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Category: Ulta Beauty (ULTA)
Date: 12 March 2021 Stock price of Ulta Beauty : $347.50 Market Capital Of Ulta Beauty: $19.8 billion We take a look at the 4th quarter 2020 earnings report of Ulta Beauty (ULTA). Ulta Beauty is the largest U.S. beauty retailer and the premier beauty destination for cosmetics, fragrance, skin care products, hair care products and salon services
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Despite the challenges of the COVID-19 global pandemic, we were still able to achieve a strong start to the year "
More About Ulta Beauty
At Ulta Beauty (NASDAQ: ULTA), the possibilities are beautiful. Ulta Beauty is the largest U.S. beauty retailer and the premier beauty destination for cosmetics, fragrance, skin care products, hair care products and salon services. In 1990, the Company reinvented the beauty retail experience by offering a new way to shop for beauty – bringing together all things beauty, all in one place. Today, Ulta Beauty has grown to become the top national retailer offering the complete beauty experience.
Ulta Beauty brings possibilities to life through the power of beauty each and every day in our stores and online with more than 25,000 products from approximately 500 well-established and emerging beauty brands across all categories and price points, including Ulta Beauty’s own private label. Ulta Beauty also offers a full-service salon in every store featuring hair, skin, brow, and make-up services.
Ulta Beauty is recognized for its commitment to personalized service, fun and inviting stores and our industry-leading Ultamate Rewards loyalty program. As of August 3, 2019, Ulta Beauty operates 1,213 retail stores across 50 states and also distributes its products through its website, which includes a collection of tips, tutorials and social content. For more information, visit www.ulta.com.
Ulta Beauty brings possibilities to life through the power of beauty each and every day in our stores and online with more than 25,000 products from approximately 500 well-established and emerging beauty brands across all categories and price points, including Ulta Beauty’s own private label. Ulta Beauty also offers a full-service salon in every store featuring hair, skin, brow, and make-up services.
Ulta Beauty is recognized for its commitment to personalized service, fun and inviting stores and our industry-leading Ultamate Rewards loyalty program. As of August 3, 2019, Ulta Beauty operates 1,213 retail stores across 50 states and also distributes its products through its website, which includes a collection of tips, tutorials and social content. For more information, visit www.ulta.com.
Overview of Ulta Beauty (ULTA) 4th quarter 2020 earnings report
For the Fourth Quarter of Fiscal 2020
- Net sales decreased 4.6% to $2.2 billion compared to $2.3 billion in the fourth quarter of fiscal 2019 due to the impact of COVID-19.
- Comparable sales (sales for stores open at least 14 months, including stores temporarily closed due to COVID-19, and e-commerce sales) decreased 4.8% compared to an increase of 4.0% in the fourth quarter of fiscal 2019. In the fourth quarter of fiscal 2020, transactions declined 12.2%, and average ticket increased 8.3%.
- Gross profit decreased 4.4% to $771.0 million compared to $806.9 million in the fourth quarter of fiscal 2019. As a percentage of net sales, gross profit increased to 35.1% compared to 35.0% in the fourth quarter of fiscal 2019, primarily due to improvement in merchandise margins driven by lower promotional activity and enhanced merchandising strategies, partially offset by channel mix shifts and deleverage in fixed costs due to lower sales.
- SG&A expenses decreased to $514.1 million compared to $515.5 million in the fourth quarter of fiscal 2019. As a percentage of net sales, SG&A expenses increased to 23.4% compared to 22.4% in the fourth quarter of fiscal 2019, primarily due higher marketing expenses, higher corporate overhead expenses, personal protective equipment (PPE) and COVID-related expenses, and the deleverage of variable store expenses due to lower sales, partially offset by leverage related to the store payroll and benefits.
- Impairment, restructuring and other costs of $30.4 million includes $13.2 million related to the suspension of the planned expansion to Canada, $10.0 million due to employee severance costs, $5.6 million lease termination costs related to the permanent closure of 19 stores, and $1.5 million due to the impairment of tangible long-lived assets and operating lease assets associated with certain retail stores.
- Pre-opening expenses decreased to $2.2 million compared to $3.6 million in the fourth quarter of fiscal 2019 due to current quarter real estate activity and stores expected to open in the first quarter of fiscal 2021. Real estate activity in the fourth quarter of fiscal 2020 included two new stores and two relocations compared to 13 new stores and two relocations in the fourth quarter of fiscal 2019.
- Operating income decreased to $224.3 million, or 10.2% of net sales, compared to $287.8 million, or 12.5% of net sales, in the fourth quarter of fiscal 2019. Adjusted operating income was $254.7 million, or 11.6% of net sales.
- Tax rate increased to 23.4% compared to 22.7% in the fourth quarter of fiscal 2019. The higher effective tax rate is primarily due to less investment tax credits received.
- Net income was $171.5 million compared to $222.7 million in the fourth quarter of fiscal 2019. Adjusted net income was $193.4 million compared to $219.5 million in the fourth quarter of fiscal 2019.
- Diluted earnings per share was $3.03 compared to $3.89 in the fourth quarter of fiscal 2019. Adjusted diluted earnings per share was $3.41 compared to $3.83 in the fourth quarter of fiscal 2019.
