stock options was $149.14 and $109.72 for the 13 weeks ended April 30, 2022 and May 1, 2021, respectively. At April 30, 2022, there was approximately $16,062 of unrecognized stock-based compensation expense related to unvested stock options. There were 50 and 52 restricted stock units issued during the 13 weeks ended April 30, 2022 and May 1, 2021, respectively. Stock-based compensation expense for restricted stock units was $4,452 and $4,835 for the 13 weeks ended April 30, 2022 and May 1, 2021, respectively. At April 30, 2022, there was approximately $35,627 of unrecognized stock-based compensation expense related to restricted stock units. There were 37 and 46 performance-based restricted stock units issued during the 13 weeks ended April 30, 2022 and May 1, 2021. Stock-based compensation expense for performance-based restricted stock units was $3,562 and $1,246 for the 13 weeks ended April 30, 2022 and May 1, 2021, respectively. At April 30, 2022, there was approximately $25,921 of unrecognized stock-based compensation expense related to performance-based restricted stock units. |
Income taxes
Income taxes | 3 Months Ended |
Apr. 30, 2022 | |
Income Taxes | |
Income taxes | 10. Income taxes Income tax expense reflects the federal statutory tax rate and the weighted average state statutory tax rate for the states in which the Company operates stores. Income tax expense of $105,912 for the 13 weeks ended April 30, 2022 represents an effective tax rate of 24.2%, compared to $74,677 of income tax expense representing an effective tax rate of 24.5% for the 13 weeks ended May 1, 2021. |
Net income per common share
Net income per common share | 3 Months Ended |
Apr. 30, 2022 | |
Net income per common share | |
Net income per common share | 11. Net income per common share The following is a reconciliation of net income and the number of shares of common stock used in the computation of net income per basic and diluted common share: 13 Weeks Ended April 30, May 1, (In thousands, except per share data) 2022 2021 Numerator: Net income $ 331,395 $ 230,289 Denominator: Weighted-average common shares – Basic 52,250 55,795 Dilutive effect of stock options and non-vested stock 332 377 Weighted-average common shares – Diluted 52,582 56,172 Net income per common share: Basic $ 6.34 $ 4.13 Diluted $ 6.30 $ 4.10 The denominator for diluted net income per common share for the 13 weeks ended April 30, 2022 and May 1, 2021 excludes 143 and 262 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects. Outstanding performance-based restricted stock units are included in the computation of dilutive shares only to the extent that the underlying performance conditions are satisfied prior to the end of the reporting period or would be considered satisfied if the end of the reporting period were the end of the related contingency period and the results would be dilutive under the treasury stock method. |
Share repurchase program
Share repurchase program | 3 Months Ended |
Apr. 30, 2022 | |
Share repurchase program | |
Share repurchase program | 12. Share repurchase program In March 2020, the Board of Directors authorized a share repurchase program (the 2020 Share Repurchase Program) pursuant to which the Company could repurchase up to $1,600,000 of the Company’s common stock. The 2020 Share Repurchase Program authorization revoked the previously authorized but unused amount of $177,805 from the earlier share repurchase program. The 2020 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time. In March 2022, the Board of Directors authorized a new share repurchase program (the 2022 Share Repurchase Program) pursuant to which the Company may repurchase up to $2,000,000 of the Company’s common stock. The 2022 Share Repurchase Program revokes the previously authorized but unused amounts from the 2020 Share Repurchase Program. The 2022 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time. A summary of common stock repurchase activity is presented in the following table: 13 Weeks Ended April 30, May 1, (In thousands) 2022 2021 Shares repurchased 332 1,243 Total cost of shares repurchased $ 132,834 $ 392,309 |
