What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-27 compared with 2024-03-26 · 79 added, 80 removed, 715 unchanged (18% of the section changed)

5 unchanged sentences

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Cash Flows

3 unchanged sentences

Report of Independent Registered Public Accounting Fir m

The Stockholders and the Board of Directors of Ulta Beauty, Inc.

To the Stockholders and the Board of Directors of Ulta Beauty, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Ulta Beauty, Inc.

(the Company) as of February 3, 2024 and January 28, 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended February 3, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at February 3, 2024 and January 28, 2023, and the consolidated results of its operations and its cash flows for each of the three years in the period ended February 3, 2024, in conformity with U.S.

(the Company) as of February 1, 2025 and February 3, 2024, the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended February 1, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at February 1, 2025 and February 3, 2024, and the results of its operations and its cash flows for each of the three years in the period ended February 1, 2025, in conformity with U.S.

generally accepted accounting principles.

8 unchanged sentences

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

11 unchanged sentences

The expected redemption percentage is based on historical redemption patterns in conjunction with current information and trends.

Auditing the Company’s estimate of loyalty deferred revenue was complex as the calculation involved management’s assumptions, such as the standalone selling price and expected redemption rate, which drive the revenue deferral.

Auditing the Company’s estimate of loyalty deferred revenue was complex as the calculation involved management’s assumptions of the standalone selling price and expected redemption rate, which drive the revenue deferral.

In particular, the estimate is sensitive to these significant assumptions, which are affected by expectations about future customer behavior.

13 unchanged sentences

Report of Independent Registered Public Accounting Firm

The Stockholders’ and the Board of Directors Ulta Beauty, Inc.

To the Stockholders’ and the Board of Directors of Ulta Beauty, Inc.

Opinion on Internal Control Over Financial Reporting

1 unchanged sentence

In our opinion, Ulta Beauty, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of February 3, 2024 , based on COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of February 3, 2024 and January 28, 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended February 3, 2024 , and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated March 26, 2024 expressed an unqualified opinion thereon.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of February 1, 2025 , based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of February 1, 2025 and February 3, 2024 , the related consolidated statements of income, stockholders’ equity and cash flows for each of the three years in the period ended February 1, 2025 , and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated March 27, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

49 unchanged sentences

45,965 and 48,324 shares outstanding;

at February 3, 2024 and January 28, 2023, respectively

at February 1, 2025 and February 3, 2024, respectively

Treasury stock-common, at cost

12 unchanged sentences

Operating income

Interest (income) expense, net

Interest income, net

Income before income taxes

4 unchanged sentences

Ulta Beauty, Inc.

Consolidated Statements of Comprehensive Income

Fiscal year ended

(In thousands)

Other comprehensive income:

Foreign currency translation adjustments

Comprehensive income

See accompanying notes to consolidated financial statements.

Ulta Beauty, Inc.

Consolidated Statements of Cash Flows

28 unchanged sentences

Purchase of treasury shares

Debt issuance costs

Net cash used in financing activities

1 unchanged sentence

( 1,006,124 )

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

6 unchanged sentences

Non-cash capital expenditures

Repurchase of common shares in accrued liablities

Repurchase of common shares in accrued liabilities

See accompanying notes to consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Stockholders’ Equity

Comprehensive

Stockholders'

2 unchanged sentences

Stock-based compensation

Foreign currency translation adjustments

Stock options exercised and other awards

1 unchanged sentence

Repurchase of common shares

( 1,521,883 )

( 1,521,925 )

Balance – January 28, 2023

2 unchanged sentences

Purchase of treasury shares

Repurchase of common shares

Balance – January 28, 2023

Repurchase of common shares, including excise tax

( 1,000,013 )

( 1,009,348 )

Balance – February 3, 2024

Stock-based compensation

20 unchanged sentences

The Company’s fiscal year is the 52 or 53 weeks ending on the Saturday closest to January 31.

The Company’s fiscal years ended February 3, 2024 (fiscal 2023), January 28, 2023 (fiscal 2022), and January 29, 2022 (fiscal 2021) were 53 , 52 , and 52 week years, respectively.

The Company’s fiscal years ended February 1, 2025 (fiscal 2024), February 3, 2024 (fiscal 2023), and January 28, 2023 (fiscal 2022) were 52 , 53 , and 52 week years, respectively.

Consolidation

18 unchanged sentences

The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximates fair value due to the short maturities of these instruments.

There was no outstanding debt as of February 3, 2024 and January 28, 2023.

