Ulta Beauty(US:ULTA)2025-12-04 21:09Financial Performance - Net sales for the third quarter of fiscal 2025 reached $2,857.6 million, a 12.9% increase from $2,530.1 million in the same period of fiscal 2024[92] - Gross profit for the third quarter of fiscal 2025 was $1,155.7 million, compared to $1,005.6 million in the prior year, reflecting a gross margin improvement[92] - Comparable sales increased by 6.3% in the third quarter of fiscal 2025, compared to a 0.6% increase in the same quarter of fiscal 2024[92] - Operating income for the third quarter of fiscal 2025 was $309.4 million, slightly down from $318.5 million in the same quarter of fiscal 2024[92] - Net income for the third quarter of fiscal 2025 was $230.9 million, compared to $242.2 million in the same period of fiscal 2024[92] - Net sales increased by $327.5 million, or 12.9%, to $2.9 billion for the 13 weeks ended November 1, 2025, compared to $2.5 billion for the same period in 2024[94] - Gross profit rose by $150.0 million, or 14.9%, to $1.2 billion for the 13 weeks ended November 1, 2025, with a gross profit margin of 40.4%[95] - Net income was $230.9 million for the 13 weeks ended November 1, 2025, down from $242.2 million for the same period in 2024[100] - For the 39 weeks ended November 1, 2025, net sales increased by $686.4 million, or 8.8%, to $8.5 billion compared to $7.8 billion for the same period in 2024[101] Expenses and Costs - Selling, general and administrative (SG&A) expenses increased by $158.7 million, or 23.3%, to $840.9 million, representing 29.4% of net sales for the 13 weeks ended November 1, 2025[96] - SG&A expenses for the 39 weeks ended November 1, 2025, increased by $300.3 million, or 15.1%, to $2.3 billion, representing 27.0% of net sales[104] Store Expansion and Operations - The number of stores at the end of the third quarter of fiscal 2025 was 1,500, an increase from 1,437 stores at the end of the same quarter in fiscal 2024[92] - The company opened 58 new stores during the 39 weeks ended November 1, 2025, compared to 57 new stores in the same period in 2024[118] Inventory and Cash Management - Merchandise inventories increased by $378.5 million, or 16.0%, to $2.7 billion as of November 1, 2025[117] - The company had cash and cash equivalents of $204.9 million as of November 1, 2025, compared to $177.8 million as of November 2, 2024[109] Share Repurchase and Debt - The company repurchased 1,658,206 shares at a total cost of $699.1 million during the 39 weeks ended November 1, 2025[126] - As of November 1, 2025, the company had $488.3 million in borrowings outstanding under its credit facility, with a weighted average interest rate of 6.42% for the 39 weeks ended November 1, 2025[130] - The company entered into a credit facility with a maximum revolving loan of $1.0 billion, maturing on March 13, 2029, and requires a minimum fixed charge coverage ratio of 1.0 when availability falls below a specified threshold[127] - As of November 1, 2025, the company had $551.7 million in total outstanding borrowings under its credit facilities, compared to $199.7 million as of November 2, 2024[135] Economic and Market Conditions - The company anticipates that persistent inflation and macroeconomic pressures may negatively impact consumer spending and sales trends for the remainder of fiscal 2025[80] - The company is subject to seasonal fluctuations, with significant sales and profits realized during the fourth quarter due to the holiday season, impacting overall financial performance[132] - A hypothetical 1% increase in interest rates on variable debt would not materially impact the company's operating income for the 39 weeks ended November 1, 2025[136] - The company is exposed to foreign currency exchange rate fluctuations, but this exposure is not material to its financial condition or results of operations[137] Strategic Focus and Growth - The company is expanding its international presence through a joint venture in Mexico and a franchise in the Middle East, along with the acquisition of Space NK in the U.K. and Ireland[74] - The strategic focus areas include assortment, experience, loyalty, and access to enhance customer engagement and drive growth[75] - The company aims to leverage fixed costs and improve merchandise margins to increase long-term operating profit despite incremental investments in new stores and technology[78] Compliance and Credit Facilities - The company maintains compliance with all terms and covenants of its loan agreements as of November 1, 2025[130] - The credit facility includes a $50.0 million subfacility for letters of credit[127] - Space NK, a wholly owned subsidiary, has a multi-currency revolving credit facility of up to £40.0 million, with £63.4 million outstanding as of November 1, 2025, and must maintain an interest coverage ratio of at least 4.0 to 1.0[131]