Ulta 2011 Annual Report Download - page 19

of other key executive personnel, it could have a material adverse effect on our business, financial condition
profitability and cash flows. Furthermore, our ability to manage our retail expansion will require us to continue to
train, motivate and manage our associates. We will need to attract, motivate and retain additional qualified
executive, managerial and merchandising personnel and store associates. Competition for this type of personnel
is intense, and we may not be successful in attracting, assimilating and retaining the personnel required to grow
and operate our business profitably.
On March 8, 2012 we announced the implementation of a Chief Financial Officer succession plan after our
current CFO, Gregg R. Bodnar, advised us that due to a family health issue he will be required to relocate and as
such intends to step down from his current position at such time as a suitable successor CFO can be identified. In
order to facilitate an orderly transition, Mr. Bodnar plans to remain in his present position pending the
appointment of his successor and is expected to assist in the transition of his successor. There can be no
assurance, however, that we will be able to timely identify a suitable successor Chief Financial Officer or that
Mr. Bodnar’s services will be available to us through a transition period. Our inability to facilitate an orderly
transition could have a material adverse effect on our business, financial condition, profitability and cash flows.
We intend to continue to open new stores, which could strain our resources and have a material adverse effect
on our business, financial condition, profitability and cash flows.
Our continued and future growth largely depends on our ability to successfully open and operate new stores on a
profitable basis. During fiscal 2011, we opened 61 new stores. We intend to continue to grow our number of
stores for the foreseeable future, and believe we have the long-term potential to grow our store base to over 1,000
stores in the United States. During fiscal 2011, the average investment required to open a typical new store was
approximately $0.9 million. This continued expansion could place increased demands on our financial,
managerial, operational and administrative resources. For example, our planned expansion will require us to
increase the number of people we employ as well as to monitor and upgrade our management information and
other systems and our distribution infrastructure. These increased demands and operating complexities could
cause us to operate our business less efficiently and could have a material adverse effect on our business,
financial condition, profitability and cash flows.
The capacity of our distribution and order fulfillment infrastructure may not be adequate to support our
recent growth and expected future growth plans, which could prevent the successful implementation of these
plans or cause us to incur costs to expand this infrastructure, which could have a material adverse effect on
our business, financial condition, profitability and cash flows.
We operate two distribution facilities, which house the distribution operations for Ulta retail stores together with
the order fulfillment operations of our e-commerce business. In order to support our recent and expected future
growth and to maintain the efficient operation of our business, we intend to open a third distribution center in
fiscal 2012. Our failure to open our third distribution center in fiscal 2012 or to expand our distribution capacity
on a timely basis to keep pace with our anticipated growth in stores could have a material adverse effect on our
business, financial condition, profitability and cash flows.
Any significant interruption in the operations of our distribution facilities could disrupt our ability to deliver
merchandise to our stores in a timely manner, which could have a material adverse effect on our business,
financial condition, profitability and cash flows.
We distribute products to our stores without supplementing such deliveries with direct-to-store arrangements
from vendors or wholesalers. We are a retailer carrying over 20,000 beauty products that change on a regular
basis in response to beauty trends, which makes the success of our operations particularly vulnerable to
disruptions in our distribution infrastructure. Any significant interruption in the operation of our supply chain
infrastructure, such as disruptions in our information systems, disruptions in operations due to fire or other
catastrophic events, labor disagreements, or shipping and transportation problems, could drastically reduce our
ability to receive and process orders and provide products and services to our stores, which could have a material
adverse effect on our business, financial condition, profitability and cash flows.
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