Ulta 2012 Annual Report Download - page 17

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Additionally, the general deterioration in economic conditions could adversely affect our commercial partners
including our product vendors as well as the real estate developers and landlords who we rely on to construct and
operate centers in which our stores are located. A bankruptcy or financial failure of a significant vendor or a
number of significant real estate developers or shopping center landlords could have a material adverse effect on
our business, financial condition, profitability, and cash flows.
We may be unable to compete effectively in our highly competitive markets.
The markets for beauty products and salon services are highly competitive with few barriers to entry even when
economic conditions are favorable. We compete against a diverse group of retailers, both small and large,
including regional and national department stores, specialty retailers, drug stores, mass merchandisers, high-end
and discount salon chains, locally owned beauty retailers and salons, Internet businesses, catalog retailers and
direct response television, including television home shopping retailers and infomercials. We believe the
principal bases upon which we compete are the quality of merchandise, our value proposition, the quality of our
customers’ shopping experience and the convenience of our stores as one-stop destinations for beauty products
and salon services. Many of our competitors are, and many of our potential competitors may be, larger and have
greater financial, marketing and other resources and therefore may be able to adapt to changes in customer
requirements more quickly, devote greater resources to the marketing and sale of their products, generate greater
national brand recognition or adopt more aggressive pricing policies than we can. As a result, we may lose
market share, which could have a material adverse effect on our business, financial condition, profitability and
cash flows.
If we are unable to gauge beauty trends and react to changing consumer preferences in a timely manner, our
sales will decrease.
We believe our success depends in substantial part on our ability to:
‰recognize and define product and beauty trends;
‰anticipate, gauge and react to changing consumer demands in a timely manner;
‰translate market trends into appropriate, saleable product and service offerings in our stores and salons in
advance of our competitors;
‰develop and maintain vendor relationships that provide us access to the newest merchandise on reasonable
terms; and
‰distribute merchandise to our stores in an efficient and effective manner and maintain appropriate in-stock
levels.
If we are unable to anticipate and fulfill the merchandise needs of the regions in which we operate, our net sales
may decrease and we may be forced to increase markdowns of slow-moving merchandise, either of which could
have a material adverse effect on our business, financial condition, profitability and cash flows.
If we fail to retain our existing senior management team or attract qualified new personnel, such failure could
have a material adverse effect on our business, financial condition, profitability and cash flows.
Our business requires disciplined execution at all levels of our organization. This execution requires an
experienced and talented management team. If we were to lose the benefit of the experience, efforts and abilities
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.
Effective February 21, 2013, Carl S. Rubin resigned from his position as President and Chief Executive Officer
and Dennis K. Eck, a current board member, is currently serving as Interim Chief Executive Officer until a
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