Ulta Beauty (ULTA) 10-K risk factor changes: FY2019 vs FY2019

[removed: The] [added: _The] risks described below could materially and adversely affect our business, financial condition, results of operations, or future growth.

You should carefully consider the following risks and all of the other information contained in this Annual Report on Form 10-K before making an investment in our common [removed: stock.][added: stock._]

[removed: The] [added: The] health of the economy in the channels we serve may affect consumer purchases of discretionary items such as beauty products and salon services, which could have a material adverse effect on our business, financial condition, profitability, and cash [removed: flows.][added: flows.]

Factors that could affect consumers’ willingness to make such discretionary purchases include: general business conditions, levels of employment, interest rates, tax rates, the availability of consumer credit, [removed: and] consumer confidence in future economic [removed: conditions.][added: conditions, and risks, or the public perception of risks, related to epidemics or pandemics like COVID-19.]

In the event of a prolonged economic downturn or acute recession, consumer spending habits could be adversely [removed: affected] [added: affected,] and we could experience lower than expected net sales.

Reduced consumer spending could cause changes in customer order patterns and changes in the level of merchandise purchased [added: by our customers, and may signify a reset of consumer spending habits, all of which may adversely affect our business, financial condition, profitability, and cash flows.]

[removed: We] [added: We] may be unable to compete effectively in our highly competitive [removed: markets.][added: markets.]

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, online capabilities of national retailers, pure-play e-commerce companies, catalog retailers, and direct response television, including television home shopping [removed: retailers,] [added: retailers] and infomercials.

We believe the principal bases upon which we compete are the breadth of merchandise, our value proposition, the quality of our guests’ shopping experience, and the [removed: convenience of our stores as one-stop destinations for beauty products and salon services.]

[removed: Our] [added: Our] comparable sales and quarterly financial performance may fluctuate for a variety of reasons, which could result in a decline in the price of our common [removed: stock.][added: stock.]

| | [removed: · |] [added: ●] | general U.S. economic conditions and, in particular, the retail sales environment; |

| | [removed: · |] [added: ●] | changes in our merchandising strategy or mix; |

| | [removed: · |] [added: ●] | performance of our new and remodeled stores; |

| | [removed: · |] [added: ●] | the effectiveness of our inventory management; |

| | [removed: · |] [added: ●] | timing and concentration of new store openings, including additional human resource requirements and related pre-opening and other start-up costs; |

| | [removed: · |] [added: ●] | cannibalization of existing store sales by new store openings; |

| | [removed: · |] [added: ●] | levels of pre-opening expenses associated with new stores; |

| | [removed: · |] [added: ●] | timing and effectiveness of our marketing activities; |

| | [removed: · |] [added: ●] | seasonal fluctuations due to weather conditions; |

| | [removed: · |] [added: ●] | actions by our existing or new competitors; and |

| | [removed: · |] [added: ●] | hurricanes, tornadoes, wildfires, earthquakes, mudslides, [removed: and] other natural [removed: disasters.] [added: disasters, and epidemics or pandemics.] |

For more information on our quarterly results of operations, see Note [removed: 17] [added: 18] to our consolidated financial statements, “Selected quarterly financial data (unaudited),” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

[removed: The] [added: The] capacity of our distribution and order fulfillment infrastructure and the performance of our distribution [added: and fast fulfillment] centers may not be adequate to support our historical growth and expected future growth plans, which could prevent the successful implementation of these plans or cause us to incur excess costs to expand this infrastructure, which could have a material adverse effect on our business, financial condition, profitability, and cash [removed: flows.][added: flows.]

We currently operate [removed: five] [added: four] distribution facilities, which house the distribution operations for Ulta Beauty retail stores together with the order fulfillment operations of our e-commerce [removed: platform.][added: platform, and one fast fulfillment center (e-commerce only).]

[removed: In order to] [added: To] support our historical and expected future growth and to maintain the efficient operation of our business, it is likely additional distribution centers or fast fulfillment centers [removed: (e-commerce only)] will be [added: added in the future.]

[removed: Any] [added: 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 [removed: flows.][added: flows.]

Any significant interruption in the operation of our supply chain infrastructure, such as disruptions in our information systems, disruptions in operations due to fire, natural disasters, or other catastrophic [removed: events,] [added: events (such as the recent outbreak of COVID-19)] 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.

We offer most of our beauty products for sale through our Ulta.com [removed: website.][added: website and through our mobile applications.]

Although we believe that our omnichannel participation is a distinct advantage for us due to synergies and the potential for new customers, supporting product offerings through these channels [removed: could] [added: can] create issues that have the potential to adversely affect our results of operations.

[removed: We] [added: We] may not be able to sustain our growth plans and successfully implement our long-range strategic and financial plans, which could have a material adverse effect on our business, financial condition, profitability, and cash flows.

In addition, 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 [removed: flows.][added: flows.]

[removed: Cybersecurity] [added: Cybersecurity] breaches and other disruptions could compromise our information, result in the unauthorized disclosure of confidential guest, employee, Company and/or business partners’ information, damage our reputation, and expose us to liability, which could negatively impact our [removed: business.][added: business.]

[removed: We] [added: We] are subject to risks relating to our information technology systems, and any failure to adequately protect our critical information technology systems or any material disruption of our information systems could negatively impact financial results and materially adversely affect our business operations, particularly during the holiday [removed: season.][added: season.]

[removed: Increased] [added: Increased] costs or interruption in our third-party vendors’ overseas sourcing operations could disrupt production, shipment, or receipt of some of our merchandise, which could result in lost sales and could increase our [removed: costs.][added: costs.]

Our sourcing operations may also be hurt by health concerns regarding infectious diseases in countries in which our merchandise is [removed: produced,] [added: produced (such as COVID-19),] adverse weather conditions or natural disasters that may occur overseas, or acts of war or terrorism in the United States or worldwide, to the extent these acts affect the production, shipment, or receipt of merchandise.

[added: Our future operations] and performance will be subject to these [removed: factors] [added: factors,] and these factors could have a material adverse effect on our business, financial condition, profitability, and cash flows or may require us to modify our current business practices and incur increased costs.

[removed: A] [added: A] reduction in traffic to, or the closing of, the other destination retailers in the shopping areas where our stores are located could significantly reduce our sales and leave us with excess inventory, which could have a material adverse effect on our business, financial condition, profitability, and cash [removed: flows.][added: flows.]

Customer traffic to these shopping areas may be adversely affected by the closing of such destination retailers or anchor stores, or by a reduction in traffic to such stores resulting from a regional or global economic downturn, [added: an outbreak of flu or other viruses (such as COVID-19),] a general downturn in the local area where our store is located, or a decline in the desirability of the shopping environment of a particular power center.

[removed: Diversion] [added: Diversion] of exclusive salon products, or a decision by manufacturers of exclusive salon products to utilize other distribution channels, could negatively impact our revenue from the sale of such products, which could have a material adverse effect on our business, financial condition, profitability, and cash [removed: flows.][added: flows.]

[removed: We] [added: We] rely on our good relationships with vendor partners to purchase prestige, mass, and salon beauty products on reasonable terms.

The coronavirus (COVID-19) will have a negative impact on our business, financial condition, profitability, cash flows and supply chain, as well as consumer spending.

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic.

Federal, state and local governments have since implemented various restrictions, including travel restrictions, border closings, restrictions on public gatherings, quarantining of people who may have been exposed to the virus, shelter-in-place restrictions and limitations on business operations.

