Ulta 2008 Annual Report Download - page 19

Distribution
We operate two distribution facilities. The first facility, located in Romeoville, Illinois, is approximately
317,000 square feet in size, including an overflow facility. During fiscal 2008, we began operating a second
distribution facility in Phoenix, Arizona that is approximately 330,000 square feet in size.
Inventory is shipped from our suppliers to our distribution facilities. We carry over 21,000 products and
replenish our stores with such products primarily in eaches (i.e., less-than-case quantities), which allows us to
ship less than an entire case when only one or two of a particular product is required. Our distribution
facilities use a warehouse management software system, which was upgraded in early 2007. Products are bar-
coded and scanned using handheld radio-frequency devices as they move within the warehouse to ensure
accuracy. Product is delivered to stores using contract carriers. One vendor currently provides store-ready
orders that can be quickly forwarded to our stores. We use carton barcode labels to facilitate these shipments.
Information technology
We are committed to using technology to enhance our competitive position. We depend on a variety of
information systems and technologies to maintain and improve our competitive position and to manage the
operations of our growing store base. We rely on computer systems to provide information for all areas of our
business, including supply chain, merchandising, POS, electronic commerce, finance, accounting and human
resources. Our core business systems consist mostly of a purchased software program that integrates with our
internally developed software solutions. Our technology also includes a company-wide network that connects
all corporate users, stores, and our distribution infrastructure and provides communications for credit card and
daily polling of sales and merchandise movement at the store level. We intend to leverage our technology
infrastructure and systems where appropriate to gain operational efficiencies through more effective use of our
systems, people and processes. We update the technology supporting our stores, distribution infrastructure and
corporate headquarters on a continual basis. We will continue to make investments in our information systems
to facilitate our growth and enable us to enhance our competitive position.
Intellectual property
We have registered a number of trademarks in the United States, including Ulta Salon Cosmetics Fragrance
(and design), Ulta.com, and Ulta Beauty and two related designs. The renewal dates for the identified marks
are January 22, 2012 (Ulta Salon Cosmetics Fragrance (and design)), October 8, 2012 (Ulta.com), July 10,
2017 (Ulta Beauty) and October 16, 2017 (the two Ulta Beauty related designs). All marks that are deemed
material to our business have been registered in the United States and select foreign countries. We have
applications pending for certain of these marks in Canada.
We believe our trademarks, especially those related to the Ulta brand, have significant value and are important
to building brand recognition.
Government regulation
In our U.S. markets, we are affected by extensive laws, governmental regulations, administrative determina-
tions, court decisions and similar constraints. Such laws, regulations and other constraints may exist at the
federal, state or local levels in the United States. Our Ulta branded products are subject to regulation by the
Food and Drug Administration (FDA), the Federal Trade Commission (FTC) and State Attorneys General in
the United States. Such regulations principally relate to the safety of our ingredients, proper labeling,
advertising, packaging and marketing of our products.
Products classified as cosmetics (as defined in the Food, Drug and Cosmetic (FDC) Act) are not subject to
pre-market approval by the FDA, but the products and the ingredients must be tested to ensure safety. The
FDA also utilizes an “intended use” doctrine to determine whether a product is a drug or cosmetic by the
labeling claims made for the product. Certain ingredients commonly used in cosmetics products such as
sunscreens and acne treatment ingredients are classified as over-the-counter drugs which have specific label
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