ULTA BEAUTY, INC., 10-K filed on 4/3/2013
Annual Report
Document and Entity Information (USD $)
12 Months Ended
Feb. 2, 2013
Mar. 28, 2013
Jul. 28, 2012
Entity Information [Line Items]
 
 
 
Document Type
10-K 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Feb. 02, 2013 
 
 
Document Fiscal Year Focus
2013 
 
 
Document Fiscal Period Focus
FY 
 
 
Trading Symbol
ULTA 
 
 
Entity Registrant Name
Ulta Salon, Cosmetics & Fragrance, Inc. 
 
 
Entity Central Index Key
0001403568 
 
 
Current Fiscal Year End Date
--02-02 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Common Stock, Shares Outstanding
 
63,670,003 
 
Entity Public Float
 
 
$ 4,199,998,000 
Balance Sheets (USD $)
In Thousands, unless otherwise specified
Feb. 2, 2013
Jan. 28, 2012
Current assets:
 
 
Cash and cash equivalents
$ 320,475 
$ 253,738 
Receivables, net
41,515 
26,153 
Merchandise inventories, net
361,125 
244,647 
Prepaid expenses and other current assets
50,452 
43,430 
Deferred income taxes
15,757 
12,264 
Total current assets
789,324 
580,232 
Property and equipment, net
483,059 
376,985 
Deferred compensation plan assets
2,866 
 
Total assets
1,275,249 
957,217 
Current liabilities:
 
 
Accounts payable
118,886 
86,442 
Accrued liabilities
92,127 
74,411 
Accrued income taxes
10,054 
4,002 
Total current liabilities
221,067 
164,855 
Deferred rent
208,003 
163,463 
Deferred income taxes
56,361 
44,195 
Other long-term liabilities
2,876 
 
Total liabilities
488,307 
372,513 
Commitments and contingencies (note 4)
   
   
Stockholders' equity:
 
 
Common stock, $.01 par value, 400,000 shares authorized; 64,565 and 62,764 shares issued; 64,009 and 62,209 shares outstanding; at February 2, 2013, and January 28, 2012, respectively
645 
627 
Treasury stock-common, at cost
(7,494)
(7,415)
Additional paid-in capital
496,930 
404,698 
Retained earnings
296,861 
186,794 
Total stockholders' equity
786,942 
584,704 
Total liabilities and stockholders' equity
$ 1,275,249 
$ 957,217 
Balance Sheets (Parenthetical) (USD $)
In Thousands, except Per Share data, unless otherwise specified
Feb. 2, 2013
Jan. 28, 2012
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
400,000 
400,000 
Common stock, shares issued
64,565 
62,764 
Common stock, shares outstanding
64,009 
62,209 
Statements of Income (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Feb. 2, 2013
Jan. 28, 2012
Jan. 29, 2011
Net sales
$ 2,220,256 
$ 1,776,151 
$ 1,454,838 
Cost of sales
1,436,582 
1,159,311 
970,753 
Gross profit
783,674 
616,840 
484,085 
Selling, general and administrative expenses
488,880 
410,658 
358,106 
Pre-opening expenses
14,816 
9,987 
7,095 
Operating income
279,978 
196,195 
118,884 
Interest expense
185 
587 
755 
Income before income taxes
279,793 
195,608 
118,129 
Income tax expense
107,244 
75,344 
47,099 
Net income
$ 172,549 
$ 120,264 
$ 71,030 
Net income per common share:
 
 
 
Basic
$ 2.73 
$ 1.96 
$ 1.20 
Diluted
$ 2.68 
$ 1.90 
$ 1.16 
Weighted average common shares outstanding:
 
 
 
Basic
63,250 
61,259 
58,959 
Diluted
64,396 
63,334 
61,288 
Dividends declared per common share
$ 1.00 
    
    
Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Feb. 2, 2013
Jan. 28, 2012
Jan. 29, 2011
Operating activities
 
 
 