In response to government recommendations and for the health and safety of our associates (i.e., employees) and guests, we announced on March 17, 2020 our decision to temporarily close all stores across the U.S. While too early to quantify, our sales and results of operations will be negatively impacted by this decision.

Even after our stores are re-opened, the virus could also negatively impact our results of operations by continuing to weaken demand for our products and services and/or by disrupting our supply chain.

As events are rapidly changing, we are unable to accurately predict the impact that COVID-19 will have on our business, financial condition, profitability, cash flows and supply chain due to uncertainties including, but not limited to, the duration of the closing of our stores, the duration of quarantines, shelter-in-place and other travel restrictions within U.S. and other affected countries, the severity of the virus, the duration of the outbreak and the public’s response to the outbreak and its eventual aftermath.

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convenience of our stores as one-stop destinations for beauty products and salon services.

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Our e-commerce platform exposes us to certain additional risks which could adversely affect our results of operations.

Additionally, omnichannel retailing is rapidly evolving, and we must keep pace with changing guest expectations and new developments by our competitors.

In addition, if we are unable to make, improve, or develop relevant guest-facing technology in a timely manner, our ability to compete and our results of operations could be adversely affected.

​

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| | ● | Future changes in healthcare reform legislation could significantly impact our business. |

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In addition, greenhouse gases may have an adverse effect on global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters.

Concern over climate change may result in new or additional legal, legislative, and regulatory requirements to reduce or mitigate the effects of climate change on the environment, which could result in future tax, transportation, and utility increases, which could adversely affect our business.

There is also increased focus, including by investors, guests, and other stakeholders on these and other sustainability matters, including the use of plastic, energy, waste, and worker safety.

Our reputation could be damaged if we do not (or are perceived not to) act responsibly with respect to sustainability matters, which could adversely affect our business, financial condition, profitability, and cash flows.

Our failure to comply with federal, state, or local requirements when we advertise our products (including prices) or services, or engage in other

Our associates or others may engage in misconduct or other improper activities, including noncompliance with our policies and procedures.

We are exposed to the risk of misconduct or other improper activities by our associates and third parties such as independent contractors or agents.

Misconduct by associates, independent contractors, or agents could include inadvertent or intentional failures to comply with our policies and procedures, the laws and regulations to which we are subject, and/or ethical, social, product, labor, and environmental standards.

by our customers, and may signify a reset of consumer spending habits, all of which may adversely affect our business, financial condition, profitability, and cash flows.

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added in the future.

Our e-commerce platform may be unsuccessful.

Our future operations

proceedings before the USPTO’s Trademark Trial and Appeal Board and opposition proceedings in the European Patent Office, regarding intellectual property rights with respect to our technologies, products purchased from third-party vendors or our Ulta Beauty branded products.

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| | · | | Comprehensive healthcare reform legislation under the Patient Protection and Affordable Care Act and the Health Care Education and Affordability Reconciliation Act (collectively, the Acts) was signed into law in 2010. This healthcare reform legislation significantly expanded healthcare coverage and future changes could significantly impact our business. |

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some instances to delay store openings.

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[removed: The] [added: _The] following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this Annual Report on Form [removed: 10‑K.][added: 10-K._]

[removed: Overview][added: Overview]

We were founded in 1990 as a beauty retailer at a time when prestige, mass, and salon products were sold through distinct channels – department stores for prestige [removed: products,] [added: products;] drug stores and mass merchandisers for mass [removed: products,] [added: products;] and salons and authorized retail outlets for professional hair care products.

We believe that the expanding U.S. beauty products and salon services industry, the shift in distribution channel of prestige beauty products from department stores to specialty [added: retail stores, coupled with Ulta Beauty’s competitive strengths, positions us to capture additional market share in the industry.]

Our comparable sales have fluctuated in the [removed: past] [added: past,] and we expect them to continue to fluctuate in the future.

[removed: Basis] [added: Basis] of [removed: presentation][added: presentation]

Other revenue sources include the private label [removed: credit card] and co-branded credit card programs, as well as deferred revenue related to the loyalty program and gift card breakage.

Therefore, a store is included in our comparable store base on the first day of the period after one year of operations plus the initial [removed: one month] [added: one-month] grand opening period.

| | [removed: · |] [added: ●] | the general national, regional, and local economic conditions and corresponding impact on customer spending levels; |

| | [removed: · |] [added: ●] | the introduction of new products or brands; |

| | [removed: · |] [added: ●] | the location of new stores in existing store markets; |

| | [removed: · |] [added: ●] | competition; |

| | [removed: · |] [added: ●] | our ability to respond on a timely basis to changes in consumer preferences; |

| | [removed: · |] [added: ●] | the effectiveness of our various merchandising and marketing activities; and |

| | [removed: · |] [added: ●] | the number of new stores opened and the impact on the average age of all of our comparable stores. |

| | [removed: · |] [added: ●] | the cost of merchandise sold, including substantially all vendor allowances, which are treated as a reduction of merchandise costs; |

| | [removed: · |] [added: ●] | distribution costs including labor and related benefits, freight, rent, depreciation and amortization, real estate taxes, utilities, and insurance; |

| | [removed: · |] [added: ●] | shipping and handling costs; |

| | [removed: · |] [added: ●] | retail stores occupancy costs including rent, depreciation and amortization, real estate taxes, utilities, repairs and maintenance, insurance, licenses, and cleaning expenses; |

| | [removed: · |] [added: ●] | salon services payroll and benefits; and |

| | [removed: · |] [added: ●] | shrink and inventory valuation reserves. |

| | [removed: · |] [added: ●] | payroll, bonus, and benefit costs for retail stores and corporate employees; |

| | [removed: · |] [added: ●] | advertising and marketing costs; |

| | [removed: · |] [added: ●] | occupancy costs related to our corporate office facilities; |

| | [removed: · |] [added: ●] | stock-based compensation expense; |

| | [removed: · |] [added: ●] | depreciation and amortization for all assets, except those related to our retail stores and distribution operations, which are included in cost of sales; and |

| | [removed: · |] [added: ●] | legal, finance, information systems, and other corporate overhead costs. |

[removed: Results] [added: Results] of [removed: operations][added: operations]

Our fiscal years are the [removed: 52] [added: 52-] or [removed: 53 week] [added: 53-week] periods ending on the Saturday closest to January 31.

The Company’s fiscal years ended February [added: 1, 2020 (fiscal 2019), February] 2, 2019 (fiscal 2018), [added: and] February 3, 2018 (fiscal [removed: 2017), and January 28, 2017 (fiscal 2016)] [added: 2017)] were 52, [removed: 53,] [added: 52,] and [removed: 52-week] [added: 53-week] years, respectively.