Ulta Beauty (ULTA) management commentary on their 4th quarter 2020 earnings
BOLINGBROOK, Ill.--(BUSINESS WIRE)-- Ulta Beauty, Inc. (NASDAQ: ULTA) today announced financial results for the thirteen-week period (“Fourth Quarter”) and fifty-two-week period (“Fiscal Year”) ended January 30, 2021 compared to the same periods ended February 1, 2020.
“The Ulta Beauty team delivered better-than-expected results for the fourth quarter. Strong, enterprise-wide execution of our plans, combined with improving trends in consumer demand, resulted in solid results across multiple metrics, including sales, transactions and profitability,” said Mary Dillon, chief executive officer. “I want to express my sincere appreciation to all Ulta Beauty associates for their continued flexibility, collaboration and unwavering commitment to our guests and each other.”
“Fiscal 2020 was a difficult year, and I am proud of how our teams navigated the unprecedented challenges with agility and purpose,” continued Dillon. “We begin fiscal 2021 with a strong foundation in place and good operational momentum. We are strategically investing in our business to drive further market share gains, and, as separately announced today, we are beginning to execute a thoughtful succession plan that ensures we continue to benefit from strong, experienced leadership for the next chapter of growth. I remain excited about the long-term opportunity for Ulta Beauty, and I am confident we will continue to shape and lead the beauty industry for many years to come.”
COVID-19 Response and Impact
The Company’s financial results continue to be impacted by the COVID-19 pandemic.
On March 19, 2020, Ulta Beauty temporarily closed all stores in response to the spread of COVID-19. On April 19, 2020, the Company introduced curbside pickup, and on May 11, 2020, the Company started a phased store reopening process. By July 20, 2020, the full fleet of Ulta Beauty stores was operational and by January 30, 2021, salon and brow services had resumed in all stores. During fiscal 2020, the Company incurred incremental operating costs related to COVID-19 of approximately $188 million and recorded a $52.4 million reduction of selling, general and administrative (SG&A) expenses as a result of the employee retention credits made available under the Coronavirus Aid, Relief and Economic Security Act (CARES Act).
“The Ulta Beauty team delivered better-than-expected results for the fourth quarter. Strong, enterprise-wide execution of our plans, combined with improving trends in consumer demand, resulted in solid results across multiple metrics, including sales, transactions and profitability,” said Mary Dillon, chief executive officer. “I want to express my sincere appreciation to all Ulta Beauty associates for their continued flexibility, collaboration and unwavering commitment to our guests and each other.”
“Fiscal 2020 was a difficult year, and I am proud of how our teams navigated the unprecedented challenges with agility and purpose,” continued Dillon. “We begin fiscal 2021 with a strong foundation in place and good operational momentum. We are strategically investing in our business to drive further market share gains, and, as separately announced today, we are beginning to execute a thoughtful succession plan that ensures we continue to benefit from strong, experienced leadership for the next chapter of growth. I remain excited about the long-term opportunity for Ulta Beauty, and I am confident we will continue to shape and lead the beauty industry for many years to come.”
COVID-19 Response and Impact
The Company’s financial results continue to be impacted by the COVID-19 pandemic.
On March 19, 2020, Ulta Beauty temporarily closed all stores in response to the spread of COVID-19. On April 19, 2020, the Company introduced curbside pickup, and on May 11, 2020, the Company started a phased store reopening process. By July 20, 2020, the full fleet of Ulta Beauty stores was operational and by January 30, 2021, salon and brow services had resumed in all stores. During fiscal 2020, the Company incurred incremental operating costs related to COVID-19 of approximately $188 million and recorded a $52.4 million reduction of selling, general and administrative (SG&A) expenses as a result of the employee retention credits made available under the Coronavirus Aid, Relief and Economic Security Act (CARES Act).
Ulta Beauty (ULTA) stock price history over the last 5 years
The image below shows the stock price history of Ulta Beauty (ULTA). And its been a pretty good time for Ulta stockholders with the stock of Ulta increasing by 75% over the last 5 years.
The stock of Ulta is trading at a lot closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Ulta Beauty's stock is very positive at this point in time.
The stock of Ulta is trading at a lot closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Ulta Beauty's stock is very positive at this point in time.
Latest stock valuation of Ulta Beauty
So what is BrightView stock worth based on their 3rd quarter 2020 earnings report? Based on their earnings report our valuation model provides a target price (full value price) for BrightView at $204.80 a stock (up very slightly from our 2nd quarter 2020 earnings report review of BrightView).
We therefore believe the stock of The BrightView is overvalued at its current price of $272
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $204.80, thus a good entry point into The BrightView would be at $184.30 or below.
We expect the stock of BrightView to pull back from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is overvalued
We therefore believe the stock of The BrightView is overvalued at its current price of $272
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $204.80, thus a good entry point into The BrightView would be at $184.30 or below.
We expect the stock of BrightView to pull back from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is overvalued
Next earnings release of Ulta Beauty
It is expected that Ulta Beauty will release their 1st quarter 2021 earnings report in early June 2021
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