Net income
$ 172,549 
$ 120,264 
$ 71,030 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
88,233 
75,931 
64,936 
Deferred income taxes
8,673 
10,827 
7,741 
Non-cash stock compensation charges
13,375 
11,605 
11,155 
Excess tax benefits from stock-based compensation
(47,345)
(25,899)
(10,640)
Loss (gain) on disposal of property and equipment
1,074 
1,324 
(519)
Change in operating assets and liabilities:
 
 
 
Receivables
(15,362)
(3,861)
(8,815)
Merchandise inventories
(116,478)
(26,131)
(11,568)
Prepaid expenses and other current assets
(9,888)
(10,640)
(2,518)
Income taxes
53,397 
40,585 
(10,354)
Accounts payable
32,444 
(651)
30,706 
Accrued liabilities
13,789 
(1,358)
14,535 
Deferred rent
44,540 
28,891 
20,854 
Net cash provided by operating activities
239,001 
220,887 
176,543 
Investing activities
 
 
 
Purchases of property and equipment
(188,578)
(128,636)
(97,115)
Net cash used in investing activities
(188,578)
(128,636)
(97,115)
Financing activities
 
 
 
Dividends paid
(62,482)
 
 
Excess tax benefits from stock-based compensation
47,345 
25,899 
10,640 
Stock options exercised
31,530 
27,639 
17,100 
Common stock repurchased
(79)
(3,236)
 
Net cash provided by financing activities
16,314 
50,302 
27,740 
Net increase in cash and cash equivalents
66,737 
142,553 
107,168 
Cash and cash equivalents at beginning of year
253,738 
111,185 
4,017 
Cash and cash equivalents at end of year
320,475 
253,738 
111,185 
Supplemental cash flow information
 
 
 
Cash paid for income taxes (net of refunds)
45,354 
24,162 
49,871 
Noncash investing and financing activities:
 
 
 
Change in property and equipment included in accrued liabilities
$ 6,803 
$ (495)
$ 2,540 
Statements of Stockholders' Equity (USD $)
In Thousands
Total
Common Stock [Member]
Treasury - Common Stock [Member]
Additional Paid-In Capital [Member]
Retained Earnings / (Accumulated Deficit) [Member]
Beginning Balance at Jan. 30, 2010
$ 292,608 
$ 586 
$ (4,179)
$ 300,701 
$ (4,500)
Beginning Balance, Shares at Jan. 30, 2010
 
58,674 
(505)
 
 
Stock options exercised
17,100 
20 
 
17,080 
 
Stock options exercised, Shares
 
2,033 
 
 
 
Net income
71,030 
 
 
 
71,030 
Comprehensive income
71,030 
 
 
 
 
Excess tax benefits from stock-based compensation
10,640 
 
 
10,640 
 
Stock compensation charge
11,155 
 
 
11,155 
 
Ending Balance at Jan. 29, 2011
402,533 
606 
(4,179)
339,576 
66,530 
Ending Balance, Shares at Jan. 29, 2011
 
60,707 
(505)
 
 
Stock options exercised
27,639 
21 
 
27,618 
 
Stock options exercised, Shares
 
2,057 
 
 
 
Common stock repurchased
(3,236)
 
(3,236)
 
 
Common stock repurchased, Shares
 
 
(50)
 
 
Net income
120,264 
 
 
 
120,264 
Comprehensive income
120,264 
 
 
 
 
Excess tax benefits from stock-based compensation
25,899 
 
 
25,899 
 
Stock compensation charge
11,605 
 
 
11,605 
 
Ending Balance at Jan. 28, 2012
584,704 
627 
(7,415)
404,698 
186,794 
Ending Balance, Shares at Jan. 28, 2012
 
62,764 
(555)
 
 
Stock options exercised and other awards
31,530 
18 
 
31,512 
 
Stock options exercised and other awards, Shares
 
1,801 
 
 
 
Common stock repurchased
(79)
 
(79)
 
 
Common stock repurchased, Shares
 
 
(1)
 
 
Net income
172,549 
 
 
 
172,549 
Comprehensive income
172,549 
 
 
 
 
Excess tax benefits from stock-based compensation
47,345 
 
 
47,345 
 
Stock compensation charge
13,375 
 
 
13,375 
 
Dividends paid
(62,482)
 