As of February [removed: 2, 2019,] [added: 1, 2020,] we operated [removed: 1,174] [added: 1,254] stores across 50 states.

| [added: ​] | [added: ​] | [removed: Fiscal] [added: ​ | Fiscal] year [removed: ended] [added: ended] | | | | | | | |

| [added: ​] | [added: ​] | [removed: February 2,] [added: ​] | [added: February 1,] | | [removed: February 3,] [added: ​] | [added: February 2,] | | [removed: January 28,] [added: ​] | [added: February 3,] | [added: |]

| [removed: (Dollars] [added: (Dollars] in [removed: thousands)] [added: thousands)] | [added: ​] | [removed: 2019] [added: ​] | [added: 2020] | | [removed: 2018] | [added: 2019] | | [removed: 2017] | [added: 2018] | [added: |]

| Net sales | [added: ​] | [added: ​ |] $ | [removed: 6,716,615] [added: 7,398,068] | [added: ​] | $ | [removed: 5,884,506] [added: 6,716,615] | [added: ​] | $ | [removed: 4,854,737] [added: 5,884,506] |

| Cost of sales | [added: ​] | [added: ​] | [removed: 4,307,304] [added: ​] | [added: 4,717,004] | [added: ​] | [removed: 3,787,697] [added: ​] | [added: 4,307,304] | [added: ​] | [removed: 3,107,508] [added: ​] | [added: 3,787,697 |]

| Gross profit | [added: ​] | [added: ​] | [removed: 2,409,311] [added: ​] | [added: 2,681,064] | [added: ​] | [removed: 2,096,809] [added: ​] | [added: 2,409,311] | [added: ​] | [removed: 1,747,229] [added: ​] | [added: 2,096,809 |]

| Selling, general and administrative expenses | [added: ​] | [added: ​] | [removed: 1,535,464] [added: ​] | [added: 1,760,716] | [added: ​] | [removed: 1,287,232] [added: ​] | [added: 1,535,464] | [added: ​] | [removed: 1,073,834] [added: ​] | [added: 1,287,232 |]

| Pre-opening expenses | [added: ​] | [added: ​] | [removed: 19,767] [added: ​] | [added: 19,254] | [added: ​] | [removed: 24,286] [added: ​] | [added: 19,767] | [added: ​] | [removed: 18,571] [added: ​] | [added: 24,286 |]

| Operating income | [added: ​] | [added: ​] | [removed: 854,080] [added: ​] | [added: 901,094] | [added: ​] | [removed: 785,291] [added: ​] | [added: 854,080] | [added: ​] | [removed: 654,824] [added: ​] | [added: 785,291 |]

Current business trends

​

Our research indicates that Ulta Beauty continues to drive meaningful market share across all categories.

However, our research also suggests that the cosmetics category in the overall U.S. market experienced mid-single digit declines through fiscal 2019.

Beauty cycles are impacted by demographics and innovation.

While demographic trends continue to be favorable, we believe a lack of incremental innovation has resulted in a challenging cycle for the cosmetics category, as innovation brought to the market has not resulted in incremental product purchases.

Despite the overall market decline in the cosmetics category, we remain confident that our differentiated and diverse business model, our commitment to strategic investments, and our highly engaged associates will continue to drive market share gains.

COVID-19

In late 2019, COVID-19 was detected in Wuhan, China and other jurisdictions, prompting the Chinese government to quarantine certain affected regions and impose both internal and external travel restrictions within the country.

The virus has since spread to almost every other part of the world, including the U.S., and in March 2020, the World Health Organization declared COVID-19 a global pandemic.

Federal, state, and local governments have since implemented various restrictions, including travel restrictions, border closings, restrictions on public gatherings, quarantining of people who may have been exposed to the virus, shelter-in-place restrictions and limitations on business operations.

In response to government recommendations and for the health and safety of our associates and guests, we announced on March 17, 2020 our decision to temporarily close all stores across the U.S. While too early to quantify, our sales and results of operations will be negatively impacted by this decision.

Even after our stores are re-opened, the virus could also negatively impact our results of operations by continuing to weaken demand for our products and services and/or by disrupting our supply chain.

As events are rapidly changing, we are unable to accurately predict the impact that COVID-19 will have on our results of operations due to uncertainties including, but not limited to, the duration of the closing of our stores, the duration of quarantines, shelter-in-place and other travel restrictions within the U.S. and other affected countries, the severity of the virus, the duration of the outbreak, and the public’s response to the outbreak and its eventual aftermath.

Shipping and handling are treated as costs to fulfill the contract and not a separate performance obligation.

Accordingly, we recognize revenue for our single performance obligation related to online sales at the time control of the merchandise passes to the customer, which is at the time of shipment.

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retail stores, coupled with Ulta Beauty’s competitive strengths, positions us to capture additional market share in the industry.

Shipping and handling are treated as costs to fulfill the contract, and as a result, any fees received from guests are included in the transaction price allocated to the performance obligation of providing goods with a corresponding amount accrued within cost of sales for amounts paid to applicable carriers.

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| Retail stores and salon services comparable sales | | | 5.1% | | | 7.1% | | | 13.4% |

| E-commerce comparable sales | | | 35.4% | | | 59.9% | | | 56.2% |

| Total comparable sales increase | | | 8.1% | | | 11.0% | | | 15.8% |

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E-commerce sales increased $183.5 million, or 32.3%, to $752.2 million compared to $568.7 million in fiscal 2017.

Salon service sales increased $23.5 million, or 8.5%, to $300.9 million compared to $277.4 million in fiscal 2017.

Non-comparable stores, which include stores opened in fiscal 2018 as well as stores opened in fiscal 2017, which have not yet turned comparable, contributed $321.9 million of the net sales increase, while comparable stores contributed $461.3 million of the total net sales increase.

Other revenue increased $48.9 million in fiscal 2018.

The sales for the 53rd week of fiscal 2017 were approximately $108.8 million.

The 8.1% comparable sales increase consisted of a 5.1% increase in retail stores and salon services and a 35.4% increase in e-commerce.

The inclusion of e-commerce resulted in an increase of approximately 300 basis points to the total comparable sales in fiscal 2018 compared to 390 basis points in fiscal 2017.

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[removed: Interest] [added: Interest] rate [removed: risk][added: risk]

We did not have any outstanding borrowings on our credit facility as of February [added: 1, 2020, February] 2, 2019, [added: or] February 3, [removed: 2018, or January 28, 2017.][added: 2018.]

[removed: Overview][added: Overview]

[added: Shopping Experience.] Our guests can satisfy all of their beauty needs at Ulta Beauty.

Our stores, website, and mobile applications offer more than 25,000 products from approximately 500 well-established and emerging [added: beauty brands across all categories and price points, including Ulta Beauty’s own private label, the Ulta Beauty Collection.]

[added: emerging] beauty brands across all categories and price points, including Ulta Beauty’s own private label, the Ulta Beauty Collection.

Our bright and open store environment and easy to shop website and mobile applications encourage our guests to [removed: enjoy discovering] [added: discover] new products and services.

We believe we offer the widest selection of [removed: categories across] [added: beauty categories, including] prestige and mass cosmetics, fragrance, haircare, skincare, bath and body products, [added: professional hair products,] and salon styling tools.

[added: Value Proposition.] We believe our focus on delivering a compelling value proposition to our guests across all of our product categories drives guest loyalty.

We offer a comprehensive loyalty program, Ultamate Rewards, and [removed: targeted] [added: target] promotions through our Customer Relationship Management (CRM) platform.

[added: Convenience.] Our stores are predominantly located in convenient, high-traffic locations such as power [added: strip] centers.

As of February [removed: 2, 2019,] [added: 1, 2020,] we operated [removed: 1,174] [added: 1,254] retail stores across 50 states, as well as an e-commerce website and mobile applications.

We were founded in 1990 as a beauty retailer at a time when prestige, mass, and salon products were sold through distinct channels — department stores for prestige [removed: products,] [added: products;] drug stores and mass merchandisers for mass [removed: products,] [added: products;] and salons and authorized retail outlets for professional hair care products.

The following description of our business should be read in conjunction with the information contained in our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 and our Financial Statements and Supplementary Data included in Item 8 of this Annual Report on Form [removed: 10‑K.][added: 10-K.]

[removed: Our strategy][added: Our strategy]

[removed: Drive] [added: Drive] growth across beauty enthusiast consumer [removed: groups.][added: groups. We target beauty enthusiasts across multiple demographics and shopping behaviors.]

