Ulta Beauty, Inc. 10-K

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market information Our common stock has traded on the NASDAQ Global Select Market under the symbol “ULTA” since October 25, 2007. Holders of the registrant’s common stock The last reported sale price of our common stock on the NASDAQ Global Select Market on March 22, 2021 was $315.09 per share. As of March 22, 2021, we had 34 holders of record of our common stock. Because many shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. 26 Table of Contents Purchases of equity securities by the issuer and affiliated purchasers The following table sets forth repurchases of our common stock during the fourth quarter of fiscal 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (2) Approximate dollar value of shares that may yet be purchased under plans or programs (in thousands) (2) November 1, 2020 to November 28, 2020 ​ 311 ​ $ 215.02 ​ – ​ $ 1,563,863 November 29, 2020 to December 26, 2020 ​ 43,218 ​ ​ 266.41 ​ 43,218 ​ ​ 1,552,349 December 27, 2020 to January 30, 2021 ​ 104,708 ​ ​ 290.62 ​ 104,606 ​ ​ 1,521,949 13 weeks ended January 30, 2021 ​ 148,237 ​ ​ 283.40 ​ 147,824 ​ ​ 1,521,949 (1) There were 147,824 shares repurchased as part of our publicly announced share repurchase program during the 13 weeks ended January 30, 2021 and there were 413 shares transferred from employees in satisfaction of minimum statutory tax withholding obligations upon the vesting of restricted stock during the period. (2) On March 12, 2020, we announced our 2020 share repurchase program pursuant to which the Company may repurchase up to $1.6 billion of the Company’s common stock. As of January 30, 2021 , $1.5 billion remained available under the $1.6 billion 2020 share repurchase program, which does not have an expiration date but which may be suspended or discontinued at any time. Recent sales of unregistered securities None. Securities authorized for issuance under equity compensation plans The following table provides information about Ulta Beauty common stock that may be issued under our equity compensation plans as of January 30, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of securities ​ ​ Number of securities ​ ​ ​ ​ remaining available ​ ​ to be issued upon ​ Weighted-average ​ for future issuance ​ ​ exercise of outstanding ​ exercise price of ​ under equity ​ ​ options, warrants ​ outstanding options, ​ compensation Plan category and rights (2) warrants and rights (3) plans (4) Equity compensation plans approved by security holders (1) 961,413 ​ $ 208.47 2,791,165 (1) Includes options issued and available for exercise and shares available for issuance in connection with past awards under the Amended and Restated 2011 Incentive Award Plan and predecessor equity incentive plans. We currently grant awards only under the Amended and Restated 2011 Incentive Award Plan. (2) Includes 671,344 shares issuable pursuant to the exercise of outstanding stock options, 252,713 shares issuable pursuant to restricted stock units, and 37,356 shares issuable pursuant to performance-based units. (3) Calculation of weighted-average exercise price of outstanding awards includes stock options but does not include shares of restricted stock units or performance-based units that convert to shares of common stock for no consideration. 