Ulta 2012 Annual Report Download - page 38

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Fiscal year 2012 versus fiscal year 2011
Net sales
Net sales increased $444.1 million, or 25.0%, to $2,220.3 million in fiscal 2012 compared to $1,776.2 million in
fiscal 2011. Salon service sales increased $22.9 million, or 23.2% to $121.4 million compared to $98.5 million in
fiscal 2011. The sales increases are due to the opening of 101 net new stores in 2012 and a 8.8% increase in
comparable store sales which was primarily due to a 6.5% increase in store traffic. Non-comparable stores, which
include stores opened in fiscal 2012 as well as stores opened in fiscal 2011 which have not yet turned
comparable, contributed $291.0 million of the net sales increase while comparable stores contributed
$153.1 million of the total net sales increase. We attribute the increase in comparable store sales to our successful
marketing and merchandise strategies.
Gross profit
Gross profit increased $166.9 million, or 27.0%, to $783.7 million in fiscal 2012, compared to $616.8 million, in
fiscal 2011. Gross profit as a percentage of net sales increased 60 basis points to 35.3% in fiscal 2012 compared
to 34.7% in fiscal 2011. The increase in gross profit margin in fiscal 2012 was primarily driven by:
‰50 basis points of leverage in fixed store costs attributed to the impact of significantly higher sales levels in
fiscal 2012; and
‰30 basis points improvement in merchandise margins driven by our marketing and merchandising strategies.
Selling, general and administrative expenses
Selling, general and administrative (SG&A) expenses increased $78.2 million, or 19.0%, to $488.9 million in
fiscal 2012 compared to $410.7 million in fiscal 2011. As a percentage of net sales, SG&A expenses decreased
110 basis points to 22.0% in fiscal 2012 compared to 23.1% in fiscal 2011. The leverage in SG&A expense was
primarily driven by:
‰70 basis points in corporate overhead leverage attributed to higher sales volume; and
‰40 basis points improvement in variable store and marketing expense leverage attributed to cost efficiencies
and higher sales volume.
Pre-opening expenses
Pre-opening expenses increased $4.8 million, or 48.4%, to $14.8 million in fiscal 2012 compared to
$10.0 million in fiscal 2011. During fiscal 2012, we opened 102 new stores, remodeled 21 stores and relocated 3
stores. During fiscal 2011, we opened 61 new stores and remodeled 17 stores and relocated 2 stores.
Interest expense
Interest expense was $0.2 million in fiscal 2012 and $0.6 million in fiscal 2011. Interest expense for both periods
represents various fees related to the credit facility. We did not utilize our credit facility during fiscal 2012 or 2011.
Income tax expense
Income tax expense of $107.2 million in fiscal 2012 represents an effective tax rate of 38.3%, compared to fiscal
2011 tax expense of $75.3 million and an effective tax rate of 38.5%. The lower tax rate in fiscal 2012 is primarily
due to a decrease in state taxes and less non-deductible executive compensation compared to fiscal 2011.
Net income
Net income increased $52.2 million, or 43.5%, to $172.5 million in fiscal 2012 compared to $120.3 million in
fiscal 2011. The increase in net income was primarily due to an increase in gross profit of $166.9 million, which
was offset by a $78.2 million increase in SG&A expenses and a $31.9 million increase in income tax expense.
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