With the unique needs and perspectives of our beauty enthusiast consumer groups, we have evolved how we connect with each [removed: group individually.][added: group.]

We believe we can drive guest acquisition across beauty enthusiast consumer groups by evolving our brand purpose and marketing mix, expanding our efforts to target specific consumer groups, and driving our leadership as a [removed: diversity forward] [added: diversity-forward] brand.

[added: Deepen Ulta Beauty love and loyalty.] We believe we can expand Ulta Beauty’s reach, relevancy, and engagement with our guests by evolving the value proposition of our Ultamate Rewards program, [added: increasing total membership in the program,] building strategic partnerships that create incremental value for our guests, and using our customer data to deliver personalized member experiences.

We have more than [removed: 31.8] [added: 34] million active Ulta Beauty guests enrolled in our Ultamate Rewards loyalty program.

Loyalty member transactions represent [removed: over] [added: more than] 95% of our annual total net sales, and our data demonstrates that loyalty members shop with higher frequency and spend more per visit as compared to non-members.

[added: We intend to continue to innovate this] program to keep it relevant, exciting, engaging, and growing.

[added: Deliver a one of a kind, world class beauty assortment.] Assortment is at the center of our value proposition and represents a core differentiator within the market.

[removed: While the products we sell] [added: Guests] can [removed: be found] [added: find everything they need] in [removed: department] [added: one shopping trip with our approximately 500 brands offered, eliminating the need to go to multiple departments] stores, specialty stores, salons, drug stores, mass merchandisers, and [removed: pure-play] [added: pure play] e-commerce [removed: companies, we offer approximately 500 brands so] [added: companies] that [removed: our guests can find everything they need in one shopping trip.][added: may sell the same or similar products.]

Because of our broad array of categories, [removed: brand,] [added: brands,] and price points, we appeal to a wide range of consumers of all ages, demographics, and lifestyles.

[added: Lead the in-store and beauty services experience transformation.] The Ulta Beauty guest experience today is differentiated by our broad array of categories, [removed: brands] [added: brands,] and price points, high quality services, and friendly, well-trained associates.

Ulta Beauty is a leading salon authority that provides high quality and consistent services from our licensed [removed: stylists,] [added: stylists and estheticians,] with a focus on hair, skin, makeup, and brows.

Our strategy is to drive awareness and trial of our [removed: salon] services with new guests as well as accelerate the frequency of existing guests’ visits.

[added: Reinvent beauty digital engagement.] Our strategic vision is to build industry leading [removed: e-commerce] [added: digital] experiences that engage our guests through our differentiated assortment, personalization, [removed: convenience] [added: convenience,] and interactive experiences.

Our omnichannel guests are extremely valuable, spending nearly three times more than [removed: retail only] [added: retail-only] guests.

[added: Deliver operational excellence and drive efficiencies.] Our strategic vision is to manage end-to-end speed, quality, and efficiency to deliver exceptional guest [removed: experience,] [added: experiences,] while leveraging efficiencies of scale to drive profit improvement.

[added: Invest in talent that drives a winning culture.] Leadership, culture, and engagement of our associates are key drivers of our performance.

[removed: Our market][added: Our market]

This market represents approximately [removed: $145] [added: $150] billion in sales, according to Euromonitor International and IBIS World Inc. The approximately [removed: $86] [added: $89] billion beauty products industry includes cosmetics, haircare, fragrance, bath and body, skincare, salon styling tools, and [added: other toiletries.]

The approximately [removed: $59] [added: $61] billion salon services industry consists of hair, skin, and nail services.

[removed: Competition][added: Competition]

Our major competitors for prestige and mass products include traditional department stores, specialty stores, drug stores, mass merchandisers, and the online capabilities of national [removed: retailers,] [added: retailers and brands,] as well as pure-play e-commerce companies.

[removed: Our stores][added: Our stores]

Our retail stores are predominantly located in convenient, high-traffic locations such as power [added: strip] centers.

Our current Ulta Beauty store format includes an open and modern salon area [removed: with approximately eight to ten stations] and [added: a skin treatment room or dedicated skin treatment area on] the [removed: majority of our stores offer brow services.][added: sales floor.]

The salon features a concierge desk, [removed: skin treatment room or dedicated skin treatment area,] [added: approximately five to ten stations,] and [added: a] shampoo and hair color processing area.

We employ highly [removed: skilled] [added: skilled,] licensed professional stylists and estheticians who offer services as well as educational experiences, including consultations, styling lessons, makeup applications, skincare regimens, and at-home care recommendations.

​

​

We believe that beauty is for everyone, regardless of age, size, ability, skin tone, culture, or gender.

We strive to provide an environment where every associate feels they can fully contribute and every guest is optimally served, regardless of differences.

We estimate that Ulta Beauty has only an 8% share of the $89 billion beauty product industry.

Our assortment strategy is built to maximize our opportunity in this industry.

We estimate that Ulta Beauty has less than 1% share of this industry.

We have full-service hair salons and skin services in substantially every store and operate brow bars in most of our stores, as well as makeup services through our salons.

Our research indicates that Ulta Beauty continues to increase market share across all categories.

However, our research also indicates that the cosmetics category in the overall U.S. market experienced declines in 2019.

Beauty cycles are impacted by demographics, trends, and product innovation.

While demographic trends continue to be favorable, we believe a lack of incremental product innovation has resulted in a challenging cycle for the cosmetics category, as innovation brought to the market has not resulted in incremental product purchases.

Despite the overall market decline in the cosmetics category, we remain confident that our differentiated and diverse business model, our commitment to strategic investments, and our highly engaged associates will continue to drive market share gains for Ulta Beauty.

In addition, the majority of our stores offer brow services on the sales floor.

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While we have opportunity to expand our footprint within the U.S., in fiscal 2019 we announced our decision to expand internationally and establish Ulta Beauty as a global brand, with our first market entry in Canada.

During 2019, we launched “Sparked at Ulta Beauty,” which is a platform designed to feature a curated, ever-evolving selection of emerging brands, across all categories, in select stores and on ulta.com.

Both permanent and temporary exclusive products represented approximately 12.9% of our total net sales in fiscal 2019.

| ​ | ​ | ​ | ​ | ​ | ​ | ​ |

Our data demonstrates that loyalty members shop with higher frequency and spend more per visit as compared to non-members.

Currently, we operate four distribution centers that support both stores and e-commerce demand and one fast fulfillment center dedicated to support e-commerce demand.

We believe our trademarks, especially those related to the Ulta Beauty brand, “All Things Beauty.

All In One Place.

certain product defects.

Shopping Experience.

Value Proposition.

Convenience.

We target beauty enthusiasts across multiple demographics and shopping behaviors.

Deepen Ulta Beauty love and loyalty.

We aim to continue to innovate this

Deliver a one of a kind, world class beauty assortment.

Lead the in-store and beauty services experience transformation.

Salon guests shop more frequently and spend almost three times more than non-salon guests based on our loyalty guest data.

Reinvent beauty digital engagement.

During fiscal 2018, we extended our digital innovation capabilities by partnering with technology companies such as Spruce and Iterate, and by acquiring technology companies GlamST and QM Scientific.

Deliver operational excellence and drive efficiencies.

We expect to achieve savings of $150 million to $200 million through this program over the next three years.

Invest in talent that drives a winning culture.

other toiletries.

| | | | | | | |

| | | | | | | |

| | | | | | | |

We expect to open approximately 70 to 80 new stores per year for the next several years.

opening expenses, and initial inventory, net of payables.