 
 
(62,482)
Ending Balance at Feb. 02, 2013
$ 786,942 
$ 645 
$ (7,494)
$ 496,930 
$ 296,861 
Ending Balance, Shares at Feb. 02, 2013
 
64,565 
(556)
 
 
Business and basis of presentation
Business and basis of presentation

1.    Business and basis of presentation

Ulta Salon, Cosmetics & Fragrance, Inc. (Company or Ulta) was incorporated in the state of Delaware on January 9, 1990, to operate specialty retail stores selling cosmetics, fragrance, haircare and skincare products, and related accessories and services. The stores also feature full-service salons. As of February 2, 2013, the Company operated 550 stores in 45 states. All amounts are stated in thousands, with the exception of per share amounts and number of stores.

The Company has determined its operating segments on the same basis that it uses to internally evaluate performance. The Company has combined its three operating segments: retail stores, salon services and e-commerce, into one reportable segment because they have a similar class of consumer, economic characteristics, nature of products and distribution methods.

Summary of significant accounting policies
Summary of significant accounting policies

2.    Summary of significant accounting policies

Fiscal year

The Company’s fiscal year is the 52 or 53 weeks ending on the Saturday closest to January 31. The Company’s fiscal years ended February 2, 2013 (fiscal 2012), January 28, 2012 (fiscal 2011) and January 29, 2011 (fiscal 2010) were 53, 52 and 52 week years, respectively.

Use of estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the accounting period. Actual results could differ from those estimates.

Cash and cash equivalents

Cash and cash equivalents include cash on hand and highly liquid investments with maturities of three months or less from the date of purchase. Cash equivalents include amounts due from third-party credit card receivables because such amounts generally convert to cash within one to three days with little or no default risk.

Receivables

Receivables consist principally of amounts receivable from vendors related to allowances earned but not yet received. These receivables are computed based on provisions of the vendor agreements in place and the Company’s completed performance. The Company’s vendors are primarily U.S.-based producers of consumer products. The Company does not require collateral on its receivables and does not accrue interest. Credit risk with respect to receivables is limited due to the diversity of vendors comprising the Company’s vendor base. The Company performs ongoing credit evaluations of its vendors and evaluates the collectability of its receivables based on the length of time the receivable is past due and historical experience. The allowance for receivables totaled $973 and $556 as of February 2, 2013 and January 28, 2012, respectively.

Merchandise inventories

Merchandise inventories are stated at the lower of cost or market. Cost is determined using the weighted-average cost method and includes costs incurred to purchase and distribute goods. Inventory cost also includes vendor allowances related to co-op advertising, markdowns, and volume discounts. The Company maintains reserves for lower of cost or market and shrinkage.

 

Fair value of financial instruments

The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximates their estimated fair values due to the short maturities of these instruments. The Company had no outstanding debt as of February 2, 2013 and January 28, 2012.

Property and equipment

The Company’s property and equipment are stated at cost net of accumulated depreciation and amortization. Maintenance and repairs are charged to operating expense as incurred. The Company’s assets are depreciated or amortized using the straight-line method, over the shorter of their estimated useful lives or the expected lease term as follows:

 

Equipment and fixtures

     3 to 10 years   

Leasehold improvements

     10 years   

Electronic equipment and software

     3 to 5 years   

The Company capitalizes costs incurred during the application development stage in developing or obtaining internal use software. These costs are amortized over the estimated useful life of the software.

The Company periodically evaluates whether changes have occurred that would require revision of the remaining useful life of equipment and leasehold improvements or render them not recoverable. If such circumstances arise, the Company uses an estimate of the undiscounted sum of expected future operating cash flows during their holding period to determine whether the long-lived assets are impaired. If the aggregate undiscounted cash flows are less than the carrying amount of the assets, the resulting impairment charges to be recorded are calculated based on the excess of the carrying value of the assets over the fair value of such assets, with the fair value determined based on an estimate of discounted future cash flows.