There was no outstanding debt as of February 1, 2025 and February 3, 2024.

Receivables primarily include amounts due from vendors for allowances, royalties and other credit card amounts, and amounts due from third-party gift card providers.

15 unchanged sentences

The Company maintains an inventory reserve for lower of cost or net realizable value and shrink.

The inventory reserve was $ 45,360 and $ 39,532 as of February 3, 2024 and January 28, 2023, respectively.

The inventory reserve was $ 40,003 and $ 45,360 as of February 1, 2025 and February 3, 2024, respectively.

Property and equipment and internal use software

65 unchanged sentences

Loyalty members earn points through purchases at Ulta Beauty, Ulta Beauty at Target, and anywhere the co-branded credit card is accepted.

The third parties reimburse the Company for certain credit card program costs such as advertising and loyalty points, which help promote the credit card program.

The Company receives from the third parties various types of incentive payments and expense reimbursements, including for certain credit card program costs such as advertising and loyalty points, which help promote the credit card program.

The Company recognizes revenue when collectability is reasonably assured, under the assumption the amounts are not constrained and it is probable that a significant revenue reversal will not occur in future periods, which is generally the time at which the actual usage of the Credit Cards or specified transaction occurs.

32 unchanged sentences

Advertising expense, net as a percentage of net sales

Prepaid advertising costs included in prepaid expenses and other current assets on the consolidated balance sheets were $ 12,708 and $ 9,466 as of February 3, 2024 and January 28, 2023, respectively.

Prepaid advertising costs included in prepaid expenses and other current assets on the consolidated balance sheets were $ 7,830 and $ 12,708 as of February 1, 2025 and February 3, 2024, respectively.

Pre-opening expenses

33 unchanged sentences

Diluted net income per common share includes dilutive common stock equivalents, using the treasury stock method (see Note 15, “Net income per common share”).

Recent accounting pronouncements not yet adopted

Recently adopted accounting pronouncements

Segment Reporting (Topic 280):

4 unchanged sentences

The ASU is effective for fiscal years beginning after December 15, 2023, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2023-07 on related disclosures.

The Company adopted ASU 2023-07 in fiscal 2024.

Recent accounting pronouncements not yet adopted

Income Taxes (Topic 740):

6 unchanged sentences

The Company is currently evaluating the impact of adopting this ASU on related disclosures.

SEC Climate-Related Disclosures

In March 2024, the SEC adopted rules intended to enhance and standardize climate-related disclosures in registration statements and annual reports.

The new rules will require disclosure of material climate-related risks, including disclosure of Board of Directors' oversight and risk management activities, the material impacts of these risks to us and the quantification of material impacts to us as a result of severe weather events and other natural conditions.

The rules also require disclosure of material greenhouse gas emissions and any material climate-related targets and goals.

The new rules will be effective for annual reporting periods beginning in fiscal year 2025, except for the greenhouse gas

emissions disclosures which will be effective for annual reporting periods beginning in fiscal year 2026.

The Company is currently evaluating the impact of these new rules.

Income Statement – Reporting Comprehensive Income (Topic 220-40):

Expense Disaggregation Disclosures

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income (Topic 220-40):

Expense Disaggregation Disclosures.

This update requires, among other things, more detailed disclosure about types of expenses in commonly presented expense captions such as cost of sales and SG&A and is intended to improve the disclosures about an entity’s expenses including purchases of inventory, employee compensation, depreciation, and amortization.

The ASU is effective for fiscal years beginning after December 15, 2026, and interim reporting periods

within fiscal years beginning after December 15, 2027.

The Company is currently evaluating the impact of adopting ASU 2024-03 on the consolidated financial statements and disclosures.

Net sales include retail stores and e-commerce merchandise sales as well as salon services and other revenue.

4 unchanged sentences

(Percentage of net sales)

Haircare products and styling tools

Fragrance and bath

Accessories and other

Certain sales departments were reclassified between categories in the prior year to conform to current year presentation, including moving the bath category from Fragrance to Skincare.

Deferred revenue

10 unchanged sentences

(2) Revenue recognized in the current period related to the beginning liability.

Other amounts included in deferred revenue were $ 7,803 and $ 6,094 at February 3, 2024 and January 28, 2023, respectively.

Other amounts included in deferred revenue were $ 7,678 and $ 7,803 at February 1, 2025 and February 3, 2024, respectively.