Summary of significant accoun_2
Summary of significant accounting policies (Policies) | 3 Months Ended |
Apr. 30, 2022 | |
Summary of significant accounting policies | |
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 first quarter in fiscal 2022 and 2021 ended on April 30, 2022 and May 1, 2021, respectively. |
Use of estimates | Use of estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the accounting period. Actual results could differ from those estimates. The Company considers its accounting policies relating to inventory valuations, vendor allowances, impairment of long-lived tangible and right-of-use assets, loyalty program and income taxes to be the most significant accounting policies that involve management estimates and judgments. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment, including those related to the impacts of the COVID-19 pandemic, geo-political events, and inflationary cost pressures, will be reflected in the consolidated financial statements in future periods. |
Business and basis of present_2
Business and basis of presentation (Tables) | 3 Months Ended |
Apr. 30, 2022 | |
Business and basis of presentation | |
Schedule of stores operated by geographic area | Number of Number of Location stores Location stores Alabama 24 Montana 6 Alaska 3 Nebraska 5 Arizona 30 Nevada 16 Arkansas 11 New Hampshire 8 California 165 New Jersey 44 Colorado 26 New Mexico 7 Connecticut 19 New York 52 Delaware 3 North Carolina 40 Florida 90 North Dakota 3 Georgia 42 Ohio 45 Hawaii 4 Oklahoma 21 Idaho 9 Oregon 16 Illinois 55 Pennsylvania 45 Indiana 24 Rhode Island 4 Iowa 11 South Carolina 22 Kansas 13 South Dakota 3 Kentucky 15 Tennessee 28 Louisiana 18 Texas 120 Maine 3 Utah 14 Maryland 28 Vermont 1 Massachusetts 23 Virginia 32 Michigan 49 Washington 36 Minnesota 19 West Virginia 7 Mississippi 11 Wisconsin 20 Missouri 25 Wyoming 3 Total 1,318 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Apr. 30, 2022 | |
Revenue | |
Schedule of approximate percentage of net sales by primary category | 13 Weeks Ended April 30, May 1, (Percentage of net sales) 2022 2021 Cosmetics 44% 45% Haircare products and styling tools 20% 19% Skincare 18% 19% Fragrance and bath 12% 11% Services 3% 3% Accessories and other 3% 3% 100% 100% |
Summary of changes in deferred revenue | April 30, May 1, (In thousands) 2022 2021 Beginning balance $ 345,206 $ 269,032 Additions to contract liabilities (1) 114,005 97,681 Deductions to contract liabilities (2) (146,852) (113,541) Ending balance $ 312,359 $ 253,172 (1) Loyalty points and gift cards issued in the current period but not redeemed or expired. (2) Revenue recognized in the current period related to the beginning liability . |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Apr. 30, 2022 | |
Leases | |
Summary of information related to lease costs for operating leases | 13 Weeks Ended April 30, May 1, (In thousands) 2022 2021 Operating lease cost $ 80,901 $ 78,736 |
Schedule of cash flow information related to operating leases | The following table presents supplemental disclosures of cash flow information related to operating leases: 13 Weeks Ended April 30, May 1, (In thousands) 2022 2021 Cash paid for operating lease liabilities (1) $ 94,745 $ 90,227 Operating lease assets obtained in exchange for operating lease liabilities (non-cash) 77,976 51,883 (1) Excludes $6,701 and $7,986 related to cash received for tenant incentives for the 13 weeks ended April 30, 2022 and May 1, 2021, respectively. |
Stock-based compensation (Table
Stock-based compensation (Tables) | 3 Months Ended |
Apr. 30, 2022 | |
Stock-based compensation | |
Schedule of weighted average assumptions to determine grant date fair value of employee stock options | 13 Weeks Ended April 30, May 1, 2022 2021 Volatility rate 49.0% 46.9% Average risk-free interest rate 2.4% 0.4% Average expected life (in years) 3.4 3.9 Dividend yield None None |
