Ulta 2012 Annual Report Download - page 4

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Marketing
We continue to build upon our strong foundation of print marketing with national media, digital marketing and social
media. In 2012, we partnered with Allure Magazine to publish a special ULTA Beauty edition to highlight our position
as a beauty and trend authority. We are also expanding into digital marketing to build our brand and reach new
customers. Additionally we enhanced our social media strategy, with dedicated efforts on Facebook, Pinterest,
Twitter and YouTube.
Digital Strategy
We continue to evolve to a true multi-channel retailer as we build our e-commerce and digital capabilities. While
sales from ulta.com represent a low single digit percentage of our sales today, this business is growing rapidly as we
continue to enhance the customer experience with improved speed and content. During 2012, we launched new customer
2012 Financial Position
ULTA Beauty’s financial position remains very strong and we generated over $50 million in free cash flow in fiscal 2012
after investing $189 million in capital. At year end, our debt-free balance sheet included $320 million of cash and cash
equivalents. During 2012, we paid a special cash dividend, returning $63 million to shareholders.
Looking ahead to 2013, we are excited about the opportunity to further expand our market share of the $100 billion
beauty industry. We believe that ULTA Beauty will continue to drive rapid sales and earnings growth, while continuing
to invest in the infrastructure needed to sustain the growth of our retail and digital businesses.
2013 Outlook
We are on track to open 125 new stores in 2013, representing 22% square footage growth. We continue to see
a strong pipeline of new products, services and brands to enhance our offering, and are delighted to continue
our expansion of Clinique boutiques to additional stores. To provide a solid foundation for ULTA Beauty’s growth
in the years ahead, we plan to invest in several areas of the business. This will include upgrading our warehouse
management systems and preparing for an additional distribution center in 2014. We plan to invest substantial
resources in our website redesign, fulfillment capabilities and in people to continue to drive rapid growth in our
e-commerce business. We plan to invest in digital marketing to reach the millions of women who have yet to discover
the ULTA Beauty brand and invest in store labor to support the growth of our prestige categories.
ULTA Beauty remains a compelling growth story which continues to build upon our five point strategy. We are
confident in our ability to deliver our long term financial model based on 4% to 6% comparable store sales, including
the impact of our e-commerce business, combined with 15% to 20% square footage growth. This model is expected
to yield 25% to 30% earnings growth and targets a mid-teens operating margin in the medium term.
We are very proud of ULTA Beauty’s 2012 performance and sincerely thank each of our 16,000 dedicated associates
for creating a compelling experience for our guests. We would also like to thank our shareholders, guests, vendor
partners and our Board of Directors for their continued support.
Sincerely yours,
Dennis K. Eck
Interim Chief Executive Officer
Scott Settersten
Chief Financial Officer
applications, expanded our online assortment and increased our digital marketing presence.
mobile