Prepaid expenses and other assets

29 unchanged sentences

February 1, 2025

January 28, 2023

February 3, 2024

Weighted-average

43 unchanged sentences

Operating lease assets obtained in exchange for operating lease liabilities (non-cash)

(1) Excludes $ 39,654 , $ 30,927 , and $ 28,591 related to cash received for tenant incentives as of February 3, 2024, January 28, 2023, and January 29, 2022, respectively.

(1) Excludes $ 40,742 , $ 39,654 , and $ 30,927 related to cash received for tenant incentives as of February 1, 2025, February 3, 2024, and January 28, 2023, respectively.

Maturity of lease liabilities

35 unchanged sentences

On August 16, 2022, the Inflation Reduction Act of 2022 was enacted into law, which, among other things, introduced a 15 % corporate alternative minimum tax on book income of certain large corporations and created a 1 % excise tax on net share repurchases.

The corporate alternative minimum tax will be effective in fiscal 2024 and is not expected to have a material impact on the consolidated financial statements.

The corporate alternative minimum tax was effective in fiscal 2024 and did not have a material impact on the consolidated financial statements.

The excise tax applies to share repurchases made after December 31, 2022.

7 unchanged sentences

Inventory valuation

Property and equipment

Credit carryforwards

NOL carryforwards

Property and equipment

Total deferred tax assets

3 unchanged sentences

Receivables not currently includable

Inventory valuation

Property and equipment

Total deferred tax liabilities

4 unchanged sentences

The Company accounts for uncertainty in income taxes in accordance with Accounting Standards Codification 740-10.

The reserve for uncertain tax positions was $ 4,060 and $ 4,158 at February 3, 2024 and January 28, 2023, respectively, which represents the best estimate of the potential liability.

The reserve for uncertain tax positions was $ 5,220 and $ 4,060 at February 1, 2025 and February 3, 2024, respectively, which represents the best estimate of the potential liability.

A reconciliation of unrecognized tax benefits, excluding interest and penalties, is as follows:

11 unchanged sentences

The Company is no longer subject to U.S.

federal examinations by the Internal Revenue Service for years before 2020 and is no longer subject to examinations by

state authorities before 2019.

On February 27, 2023, the Company entered into Amendment No.

federal examinations by the Internal Revenue Service for years before 2021 and is no longer subject to examinations by state authorities before 2020.

On March 13, 2024, the Company entered into Amendment No.

3 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;

6 unchanged sentences

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 Term Secured Overnight Financing Rate plus a margin of 1.125 % to 1.250 %, and a credit spread adjustment of 0.10 %, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.20 % per annum.

As of February 3, 2024 and January 28, 2023, the Company had no borrowings outstanding under the credit facility.

Outstanding borrowings bear interest, at the Company’s election, at either a base rate plus a margin of 0.5 % to 1.0 % or the Term Secured Overnight Financing Rate plus a margin of 1.5 % to 2.0 %, and a credit spread adjustment of 0.10 %, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.25 % to 0.375 % per annum.

As of February 1, 2025 and February 3, 2024, the Company had no borrowings outstanding under the credit facility.

As of February 1, 2025, the Company was in compliance with all terms and covenants of the Loan Agreement.

5 unchanged sentences

● 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 February 3, 2024 and January 28, 2023, there were liabilities related to the non-qualified deferred compensation plan included in other long-term liabilities on the consolidated balance sheets of $ 42,653 and $ 37,501 , respectively.

As of February 1, 2025 and February 3, 2024, there were liabilities related to the non-qualified deferred compensation plan included in other long-term liabilities on the consolidated balance sheets of $ 43,117 and $ 42,653 , 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.

Investments in renewable energy projects are accounted for under the equity method of accounting.

The balance of these investments was $ 1,163 and $ 2,316 as of February 3, 2024 and January 28, 2023, respectively, and is included in other long-term assets on the consolidated balance sheets.

The Company did no t contribute capital or receive investment tax credits during fiscal 2023 and 2022.

The Company made other investments of $ 6,158 and $ 2,458 during fiscal 2023 and 2022, respectively.

Stock-based compensation

26 unchanged sentences

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.

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.

35 unchanged sentences

RSUs are expensed on a straight-line basis over the requisite service period.

Forfeitures of RSUs are estimated at the grant date based on historical rates of stock award

activity and reduce the stock-based compensation expense recognized.

Forfeitures of RSUs are estimated at the grant date based on historical rates of stock award activity and reduce the stock-based compensation expense recognized.

At February 1, 2025, unrecognized stock-based compensation expense related to RSUs was $ 24,888 .