Net income per common share (Ta
Net income per common share (Tables) | 3 Months Ended |
Apr. 30, 2022 | |
Net income per common share | |
Schedule reconciliation of net income and the number of shares of common stock used in the computation of net income per basic and diluted common share | 13 Weeks Ended April 30, May 1, (In thousands, except per share data) 2022 2021 Numerator: Net income $ 331,395 $ 230,289 Denominator: Weighted-average common shares – Basic 52,250 55,795 Dilutive effect of stock options and non-vested stock 332 377 Weighted-average common shares – Diluted 52,582 56,172 Net income per common share: Basic $ 6.34 $ 4.13 Diluted $ 6.30 $ 4.10 |
Share repurchase program (Table
Share repurchase program (Tables) | 3 Months Ended |
Apr. 30, 2022 | |
Share repurchase program | |
Summary of the Company's common stock repurchase activity | 13 Weeks Ended April 30, May 1, (In thousands) 2022 2021 Shares repurchased 332 1,243 Total cost of shares repurchased $ 132,834 $ 392,309 |
Business and basis of present_3
Business and basis of presentation (Details) | Apr. 30, 2022storestate |
Stores by state | |
Number of stores operated | 1,318 |
Number of states in which entity operates | state | 50 |
Alabama | |
Stores by state | |
Number of stores operated | 24 |
Alaska | |
Stores by state | |
Number of stores operated | 3 |
Arizona | |
Stores by state | |
Number of stores operated | 30 |
Arkansas | |
Stores by state | |
Number of stores operated | 11 |
California | |
Stores by state | |
Number of stores operated | 165 |
Colorado | |
Stores by state | |
Number of stores operated | 26 |
Connecticut | |
Stores by state | |
Number of stores operated | 19 |
Delaware | |
Stores by state | |
Number of stores operated | 3 |
Florida | |
Stores by state | |
Number of stores operated | 90 |
Georgia | |
Stores by state | |
Number of stores operated | 42 |
Hawaii | |
Stores by state | |
Number of stores operated | 4 |
Idaho | |
Stores by state | |
Number of stores operated | 9 |
Illinois | |
Stores by state | |
Number of stores operated | 55 |
Indiana | |
Stores by state | |
Number of stores operated | 24 |
Iowa | |
Stores by state | |
Number of stores operated | 11 |
Kansas | |
Stores by state | |
Number of stores operated | 13 |
Kentucky | |
Stores by state | |
Number of stores operated | 15 |
Louisiana | |
Stores by state | |
Number of stores operated | 18 |
Maine | |
Stores by state | |
Number of stores operated | 3 |
Maryland | |
Stores by state | |
Number of stores operated | 28 |
Massachusetts | |
Stores by state | |
Number of stores operated | 23 |
Michigan | |
Stores by state | |
Number of stores operated | 49 |
Minnesota | |
Stores by state | |
Number of stores operated | 19 |
Mississippi | |
Stores by state | |
Number of stores operated | 11 |
Missouri | |
Stores by state | |
Number of stores operated | 25 |
Montana | |
Stores by state | |
Number of stores operated | 6 |
Nebraska | |
Stores by state | |
Number of stores operated | 5 |
Nevada | |
Stores by state | |
Number of stores operated | 16 |
New Hampshire | |
Stores by state | |
Number of stores operated | 8 |
New Jersey | |
Stores by state | |
Number of stores operated | 44 |
New Mexico | |
Stores by state | |
Number of stores operated | 7 |
New York | |
Stores by state | |
Number of stores operated | 52 |
North Carolina | |
Stores by state | |
Number of stores operated | 40 |
North Dakota | |
Stores by state | |
Number of stores operated | 3 |
Ohio | |
Stores by state | |
Number of stores operated | 45 |
Oklahoma | |
Stores by state | |
Number of stores operated | 21 |
Oregon | |
Stores by state | |
Number of stores operated | 16 |
Pennsylvania | |
Stores by state | |
Number of stores operated | 45 |
Rhode Island | |
Stores by state | |
Number of stores operated | 4 |
South Carolina | |
Stores by state | |
Number of stores operated | 22 |
South Dakota | |
Stores by state | |
Number of stores operated | 3 |
Tennessee | |
Stores by state | |
Number of stores operated | 28 |
Texas | |