Customer loyalty program

The Company currently operates two loyalty programs, ULTAmate Rewards and The Club at Ulta. The Club at Ulta is a certificate program offering customers reward certificates for free beauty products based on their level of purchases. Customers earn reward certificates to redeem during specific promotional periods throughout the year. ULTAmate Rewards is a points-based program in which customers earn points based on their purchases. Points earned are valid for one year and may be redeemed on any product or select salon service. The Company accrues the cost of anticipated redemptions related to these programs at the time of the initial purchase based on historical experience. The accrued liability related to both of the loyalty programs at February 2, 2013 and January 28, 2012 was $7,084 and $6,207, respectively. The cost of these programs, which was $22,044, $17,200 and $12,942 in fiscal 2012, 2011 and 2010, respectively, is included in cost of sales in the statements of income.

Deferred rent

Many of the Company’s operating leases contain predetermined fixed increases of the minimum rental rate during the lease. For these leases, the Company recognizes the related rental expense on a straight-line basis over the expected lease term, including cancelable option periods where failure to exercise such options would result in an economic penalty, and records the difference between the amounts charged to expense and the rent paid as deferred rent. The lease term commences on the earlier of the date when the Company becomes legally obligated for rent payments or the date the Company takes possession of the leased space.

As part of many lease agreements, the Company receives construction allowances from landlords for tenant improvements. These leasehold improvements made by the Company are capitalized and amortized over the shorter of their estimated useful lives or the lease term. The construction allowances are recorded as deferred rent and amortized on a straight-line basis over the lease term as a reduction of rent expense.

 

Revenue recognition

Net sales include merchandise sales and salon service revenue. Revenue from merchandise sales at stores is recognized at the time of sale, net of estimated returns. The Company provides refunds for product returns within 60 days from the original purchase date. Salon revenue is recognized when services are rendered. Salon service revenue amounted to $121,357, $98,479 and $86,484 for fiscal 2012, 2011 and 2010, respectively. Company coupons and other incentives are recorded as a reduction of net sales. State sales taxes are presented on a net basis as the Company considers itself a pass-through conduit for collecting and remitting state sales tax. E-commerce sales are recorded at the time of shipment.

The Company’s gift card sales are deferred and recognized in net sales when the gift card is redeemed for product or services. The Company’s gift cards do not expire and do not include service fees that decrease customer balances. The Company has maintained Company-specific, historical data related to its large pool of similar gift card transactions sold and redeemed over a significant time frame. During fiscal 2010, there was a change in facts and circumstances which resulted in the Company recognizing approximately $2.0 million of gift card breakage income which related primarily to gift cards sold in prior years. The Company recognizes gift card breakage to the extent there is no requirement for remitting balances to governmental agencies under unclaimed property laws. Gift card breakage is recognized over the same performance period, and in the same proportion, that the Company’s data has demonstrated that gift cards are redeemed. Gift card breakage is recorded as a decrease in selling, general and administrative expense in the statements of income. Deferred gift card revenue was $13,364 and $10,573 at February 2, 2013 and January 28, 2012, respectively, and is included in accrued liabilities – accrued customer liabilities (Note 5).

Vendor allowances

The Company receives allowances from vendors in the normal course of business including advertising and markdown allowances, purchase volume discounts and rebates, and reimbursement for defective merchandise, and certain selling and display expenses. Substantially all vendor allowances are recorded as a reduction of the vendor’s product cost and are recognized in cost of sales as the product is sold.

Advertising

Advertising expense consists principally of paper, print, and distribution costs related to the Company’s advertising circulars. The Company expenses the production and distribution costs related to its advertising circulars in the period the related promotional event occurs. Total advertising costs, exclusive of incentives from vendors and start-up advertising expense, amounted to $118,365, $99,446 and $84,796 for fiscal 2012, 2011 and 2010, respectively. Prepaid advertising costs included in prepaid expenses and other current assets were $6,251and $4,721 as of February 2, 2013 and January 28, 2012, respectively.

Pre-opening expenses

Non-capital expenditures incurred prior to the grand opening of a new, remodeled or relocated store are charged against earnings as incurred.