31 unchanged sentences

As of February 1, 2025, the maximum number of units that could vest under the provisions of the agreements was 205 .

Awards with market conditions are classified as liability awards and the fair value is determined using a Monte Carlo simulation.

Market-based restricted stock units totaling 28 shares were granted to the former Chief Executive Officer in fiscal 2018 and settled during fiscal 2021.

Compensation expense for liability awards was $ 7,671 in fiscal 2021.

There was no compensation expense for liability awards in fiscal 2023 or 2022.

Net income per common share

27 unchanged sentences

In March 2022, the Board of Directors authorized a share repurchase program (the 2022 Share Repurchase Program) pursuant to which the Company could repurchase up to $ 2,000,000 of the Company’s common stock.

The 2020 Share Repurchase Program authorization revoked the previously authorized but unused amounts 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.

The 2022 Share Repurchase Program revoked the previously authorized but unused amounts from the 2020 Share Repurchase Program.

The 2022 Share Repurchase Program revoked the previously authorized but unused amounts from the earlier share repurchase program.

The 2022 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

In March 2024, the Board of Directors authorized a share repurchase program (the March 2024 Share Repurchase Program) pursuant to which the Company could repurchase up to $ 2,000,000 of the Company’s common stock.

The March 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts from the 2022 Share Repurchase Program.

The March 2024 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

In October 2024, the Board of Directors authorized a share repurchase program (the October 2024 Share Repurchase Program) pursuant to which the Company may repurchase up to $ 3,000,000 of the Company’s common stock.

The October 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts from the March 2024 Share Repurchase Program.

The October 2024 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:

3 unchanged sentences

Total cost of shares repurchased

Subsequent events

On March 12, 2024, the Board of Directors authorized a new share repurchase program (the 2024 Share Repurchase

Program) pursuant to which the Company may repurchase up to $ 2,000,000 of the Company’s common stock.

The 2024 Share Repurchas Program authorization revokes the previously authorized but unused amounts from the 2022 Share Repurchase Program.

The 2024 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time.

On March 13, 2024, the Company entered into an Amendment No.

3 to its Second Amended and Restated Loan Agreement, which amended and restated the existing agreement.

The new loan agreement extends the maturity of the facility to March 13, 2029, provides maximum revolving loans equal to the lesser of $ 800,000 or a percentage of eligible owned inventory, contains a $ 50,000 sub-facility for letters of credit and allows the Company to increase the revolving facility by an additional $ 200,000 .

Segment reporting

The Company operates specialty beauty retail stores in the United States selling cosmetics, fragrance, skincare products, haircare products, wellness products, and services.

Nearly every store features a full-service salon.

The Company has one operating segment and one reportable segment, both of which include retail stores, salon services, and e-commerce.

The Company’s President and Chief Executive Officer operates as the chief operating decision maker (“CODM”) and evaluates performance based on net income that is reported on the consolidated statements of income.

The measure of segment assets is reported on the consolidated balance sheets as total assets.

The Company’s net sales are generated within the United States and its long-lived assets are located primarily in the United States.

The CODM considers both budget-to-actual and forecast-to-actual variances on a monthly basis for profit measures when assessing performance and making decisions about allocating capital and resources.

The CODM also uses net income in competitive analysis by benchmarking to competitors.

The competitive analysis along with the monitoring of the financial results are used in assessing performance of the reportable segment and in establishing compensation.

Within the reportable segment, there are significant expense categories regularly provided to the CODM and included in the measure of the segment’s net income as shown below:

Fiscal year ended

(In thousands, except per share data)

Cost of sales (1)

Associate expenses (2)

Advertising expense, net (3)

Pre-opening expenses

Other segment expenses (1) (4)

Interest income, net

Income tax expense

(1) Included within cost of sales and other segment expenses is depreciation and amortization expense of $ 267,042 , $ 243,840 , and $ 241,372 is fiscal years 2024, 2023, and 2022, respectively, as described in Note 2, “Summary of significant accounting policies.”

(2) Associate expenses include salaries, wages, bonus, and other forms of compensation related to associates as described in Note 2, “Summary of significant accounting policies.”

(3) Advertising expense, net consists of print, digital and social media, and television and radio advertising, net of vendor income that is a reimbursement of specific, incremental, and identifiable costs as described in Note 2, “Summary of significant accounting policies.”

(4) Other segment expenses include other corporate overhead and store operating expenses within SG&A expenses as described in Note 2, “Summary of significant accounting policies.”

Ulta Beauty, Inc.

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data