Stores by state | |
Number of stores operated | 120 |
Utah | |
Stores by state | |
Number of stores operated | 14 |
Vermont | |
Stores by state | |
Number of stores operated | 1 |
Virginia | |
Stores by state | |
Number of stores operated | 32 |
Washington | |
Stores by state | |
Number of stores operated | 36 |
West Virginia | |
Stores by state | |
Number of stores operated | 7 |
Wisconsin | |
Stores by state | |
Number of stores operated | 20 |
Wyoming | |
Stores by state | |
Number of stores operated | 3 |
Summary of significant accoun_3
Summary of significant accounting policies (Details) | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Summary of significant accounting policies | ||
Fiscal quarter | 91 days | 91 days |
Revenue - Disaggregated revenue
Revenue - Disaggregated revenue (Details) - Sales Revenue - Product concentration | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Disaggregated revenue | ||
Concentration (as a percent) | 100.00% | 100.00% |
Cosmetics | ||
Disaggregated revenue | ||
Concentration (as a percent) | 44.00% | 45.00% |
Haircare products and styling tools | ||
Disaggregated revenue | ||
Concentration (as a percent) | 20.00% | 19.00% |
Skincare | ||
Disaggregated revenue | ||
Concentration (as a percent) | 18.00% | 19.00% |
Fragrance and bath | ||
Disaggregated revenue | ||
Concentration (as a percent) | 12.00% | 11.00% |
Services | ||
Disaggregated revenue | ||
Concentration (as a percent) | 3.00% | 3.00% |
Accessories and other | ||
Disaggregated revenue | ||
Concentration (as a percent) | 3.00% | 3.00% |
Revenue - Deferred revenue (Det
Revenue - Deferred revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Summary of changes in deferred revenue | ||
Balance at beginning of period | $ 345,206 | $ 269,032 |
Additions to contract liabilities | 114,005 | 97,681 |
Deductions to contract liabilities | (146,852) | (113,541) |
Balance at end of period | 312,359 | 253,172 |
Other amounts included in deferred revenue | $ 12,335 | $ 16,918 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 30, 2022 | Jan. 29, 2022 | May 01, 2021 | |
Goodwill and Other Intangible Assets | |||
Goodwill | $ 10,870 | $ 10,870 | $ 10,870 |
Additional goodwill recognized | $ 0 |
Leases - Lease cost and Other i
Leases - Lease cost and Other information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Leases | ||
Initial lease term | 10 years | |
Operating lease cost | $ 80,901 | $ 78,736 |
Cash paid for operating lease liabilities | 94,745 | 90,227 |
Operating lease assets obtained in exchange for operating lease liabilities (non-cash) | 77,976 | 51,883 |
Excluded cash received for tenant incentives | $ 6,701 | $ 7,986 |
Debt (Details)
Debt (Details) $ in Thousands | 3 Months Ended | ||
Apr. 30, 2022USD ($) | Jan. 29, 2022USD ($) | May 01, 2021USD ($) | |
Notes payable | |||
Outstanding borrowings under credit facility | $ 0 | $ 0 | $ 0 |
Amendment No. 1 to the Second Amended and Restated Loan Agreement | |||
Notes payable | |||
Unused line fee (as a percent) | 0.20% | ||
Amendment No. 1 to the Second Amended and Restated Loan Agreement | Minimum | |||
Notes payable | |||
Fixed charge coverage ratio covenant | 1 | ||
Amendment No. 1 to the Second Amended and Restated Loan Agreement | London Interbank Offered Rate (LIBOR) | Minimum | |||
Notes payable | |||
Interest rate margin (as a percent) | 1.125% | ||
Amendment No. 1 to the Second Amended and Restated Loan Agreement | London Interbank Offered Rate (LIBOR) | Maximum | |||
Notes payable | |||
Interest rate margin (as a percent) | 1.25% | ||
Amendment No. 1 to the Second Amended and Restated Loan Agreement | Base Rate | Minimum | |||
Notes payable | |||
Interest rate margin (as a percent) | 0.00% | ||
Amendment No. 1 to the Second Amended and Restated Loan Agreement | Base Rate | Maximum | |||
Notes payable | |||
Interest rate margin (as a percent) | 0.125% | ||
Amendment No. 1 to the Second Amended and Restated Loan Agreement | Revolving Credit Facility | |||
Notes payable | |||
Maximum borrowing capacity | $ 1,000,000 | ||
