ULTA SALON, COSMETICS & FRAGRANCE, INC. (ULTA) filed Quarterly Report for the period ended 2009-08-01.
ULTA is the largest beauty retailer that provides one-stop shopping for prestige mass and salon products and salon services in the United States. ULTA provides affordable indulgence to its customers by combining the product breadth value and convenience of a beauty superstore with the distinctive environment and experience of a specialty retailer. ULTA offers a unique combination of over twenty one thousand prestige and mass beauty products across the categories of cosmetics fragrance haircare skincare bath and body products and salon styling tools as well as salon haircare products. ULTA also offers a full-service salon in all of its stores. Ulta Salon, Cosmetics & Fragrance, Inc. has a market cap of $832.6 million; its shares were traded at around $14.41 with a P/E ratio of 30 and P/S ratio of 0.8.
Highlight of Business Operations:
Net sales increased $24.4 million, or 9.8%, to $273.5 million for the three months ended August 1, 2009, compared to $249.1 million for the three months ended August 2, 2008. The increase is primarily due to an additional 50 new stores operating since second quarter 2008 which contributed $28.5 million to net sales while the sales decline in comparable stores caused a decrease of $4.1 million to net sales when compared to last year.
Net income increased $2.1 million, or 55.9%, to $5.8 million for the three months ended August 1, 2009, compared to $3.7 million for the three months ended August 2, 2008. The increase is primarily related to the $5.4 million increase in gross profit and a $2.1 million decrease in pre-opening expenses, partially offset by a $4.4 million increase in SG&A expenses.
Net sales increased $54.0 million, or 11.0%, to $542.4 million for the six months ended August 1, 2009, compared to $488.4 million for the six months ended August 2, 2008. The increase is primarily due to an additional 50 new stores operating since second quarter 2008 which contributed $63.2 million to net sales while the sales decline in comparable stores caused a decrease of $9.2 million to net sales when compared to last year.
Net income increased $2.7 million, or 34.0%, to $10.7 million for the six months ended August 1, 2009, compared to $8.0 million for the six months ended August 2, 2008. The increase is primarily related to the $10.8 million increase in gross profit and a $4.6 million decrease in pre-opening expenses, partially offset by a $11.5 million increase in SG&A expenses.
Our credit facility is with LaSalle Bank National Association as the administrative agent, Wachovia Capital Finance Corporation as collateral agent, and JP Morgan Chase Bank as documentation agent. This facility provides maximum credit of $200 million through May 31, 2011. The facility provides maximum borrowings equal to the lesser of $200 million or a percentage of eligible owned inventory. The advance rates on owned inventory are 80% (85% from September 1 to January 31).The credit facility agreement contains a restrictive financial covenant requiring us to maintain tangible net worth of not less than $80 million. On August 1, 2009, our tangible net worth was approximately $259 million. Substantially all of our assets are pledged as collateral for outstanding borrowings under the facility. Outstanding borrowings bear interest at the prime rate or the Eurodollar rate plus 1.00% up to $100 million and 1.25% thereafter.
The interest rate on the outstanding balances under the facility as of August 1, 2009, January 31, 2009 and August 2, 2008 was 1.60%, 1.52% and 3.67%, respectively. At August 1, 2009, we had $65.5 million of outstanding borrowings under the facility. We have classified $42.4 million as long-term as this is the minimum amount we believe will remain outstanding for an uninterrupted period over the next year. We had approximately $120.8 million, $86.8 million and $31.5 million (excluding the accordion option which was exercised on August 15, 2008) of availability as of August 1, 2009, January 31, 2009 and August 2, 2008, respectively. We also have an ongoing letter of credit that renews annually which had a balance of $0.3 million as of August 1, 2009, January 31, 2009 and August 2, 2008.
ULTA is in the portfolios of Ron Baron of Baron Funds.
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