We have gained market share across all categories of our business.

| | | | | | | |

Our merchandising team works to ensure consistent execution across our store base and e-commerce platform.

We continue to optimize our merchandising planning and forecasting system, master data, and space and floor planning systems.

Marketing strategy

Our salon

Currently, we operate five distribution centers.

Starting in fiscal 2019, we expect to open a fast fulfillment center and pilot “Ship from Store” capabilities to reduce e-commerce shipment time.

See Note [removed: 8] [added: 9] to our consolidated financial statements, “Commitments and contingencies - General litigation,” for information on legal proceedings.

FORM [removed: 10‑K][added: 10-K]

For the fiscal year ended February [removed: 2, 2019][added: 1, 2020]

Commission File Number: [removed: 001‑33764][added: 001-33764]

| [added: ​] incorporation or organization) [added: ​] | [added: ​] Identification No.) [added: ​] |

| Delaware (State or other jurisdiction of incorporation or organization) | [removed: 38‑4022268] [added: 38-4022268] (I.R.S. Employer Identification No.) |

Registrant’s telephone number, including area code: (630) [removed: 410‑4800][added: 410-4800]

| Title of each class | [added: Trading symbol |] Name of each exchange on which registered |

| [removed: Common] [added: Common] stock, par value $0.01 per [removed: share] [added: share] | [removed: The NASDAQ Global] [added: ULTA | The NASDAQ Global] Select [removed: Market] [added: Market] |

Securities registered pursuant to Section 12(g) of the Act: [removed: None][added: None]

[removed: ☒] [added: ⌧] Yes [removed: ☐] [added: ◻] No

[removed: ☐] [added: ◻] Yes [removed: ☒] [added: ⌧] No

[removed: ☒] [added: ⌧] Yes [removed: ☐] [added: ◻] No

[removed: ☒] [added: ⌧] Yes [removed: ☐] [added: ◻] No

See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule [removed: 12b‑2] [added: 12b-2] of the Exchange Act.:

| Large [removed: accelerated filer ☒] [added: Accelerated Filer ⌧] | [added: ​] | Accelerated filer [removed: ☐] [added: ◻] | [added: ​] |

| Non-accelerated filer [removed: ☐] [added: ◻] | | Smaller reporting company [removed: ☐] [added: ☐] | Emerging growth company [removed: ☐] [added: ☐] |

Indicate by check mark whether the registrant is a shell company (as defined in Rule [removed: 12b‑2] [added: 12b-2] of the Exchange Act).

☐ Yes [removed: ☒] [added: ☒] No

The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing sale price of the common stock on August [removed: 3, 2018,] [added: 2, 2019,] as reported on the NASDAQ Global Select Market, was approximately [removed: $10,735,950,000.][added: $14,367,080,000.]

The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding as of March [removed: 28, 2019] [added: 23, 2020] was [removed: 58,803,744] [added: 56,309,476] shares.

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Information required in response to Part III of Form [removed: 10‑K] [added: 10-K] is hereby incorporated by reference from portions of the registrant’s Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of Stockholders.

Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended February [removed: 2, 2019.][added: 1, 2020.]

| [Forward Looking Statements](#Forward_looking_statements) | | | [added: ​] | 1 |

| [Part I](#PartI_472203) | [added: ​] | [added: ​] | [added: ​] | [added: ​] |

| [Item 1.](#Item1Business_571097) | [added: ​] | [Business](#Item1Business_571097) | [added: ​] | [removed: 1] [added: 2] |

| [Item 1A.](#Item1ARiskFactors_628368) | [added: ​] | [Risk Factors](#Item1ARiskFactors_628368) | [added: ​] | [removed: 10] [added: 11] |

| [Item 1B.](#Item1BUnresolvedStaffComments_655706) | [added: ​] | [Unresolved Staff Comments](#Item1BUnresolvedStaffComments_655706) | [added: ​] | [removed: 21] [added: 22] |

| [Item 2.](#Item2Properties_676325) | [added: ​] | [Properties](#Item2Properties_676325) | [added: ​] | [removed: 22] [added: 23] |

| [Item 3.](#Item3LegalProceedings_817269) | [added: ​] | [Legal Proceedings](#Item3LegalProceedings_817269) | [added: ​] | [removed: 23] [added: 24] |

| [Item 4.](#Item4MineSafetyDisclosures_491985) | [added: ​] | [Mine Safety Disclosures](#Item4MineSafetyDisclosures_491985) | [added: ​] | [removed: 23] [added: 24] |

| [Part II](#PartII_970038) | [added: ​] | [added: ​] | [added: ​] | [added: ​] |

| [Item 5.](#Item5MarketforRegistrantsCommonEquityRel) | [added: ​] | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#Item5MarketforRegistrantsCommonEquityRel) | [added: ​] | [removed: 24] [added: 25] |

| [Item 6.](#Item6_835160) | [added: ​] | [Selected Financial Data](#Item6_835160) | [added: ​] | [removed: 27] [added: 28] |

| [Item 7.](#Item7_651497) | [added: ​] | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#Item7_651497) | [added: ​] | [removed: 28] [added: 29] |

| [Item 7A.](#Item7AQuantitativeandQualitativeDisclosu) | [added: ​] | [Quantitative and Qualitative Disclosures about Market Risk](#Item7AQuantitativeandQualitativeDisclosu) | [added: ​] | [removed: 40] [added: 41] |

| [Item 8.](#Item8FinancialStatementsandSupplementary) | [added: ​] | [Financial Statements and Supplementary Data](#Item8FinancialStatementsandSupplementary) | [added: ​] | [removed: 40] [added: 41] |

| [Item 9.](#Item9ChangesinandDisagreementswithAccoun) | [added: ​] | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#Item9ChangesinandDisagreementswithAccoun) | [added: ​] | [removed: 40] [added: 41] |

| [Item 9A.](#Item9AControlsandProcedures_91034) | [added: ​] | [Controls and Procedures](#Item9AControlsandProcedures_91034) | [added: ​] | 41 |

| [Item 9B.](#Item9BOtherInformation_494278) | [added: ​] | [Other Information](#Item9BOtherInformation_494278) | [added: ​] | [removed: 41] [added: 42] |

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| | ● | The uncertain negative impacts the coronavirus (COVID-19) will have on our business, financial condition, profitability, cash flows and supply chain, as well as consumer spending; |

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10-K 1 ulta-20190202x10k.htm 10-K

| --- | --- |

| | |

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10‑K or any amendment to this Form 10‑K.