Contingent increase to revolving facility | 100,000 | ||
Amendment No. 1 to the Second Amended and Restated Loan Agreement | Letters of credit | |||
Notes payable | |||
Maximum borrowing capacity | $ 50,000 |
Fair value measurements (Detail
Fair value measurements (Details) - USD ($) $ in Thousands | Apr. 30, 2022 | Jan. 29, 2022 | May 01, 2021 |
Fair Value, Inputs, Level 2 | Non-qualified deferred compensation plan | |||
Fair value measurements | |||
Fair value of financial liabilities | $ 40,792 | $ 40,839 | $ 35,449 |
Stock-based compensation - Assu
Stock-based compensation - Assumptions to Estimate Fair Value of Stock Options (Details) - Stock options | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Weighted-average assumptions to estimate fair value | ||
Volatility rate (as a percent) | 49.00% | 46.90% |
Average risk-free interest rate (as a percent) | 2.40% | 0.40% |
Average expected life | 3 years 4 months 24 days | 3 years 10 months 24 days |
Dividend yield (as a percent) | 0.00% | 0.00% |
Stock-based compensation - Stoc
Stock-based compensation - Stock Option Activity (Details) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Share-based compensation | ||
Weighted-average grant date fair value (in dollars per share) | $ 149.14 | $ 109.72 |
Stock options | ||
Stock compensation expense | $ 2,342 | $ 2,897 |
Unrecognized compensation expense | $ 16,062 | |
Number of options | ||
Granted (in shares) | 48 | 61 |
Stock-based compensation - Rest
Stock-based compensation - Restricted Stock Units (Details) - Restricted stock units - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Restricted stock units | ||
Unrecognized compensation cost | $ 35,627 | |
Stock compensation expense | $ 4,452 | $ 4,835 |
Number of shares | ||
Granted (in shares) | 50 | 52 |
Stock-based compensation - Perf
Stock-based compensation - Performance-based Restricted Stock Units (Details) - Performance Based Restricted Stock Units - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Performance-based restricted stock units | ||
Unrecognized compensation cost | $ 25,921 | |
Stock compensation expense | $ 3,562 | $ 1,246 |
Number of shares | ||
Granted (in shares) | 37 | 46 |
Income taxes (Details)
Income taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Income taxes | ||
Income tax expense | $ 105,912 | $ 74,677 |
Effective tax rate (as a percent) | 24.20% | 24.50% |
Net income per common share - R
Net income per common share - Reconciliation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Numerator: | ||
Net income | $ 331,395 | $ 230,289 |
Denominator: | ||
Weighted-average common shares - Basic | 52,250 | 55,795 |
Dilutive effect of stock options and non-vested stock | 332 | 377 |
Weighted-average common shares - Diluted | 52,582 | 56,172 |
Net income per common share: | ||
Basic | $ 6.34 | $ 4.13 |
Diluted | $ 6.30 | $ 4.10 |
Net income per common share - A
Net income per common share - Anti-dilutive Shares (Details) - shares shares in Thousands | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Net income per common share | ||
Employee stock options and restricted stock units excluded from the computation of net income per common share | 143 | 262 |
Share repurchase program (Detai
Share repurchase program (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |||
Apr. 30, 2022 | May 01, 2021 | Mar. 31, 2022 | Mar. 12, 2020 | |
Share repurchase program | ||||
Common stock repurchased and retired | $ 132,834 | $ 392,309 | ||
Share Repurchase Programs | ||||
Share repurchase program | ||||
Shares repurchased (in shares) | 332 | 1,243 | ||
Common stock repurchased and retired | $ 132,834 | $ 392,309 | ||
2020 Share Repurchase Program | ||||
Share repurchase program | ||||
Authorized amount of share repurchase program | $ 1,600,000 | |||
Remaining authorized amount from earlier share repurchase program | $ 177,805 | |||
2022 Share Repurchase Program | ||||
Share repurchase program | ||||
Authorized amount of share repurchase program | $ 2,000,000 |