27 Table of Contents (4) Represents shares that are available for issuance pursuant to the Amended and Restated 2011 Incentive Award Plan. The shares available under the plan are reduced by 1.0 for each stock option awarded and by 1.5 for each restricted stock unit and performance-based unit awarded. Stock performance graph The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such filing. Set forth below is a graph comparing the cumulative total stockholder return on Ulta Beauty’s common stock with the NASDAQ Global Select Market Composite Index (NQGS), the S&P 500, and the S&P 500 Retailing/RLX (Industry Group, SP500-2550) for the period covering January 30, 2016 through the end of Ulta Beauty’s fiscal year ended January 30, 2021. The graph assumes an investment of $100 made at the closing of trading on January 30, 2016 in (i) Ulta Beauty’s common stock, (ii) the stocks comprising the NQGS, (iii) the stocks comprising the S&P 500 and (iv) the stocks comprising the S&P 500 Retailing/RLX (Industry Group, SP500-2550). As Ulta Beauty is a part of the S&P 500, pursuant to the rules of the SEC, the S&P 500 is included in the graph below. All values assume reinvestment of the full amount of all dividends, if any, into additional shares of the same class of equity securities at the frequency with which dividends are paid on such securities during the applicable time period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal year ended ​ ​ January 30, ​ January 28, ​ February 3, ​ February 2, ​ February 1, ​ January 30, Company / Index 2016 2017 2018 2019 2020 2021 Ulta Beauty ​ $ 100.00 $ 150.29 $ 122.59 $ 161.13 $ 147.88 $ 154.42 NQGS ​ ​ 100.00 ​ ​ 121.62 ​ ​ 160.75 ​ ​ 157.85 ​ ​ 199.43 ​ ​ 282.53 S&P 500 ​ ​ 100.00 ​ ​ 117.45 ​ ​ 145.54 ​ ​ 139.37 ​ ​ 166.24 ​ ​ 191.43 S&P 500 Retailing (RLX) ​ ​ 100.00 ​ ​ 116.83 ​ ​ 168.04 ​ ​ 180.73 ​ ​ 210.51 ​ ​ 234.02 ​ 28 Table of Contents Item 6. Selected Financial Data The following table presents our selected consolidated financial data. The table should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal year ended (1) ​ ​ January 30, ​ February 1, ​ February 2, ​ February 3, ​ January 28, ​ ​ 2021 2020 2019 (2) 2018 (3) 2017 ​ ​ (In thousands, except per share and per square foot data and number of stores) Statement of operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 6,151,953 ​ $ 7,398,068 ​ $ 6,716,615 ​ $ 5,884,506 ​ $ 4,854,737 Cost of sales ​ ​ 4,202,794 ​ ​ 4,717,004 ​ ​ 4,307,304 ​ ​ 3,787,697 ​ ​ 3,107,508 Gross profit ​ ​ 1,949,159 ​ ​ 2,681,064 ​ ​ 2,409,311 ​ ​ 2,096,809 ​ ​ 1,747,229 Selling, general and administrative expenses ​ ​ 1,583,017 ​ ​ 1,760,716 ​ ​ 1,535,464 ​ ​ 1,287,232 ​ ​ 1,073,834 Impairment, restructuring and other costs ​ ​ 114,322 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Pre-opening expenses ​ ​ 15,000 ​ ​ 19,254 ​ ​ 19,767 ​ ​ 24,286 ​ ​ 18,571 Operating income ​ ​ 236,820 ​ ​ 901,094 ​ ​ 854,080 ​ ​ 785,291 ​ ​ 654,824 Interest expense (income), net ​ ​ 5,735 ​ ​ (5,056) ​ ​ (5,061) ​ ​ (1,568) ​ ​ (890) Income before income taxes ​ ​ 231,085 ​ ​ 906,150 ​ ​ 859,141 ​ ​ 786,859 ​ ​ 655,714 Income tax expense (4) ​ ​ 55,250 ​ ​ 200,205 ​ ​ 200,582 ​ ​ 231,625 ​ ​ 245,954 Net income ​ $ 175,835 ​ $ 705,945 ​ $ 658,559 ​ $ 555,234 ​ $ 409,760 Net income per common share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 3.12 ​ $ 12.21 ​ $ 11.00 ​ $ 9.02 ​ $ 6.55 Diluted ​ $ 3.11 ​ $ 12.15 ​ $ 10.94 ​ $ 8.96 ​ $ 6.52 Weighted average common shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ 56,351 ​ ​ 57,840 ​ ​ 59,864 ​ ​ 61,556 ​ ​ 62,519 Diluted ​ ​ 56,558 ​ ​ 58,105 ​ ​ 60,181 ​ ​ 61,975 ​ ​ 62,851 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other operating data: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comparable sales (5) ​ ​ (17.9)% ​ ​ 5.0% ​ ​ 8.1% ​ ​ 11.0% ​ ​ 15.8% Number of stores end of year ​ ​ 1,264 ​ ​ 1,254 ​ ​ 1,174 ​ ​ 1,074 ​ ​ 974 Total square footage end of year ​ ​ 13,291,838 ​ ​ 13,193,076 ​ ​ 12,337,145 ​ ​ 11,300,920 ​ ​ 10,271,184 Total square footage per store (6) ​ ​ 10,516 ​ ​ 10,521 ​ ​ 10,509 ​ ​ 10,522 ​ ​ 10,545 Average total square footage (7) ​ ​ 13,260,705 ​ ​ 12,804,988 ​ ​ 11,893,413 ​ ​ 10,742,874 ​ ​ 9,641,367 Capital expenditures ​ $ 151,866 ​ $ 298,534 ​ $ 319,400 ​ $ 440,714 ​ $ 373,747 Depreciation and amortization ​ ​ 297,772 ​ ​ 295,599 ​ ​ 279,472 ​ ​ 252,713 ​ ​ 210,295 Repurchase of common shares ​ ​ 114,895 ​ ​ 680,979 ​ ​ 616,194 ​ ​ 367,581 ​ ​ 344,275 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance sheet data (at period end): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 1,046,051 ​ $ 392,325 ​ $ 409,251 ​ $ 277,445 ​ $ 385,010 Short-term investments ​ ​ — ​ ​ 110,000 ​ ​ — ​ ​ 120,000 ​ ​ 30,000 Working capital ​ ​ 1,171,064 ​ ​ 918,056 ​ ​ 1,091,125 ​ ​ 1,051,577 ​ ​ 1,006,894 Property and equipment, net ​ ​ 995,795 ​ ​ 1,205,524 ​ ​ 1,226,029 ​ ​ 1,189,453 ​ ​ 1,004,358 Total assets (8) ​ ​ 5,089,969 ​ ​ 4,863,872 ​ ​ 3,191,172 ​ ​ 2,908,687 ​ ​ 2,551,878 Operating lease liabilities (8) ​ ​ 1,896,801 ​ ​ 1,938,347 ​ ​ — ​ ​ — ​ ​ — Total stockholders' equity ​ ​ 1,999,549 ​ ​ 1,902,094 ​ ​ 1,820,218 ​ ​ 1,774,217 ​ ​ 1,550,218 (1) Our fiscal year-end is the Saturday closest to January 31 based on a 52/53-week year. Each fiscal year consists of four 13-week quarters, with an extra week added onto the fourth quarter every five or six years. ​ (2) The Company adopted Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606) using the modified retrospective transition method in fiscal 2018. Results from fiscal years prior to fiscal 2018 have not been recast for the adoption of ASC 606. 29 Table of Contents (3) Fiscal 2017 includes 53 weeks; all other fiscal years reported include 52 weeks. Net sales for the 53 rd week of fiscal 2017 were approximately $108.8 million. (4) On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law. This new legislation reduced the federal corporate tax rate to 21.0% effective January 1, 2018. In accordance with Section 15 of the Internal Revenue Code, the Company utilized a blended rate of 33.7% for the fiscal 2017 tax year, by applying a prorated percentage of the number of days prior to and subsequent to the January 1, 2018 effective date. Income tax expense in fiscal 2018 reflects the lower federal tax rate for the entire fiscal year. (5) Comparable sales reflects sales for stores beginning on the first day of the 14 th month of operation. Remodeled stores are included in comparable sales unless the store was closed for a portion of the current or comparable prior year. (6) Total square footage per store is calculated by dividing total square footage at end of year by number of stores at end of year. (7) Average total square footage represents a weighted average, which reflects the effect of opening stores in different months throughout the year. (8) The Company adopted Accounting Standards Update No. 2016-02, Leases (Topic 842), on February 3, 2019 using the modified retrospective approach by recognizing and measuring leases without revising comparative period information or disclosures. ​