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[removed: Retail stores][added: Retail stores]

As of February [removed: 2, 2019,] [added: 1, 2020,] we operated [removed: 1,174] [added: 1,254] retail stores across 50 states, as shown in the table below:

| [added: ​] | [added: ​] | [removed: Number of] [added: Number of] | [added: ​] | [added: ​] | [added: ​] | [removed: Number of] [added: Number of] |

| [removed: Location] [added: Location] | | [removed: stores] [added: stores] | | [removed: Location] [added: Location] | | [removed: stores] [added: stores] |

| Alabama | [added: ​] | [removed: 18] [added: 22] | [added: ​] | Montana | [added: ​] | 6 |

| Alaska | [added: ​] | 3 | [added: ​] | Nebraska | [added: ​] | 5 |

| Arizona | [added: ​] | [removed: 27] [added: 30] | [added: ​] | Nevada | [added: ​] | [removed: 14] [added: 15] |

| Arkansas | [added: ​] | 10 | [added: ​] | New Hampshire | [added: ​] | 7 |

| California | [added: ​] | [removed: 150] [added: 159] | [added: ​] | New Jersey | [added: ​] | [removed: 34] [added: 38] |

| Colorado | [added: ​] | [removed: 25] [added: 26] | [added: ​] | New Mexico | [added: ​] | [removed: 6] [added: 7] |

| Connecticut | [added: ​] | 16 | [added: ​] | New York | [added: ​] | [removed: 45] [added: 50] |

| Delaware | [added: ​] | 3 | [added: ​] | North Carolina | [added: ​] | [removed: 30] [added: 34] |

| Florida | [added: ​] | [removed: 83] [added: 84] | [added: ​] | North Dakota | [added: ​] | 3 |

| Georgia | [added: ​] | [removed: 35] [added: 38] | [added: ​] | Ohio | [added: ​] | [removed: 41] [added: 43] |

| Hawaii | [added: ​] | 4 | [added: ​] | Oklahoma | [added: ​] | [removed: 20] [added: 21] |

| Idaho | [added: ​] | [removed: 8] [added: 9] | [added: ​] | Oregon | [added: ​] | 14 |

| Illinois | [added: ​] | 55 | [added: ​] | Pennsylvania | [added: ​] | [removed: 42] [added: 45] |

| Indiana | [added: ​] | [removed: 22] [added: 24] | [added: ​] | Rhode Island | [added: ​] | 3 |

| Iowa | [added: ​] | 10 | [added: ​] | South Carolina | [added: ​] | 20 |

| Kansas | [added: ​] | [removed: 12] [added: 13] | [added: ​] | South Dakota | [added: ​] | [removed: 2] [added: 3] |

| Kentucky | [added: ​] | [removed: 14] [added: 15] | [added: ​] | Tennessee | [added: ​] | [removed: 24] [added: 26] |

| Louisiana | [added: ​] | [removed: 17] [added: 19] | [added: ​] | Texas | [added: ​] | [removed: 104] [added: 115] |

| Maine | [added: ​] | 3 | [added: ​] | Utah | [added: ​] | 14 |

| Maryland | [added: ​] | [removed: 22] [added: 25] | [added: ​] | Vermont | [added: ​] | 1 |

| Massachusetts | [added: ​] | [removed: 18] [added: 21] | [added: ​] | Virginia | [added: ​] | [removed: 27] [added: 29] |

| Michigan | [added: ​] | [removed: 46] [added: 49] | [added: ​] | Washington | [added: ​] | [removed: 33] [added: 36] |

| Minnesota | [added: ​] | [removed: 17] [added: 18] | [added: ​] | West Virginia | [added: ​] | 7 |

| Mississippi | [added: ​] | [removed: 9] [added: 10] | [added: ​] | Wisconsin | [added: ​] | 20 |

| Missouri | [added: ​] | [removed: 23] [added: 24] | [added: ​] | Wyoming | [added: ​] | 2 |

[removed: Distribution] [added: Distribution] centers [added: and fast fulfillment centers]

Our standard distribution [added: and fast fulfillment] center lease provides for a fixed minimum annual rent and generally has a 10 or [removed: 15‑year] [added: 15-year] initial term with three or four renewal options with terms of five years each.

The general location, approximate size, and lease expiration dates of our distribution centers [added: (DC) and fast fulfillment centers (FFC)] at February [removed: 2, 2019,] [added: 1, 2020,] are set forth below:

| [added: ​] | [added: ​] | [removed: Approximate] [added: ​] | [added: ​] | [removed: Lease Expiration] [added: Approximate] | [added: ​ | Lease Expiration |]

| [removed: Location] [added: Location] | | [removed: Square Feet] [added: Type] | | [removed: Date] [added: Square Feet] | [added: | Date |]

| Romeoville, Illinois [added: (2)] | [added: ​] | [added: FFC | ​ |] 291,000 | [added: ​] | [removed: April 30, 2020] [added: May 31, 2023] |

| Chambersburg, Pennsylvania | [added: ​] | [added: DC | ​ |] 373,000 | [added: ​] | March 31, 2027 |

| Greenwood, Indiana | [added: ​] | [added: DC | ​ |] 671,000 | [added: ​] | July 31, 2025 |

| Dallas, Texas | [added: ​] | [added: DC | ​ |] 671,000 | [added: ​] | July 31, 2026 |

| Fresno, California | [added: ​] | [added: DC | ​ |] 671,000 | [added: ​] | July 31, 2028 |

[removed: Corporate office][added: Corporate office]

| ​ | ​ | ​ | ​ | ​ | ​ | ​ |

​

| ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- | --- | --- |

| Jacksonville, Florida (1) | ​ | FFC | ​ | 203,463 | ​ | September 30, 2029 |

| (1) | The Jacksonville, Florida fast fulfillment center is expected to open in fiscal 2021. |

| --- | --- |

| (2) | The Romeoville, Illinois distribution center was converted to a fast fulfillment center in fiscal 2019. |

| --- | --- |

| | | | | | | |

| | | | | Total | | 1,174 |

| | | | | |

| --- | --- | --- | --- | --- |

The Phoenix, Arizona distribution center lease expired on March 31, 2019.

[removed: EXECUTIVE] [added: EXECUTIVE] OFFICERS OF THE [removed: REGISTRANT][added: REGISTRANT]

| [removed: Name] [added: Name] | | [removed: Age] [added: Age] | | [removed: Position] [added: Position] |

| Mary N. Dillon | [added: ​] | [removed: 57] [added: 58] | [added: ​] | Chief Executive Officer and member of the Board of Directors |

| Scott M. Settersten | [added: ​] | [removed: 58] [added: 59] | [added: ​] | Chief Financial Officer, Treasurer and Assistant Secretary |

| Jodi J. Caro | [added: ​] | [removed: 53] [added: 54] | [added: ​] | General Counsel, Chief Compliance Officer and Corporate Secretary |

| Jeffrey J. Childs | [added: ​] | [removed: 61] [added: 62] | [added: ​] | Chief Human Resources Officer |

[removed: Mary] [added: _Mary] N.

[added: Dillon._] Ms. Dillon was named Chief Executive Officer effective July 2013.

Prior to joining McDonald’s Corporation, she held various positions at PepsiCo, including President of the Quaker Foods [removed: division.]

[removed: Scott] [added: _Scott] M.

[added: Settersten._] Mr. Settersten was named Chief Financial Officer, Treasurer and Assistant Secretary in March 2013 after having previously served as Acting Chief Financial Officer and Assistant Secretary since October 2012.

[added: Prior to] this role, Mr. Settersten served as Vice President of Accounting since 2010 and was responsible for accounting, tax, external reporting and investor relations.

[removed: Jodi] [added: _Jodi] J.

[added: Caro._] Ms. Caro was named General Counsel, Chief Compliance Officer [removed: &] [added: and] Corporate Secretary in August 2015.

Prior to joining Integrys in 2008, Ms. Caro owned and operated her own law practice, which provided general counsel and corporate services to clients ranging from established [removed: multi-million dollar] [added: multi-million-dollar] companies to medium and small early-stage enterprises.

[removed: Jeffrey] [added: _Jeffrey] J.

[removed: David] [added: _David] C.

[added: Kimbell._] Mr. Kimbell was named [added: President in December 2019 after having previously served as] Chief Merchandising and Marketing Officer [removed: in] [added: since] March 2015 [removed: after having previously served as] [added: and] Chief Marketing Officer since February 2014.

[removed: Part II][added: Part II]

| ​ | ​ | ​ | ​ | ​ |

| David C. Kimbell | ​ | 53 | ​ | President |

| ​ | ​ | ​ |

| --- | --- | --- |

division.

Childs_.

| | | | | |

| David C. Kimbell | | 52 | | Chief Merchandising and Marketing Officer |

Dillon.

Settersten.

Prior to

Caro.

Childs.

Kimbell.

[removed: Market information][added: Market information]

[removed: Holders] [added: Holders] of the registrant’s common [removed: stock][added: stock]

The last reported sale price of our common stock on the NASDAQ Global Select Market on March [removed: 28, 2019] [added: 23, 2020] was [removed: $345.23] [added: $143.24] per share.

As of March [removed: 28, 2019,] [added: 23, 2020,] we had [removed: 38] [added: 32] holders of record of our common stock.

[removed: Purchases] [added: Purchases] of equity securities by the issuer and affiliated [removed: purchasers][added: purchasers]

The following table sets forth repurchases of our common stock during the fourth quarter of [removed: 2018:][added: 2019:]

| [removed: Period] [added: Period] | | [removed: Total] [added: Total] number of shares purchased [removed: (1)] [added: (1)] | | [removed: Average] [added: Average] price paid per [removed: share] [added: share] | | | [removed: Total] [added: Total] number of shares purchased as part of publicly announced plans or programs [removed: (2)] [added: (2)] | | [removed: Approximate] [added: Approximate] dollar value of shares that may yet [removed: to] be purchased under plans or programs (in thousands) [removed: (2)] [added: (2)] | |

| [removed: |] (1) | [removed: |] There were [removed: 881,437] [added: 681,458] shares repurchased as part of our publicly announced share repurchase program during the 13 weeks ended February [removed: 2, 2019] [added: 1, 2020,] and there were [removed: 794] [added: 700] shares transferred from employees in satisfaction of minimum statutory tax withholding obligations upon the vesting of restricted stock during the period. |

| [removed: |] (2) | [removed: |] On March [removed: 15, 2018,] [added: 14, 2019,] we announced our [removed: 2018] [added: 2019] share repurchase program pursuant to which the Company may repurchase up to [removed: $625.0] [added: $875.0] million of the Company’s common stock. The [removed: 2018] [added: 2019] share repurchase program did not have an expiration date but provided for suspension or discontinuation at any time. As of February [removed: 2, 2019, $46.1] [added: 1, 2020, $214.6] million remained available under the [removed: $625.0] [added: $875.0] million [removed: 2018] [added: 2019] share repurchase program. On March [removed: 14, 2019,] [added: 12, 2020,] we announced the [removed: 2019] [added: 2020] share repurchase program. For additional information on the [removed: 2019] [added: 2020] share repurchase program see Note [removed: 19] [added: 20] to our consolidated financial statements, “Subsequent event.” |

[removed: Recent] [added: Recent] sales of unregistered [removed: securities][added: securities]

[removed: Securities] [added: Securities] authorized for issuance under equity compensation [removed: plans][added: plans]

The following table provides information about Ulta Beauty common stock that may be issued under our equity compensation plans as of February [removed: 2, 2019:][added: 1, 2020:]

| [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [removed: Number] [added: Number] of [removed: securities] [added: securities] |

| [added: ​] | [added: ​] | [removed: Number] [added: Number] of [removed: securities] [added: securities] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [removed: remaining available] [added: remaining available] |

| [added: ​] | [added: ​] | [removed: to] [added: to] be issued [removed: upon] [added: upon] | [added: ​] | [removed: Weighted-average] [added: Weighted-average] | | [added: ​] | [removed: for] [added: for] future [removed: issuance] [added: issuance] |

| [added: ​] | [added: ​] | [removed: exercise] [added: exercise] of [removed: outstanding] [added: outstanding] | [added: ​] | [removed: exercise] [added: exercise] price [removed: of] [added: of] | | [added: ​] | [removed: under equity] [added: under equity] |

| [added: ​] | [added: ​] | [removed: options, warrants] [added: options, warrants] | [added: ​] | [removed: outstanding options,] [added: outstanding options,] | | [added: ​] | [removed: compensation] [added: compensation] |

| [removed: Plan category] [added: Plan category] | | [removed: and] [added: and] rights [removed: (2)] [added: (2)] | | [removed: warrants] [added: warrants] and rights [removed: (3)] [added: (3)] | | | [removed: plans (4)] [added: plans (4)] |

| [removed: |] (1) | [removed: |] Includes options issued and available for exercise and shares available for issuance in connection with past awards under the Amended and Restated 2011 Incentive Award Plan and predecessor equity incentive plans. We currently grant awards only under the Amended and Restated 2011 Incentive Award Plan. |

| [removed: |] (2) | [removed: |] Includes [removed: 754,666] [added: 539,155] shares issuable pursuant to the exercise of outstanding stock options, [removed: 167,742] [added: 159,363] shares issuable pursuant to restricted stock units, and [removed: 94,153] [added: 62,402] shares issuable pursuant to performance-based units. |

| [removed: |] (3) | [removed: |] Calculation of weighted-average exercise price of outstanding awards includes stock [removed: options,] [added: options] but does not include shares of restricted stock units or performance-based units that convert to shares of common stock for no consideration. |

| [removed: |] (4) | [removed: |] Represents shares that are available for issuance pursuant to the Amended and Restated 2011 Incentive Award Plan. The shares available under the plan are reduced by 1.0 for each stock option awarded and by 1.5 for each restricted stock unit and performance-based unit awarded. |

[removed: Stock] [added: Stock] performance [removed: graph][added: graph]

[removed: The] [added: _The] following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such [removed: filing.][added: filing._]

Set forth below is a graph comparing the cumulative total stockholder return on Ulta Beauty’s common stock with the NASDAQ Global Select Market Composite Index (NQGS) and the S&P Retail Index (RLX) for the period covering [removed: February 1, 2014] [added: January 31, 2015] through the end of Ulta Beauty’s fiscal year ended February [removed: 2, 2019.][added: 1, 2020.]

The graph assumes an investment of $100 made at the closing of trading on [removed: February 1, 2014] [added: January 31, 2015] in (i) Ulta Beauty’s common stock, (ii) the stocks comprising the NQGS and (iii) stocks comprising the RLX.

[removed: ][added: ]

| [added: ​] | [added: ​] | [removed: Fiscal] [added: Fiscal] year [removed: ended] [added: ended] | | | | | | | | | | | | | | | | |

| [added: ​] | [added: ​] | [removed: February 1,] [added: January 31,] | | [added: ​] | [removed: January 31,] [added: January 30,] | | [added: ​] | [removed: January 30,] [added: January 28,] | | [added: ​] | [removed: January 28,] [added: February 3,] | | [added: ​] | [removed: February 3,] [added: February 2,] | | [added: ​] | [removed: February 2,] [added: February 1,] | |

| [removed: Company] [added: Company] / [removed: Index] [added: Index] | | [removed: 2014] [added: 2015] | | | [removed: 2015] [added: 2016] | | | [removed: 2016] [added: 2017] | | | [removed: 2017] [added: 2018] | | | [removed: 2018] [added: 2019] | | | [removed: 2019] [added: 2020] | |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| November 3, 2019 to November 30, 2019 | ​ | 138,567 | ​ | $ | 238.46 | ​ | 138,167 | ​ | $ | 355,817 |

| December 1, 2019 to December 28, 2019 | ​ | 215,290 | ​ | ​ | 250.41 | ​ | 215,290 | ​ | ​ | 301,906 |

| December 29, 2019 to February 1, 2020 | ​ | 328,301 | ​ | ​ | 266.02 | ​ | 328,001 | ​ | ​ | 214,650 |

| 13 weeks ended February 1, 2020 | ​ | 682,158 | ​ | ​ | 255.50 | ​ | 681,458 | ​ | ​ | 214,650 |

| --- | --- |

| --- | --- |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| Equity compensation plans approved by security holders (1) | | 760,920 | ​ | $ | 212.58 | | 3,194,142 |

| --- | --- |

| --- | --- |

| --- | --- |

| --- | --- |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| Ulta Beauty | ​ | $ | 100.00 | | $ | 137.31 | | $ | 206.37 | | $ | 168.33 | | $ | 221.25 | | $ | 203.05 |

| NQGS | ​ | ​ | 100.00 | ​ | ​ | 100.13 | ​ | ​ | 121.78 | ​ | ​ | 160.96 | ​ | ​ | 158.06 | ​ | ​ | 199.69 |

| RLX | ​ | ​ | 100.00 | ​ | ​ | 115.56 | ​ | ​ | 135.00 | ​ | ​ | 194.19 | ​ | ​ | 208.85 | ​ | ​ | 243.26 |

| | | | | | | | | | | |

| | | | | | | | | | | |

| November 4, 2018 to December 1, 2018 | | 150,338 | | $ | 302.49 | | 150,338 | | $ | 237,361 |

| December 2, 2018 to December 29, 2018 | | 393,706 | | | 249.07 | | 393,472 | | | 139,362 |

| December 30, 2018 to February 2, 2019 | | 338,187 | | | 276.30 | | 337,627 | | | 46,065 |

| 13 weeks ended February 2, 2019 | | 882,231 | | | 268.61 | | 881,437 | | | 46,065 |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| | | | | | | | |

| Equity compensation plans approved by security holders (1) | | 1,016,561 | | $ | 174.34 | | 3,336,386 |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | |

| Ulta Beauty | | $ | 100.00 | | $ | 154.91 | | $ | 212.72 | | $ | 319.69 | | $ | 260.77 | | $ | 342.75 |

| NQGS | | | 100.00 | | | 113.40 | | | 113.55 | | | 138.09 | | | 182.52 | | | 179.24 |

| RLX | | | 100.00 | | | 118.75 | | | 137.22 | | | 160.31 | | | 230.59 | | | 248.01 |

The table should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form [removed: 10‑K.][added: 10-K.]

| [added: ​] | [added: ​] | [removed: Fiscal] [added: Fiscal] year ended [removed: (1)] [added: (1)] | | | | | | | | | | | | | |

| [added: ​] | [added: ​] | [removed: February 2,] [added: February 1,] | | [added: ​] | [removed: February 3,] [added: February 2,] | | [added: ​] | [removed: January 28,] [added: February 3,] | | [added: ​] | [removed: January 30,] [added: January 28,] | | [added: ​] | [removed: January 31,] [added: January 30,] | |

| [added: ​] | [added: ​] | [removed: 2019 (2)] [added: 2020] | | | [removed: 2018 (3)] [added: 2019 (2)] | | | [removed: 2017] [added: 2018 (3)] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | |

| [added: ​] | [added: ​] | [removed: (In] [added: (In] thousands, except per share and per square foot [removed: data)] [added: data)] | | | | | | | | | | | | | |

| [removed: Income statement:] [added: Income statement:] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] |

| Net sales | [added: ​] | $ | [removed: 6,716,615] [added: 7,398,068] | [added: ​] | $ | [removed: 5,884,506] [added: 6,716,615] | [added: ​] | $ | [removed: 4,854,737] [added: 5,884,506] | [added: ​] | $ | [removed: 3,924,116] [added: 4,854,737] | [added: ​] | $ | [removed: 3,241,369] [added: 3,924,116] |

| Cost of sales | [added: ​] | [added: ​] | [added: 4,717,004 | ​ | ​ |] 4,307,304 | [added: ​] | [added: ​] | 3,787,697 | [added: ​] | [added: ​] | 3,107,508 | [added: ​] | [added: ​] | 2,539,783 | [removed: | | 2,104,582 |]

| Gross profit | [added: ​] | [added: ​] | [added: 2,681,064 | ​ | ​ |] 2,409,311 | [added: ​] | [added: ​] | 2,096,809 | [added: ​] | [added: ​] | 1,747,229 | [added: ​] | [added: ​] | 1,384,333 | [removed: | | 1,136,787 |]

| Selling, general and administrative expenses | [added: ​] | [added: ​] | [added: 1,760,716 | ​ | ​ |] 1,535,464 | [added: ​] | [added: ​] | 1,287,232 | [added: ​] | [added: ​] | 1,073,834 | [added: ​] | [added: ​] | 863,354 | [removed: | | 712,006 |]

| Pre-opening expenses | [added: ​] | [added: ​] | [added: 19,254 | ​ | ​ |] 19,767 | [added: ​] | [added: ​] | 24,286 | [added: ​] | [added: ​] | 18,571 | [added: ​] | [added: ​] | 14,682 | [removed: | | 14,366 |]

| Operating income | [added: ​] | [added: ​] | [added: 901,094 | ​ | ​ |] 854,080 | [added: ​] | [added: ​] | 785,291 | [added: ​] | [added: ​] | 654,824 | [added: ​] | [added: ​] | 506,297 | [removed: | | 410,415 |]

| Interest income, net | [added: ​] | [added: ​] | [added: (5,056) | ​ | ​ |] (5,061) | [added: ​] | [added: ​] | (1,568) | [added: ​] | [added: ​] | (890) | [added: ​] | [added: ​] | (1,143) | [removed: | | (894) |]

| Income before income taxes | [added: ​] | [added: ​] | [added: 906,150 | ​ | ​ |] 859,141 | [added: ​] | [added: ​] | 786,859 | [added: ​] | [added: ​] | 655,714 | [added: ​] | [added: ​] | 507,440 | [removed: | | 411,309 |]

| Income tax expense (4) | [added: ​] | [added: ​] | [added: 200,205 | ​ | ​ |] 200,582 | [added: ​] | [added: ​] | 231,625 | [added: ​] | [added: ​] | 245,954 | [added: ​] | [added: ​] | 187,432 | [removed: | | 154,174 |]

| Net income | [added: ​] | $ | [removed: 658,559] [added: 705,945] | [added: ​] | $ | [removed: 555,234] [added: 658,559] | [added: ​] | $ | [removed: 409,760] [added: 555,234] | [added: ​] | $ | [removed: 320,008] [added: 409,760] | [added: ​] | $ | [removed: 257,135] [added: 320,008] |

| Net income per common share: | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] |

| Basic | [added: ​] | $ | [removed: 11.00] [added: 12.21] | [added: ​] | $ | [removed: 9.02] [added: 11.00] | [added: ​] | $ | [removed: 6.55] [added: 9.02] | [added: ​] | $ | [removed: 5.00] [added: 6.55] | [added: ​] | $ | [removed: 4.00] [added: 5.00] |

| Diluted | [added: ​] | $ | [removed: 10.94] [added: 12.15] | [added: ​] | $ | [removed: 8.96] [added: 10.94] | [added: ​] | $ | [removed: 6.52] [added: 8.96] | [added: ​] | $ | [removed: 4.98] [added: 6.52] | [added: ​] | $ | [removed: 3.98] [added: 4.98] |