Cost of sales

Cost of sales includes the cost of merchandise sold including all vendor allowances, which are treated as a reduction of merchandise costs; warehousing and distribution costs including labor and related benefits, freight, rent, depreciation and amortization, real estate taxes, utilities, and insurance; shipping and handling costs; store occupancy costs including rent, depreciation and amortization, real estate taxes, utilities, repairs and maintenance, insurance, licenses, and cleaning expenses; salon payroll and benefits; customer loyalty program expense; and shrink and inventory valuation reserves.

Selling, general and administrative expenses

Selling, general and administrative expenses includes payroll, bonus, and benefit costs for retail and corporate employees; advertising and marketing costs; occupancy costs related to our corporate office facilities; public company expense including Sarbanes-Oxley compliance expenses; stock-based compensation expense; depreciation and amortization for all assets except those related to our retail and warehouse operations which are included in cost of sales; and legal, finance, information systems and other corporate overhead costs.

Income taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes and the amounts reported were derived using the enacted tax rates in effect for the year the differences are expected to reverse.

Income tax benefits related to uncertain tax positions are recognized only when it is more likely than not that the tax position will be sustained on examination by the taxing authorities. The determination is based on the technical merits of the position and presumes that each uncertain tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information. Penalties and interest related to unrecognized tax positions are recorded in income tax expense.

Share-based compensation

The Company accounts for share-based compensation in accordance with the Accounting Standards CodificationTM (ASC) rules for stock compensation. Share-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized on a straight-line method over the requisite service period for awards expected to vest. The Company recorded stock compensation expense of $13,375, $11,605 and $11,155 for fiscal 2012, 2011 and 2010, respectively (see Note 9, “Share-based awards”).

Insurance expense

The Company has insurance programs with third party insurers for employee health, workers compensation and general liability, among others, to limit the Company’s liability exposure. The insurance programs are premium based and include retentions, deductibles and stop loss coverage. Current stop loss coverage is $150 for employee health claims, $100 for general liability claims and $250 for workers compensation claims. The Company makes collateral and premium payments during the plan year and accrues expenses in the event additional premium is due from the Company based on actual claim results.

Net income per common share

Basic net income per common share is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share includes dilutive common stock equivalents, using the treasury stock method (see Note 10, “Net income per common share”).

Property and equipment
Property and equipment

3.    Property and equipment

Property and equipment consist of the following:

 

     February 2,
2013
    January 28,
2012
 

Equipment and fixtures

   $ 323,069      $ 256,479   

Leasehold improvements

     307,624        256,487   

Electronic equipment and software

     169,997        126,790   

Construction-in-progress

     37,700        33,598   
  

 

 

   

 

 

 
     838,390        673,354   

Less accumulated depreciation and amortization

     (355,331     (296,369
  

 

 

   

 

 

 

Property and equipment, net

   $ 483,059      $ 376,985   
  

 

 

   

 

 

 

 

The Company had no capitalized interest for fiscal 2012 and 2011 as a result of not utilizing the credit facility during the year.

Commitments and contingencies
Commitments and contingencies

4.    Commitments and contingencies

Leases — The Company leases retail stores, distribution and office facilities, and certain equipment. Original non-cancelable lease terms range from three to ten years, and store leases generally contain renewal options for additional years. A number of the Company’s store leases provide for contingent rentals based upon sales. Contingent rent amounts were insignificant in fiscal 2012, 2011 and 2010. Total rent expense under operating leases was $115,755, $94,175 and $82,365 for fiscal 2012, 2011 and 2010, respectively. Future minimum lease payments under operating leases as of February 2, 2013, are as follows:

 

Fiscal year

   Operating
Leases
 

2013

   $ 155,542   

2014

     160,168   

2015

     153,441   

2016

     144,991   

2017

     133,574   

2018 and thereafter

     460,811   
  

 

 

 

Total minimum lease payments

   $ 1,208,527   
  

 

 

 

Included in the operating lease schedule above is $210,375 of minimum lease payments for stores that will open in fiscal 2013.

General litigation — On March 2, 2012, a putative employment class action lawsuit was filed against us and certain unnamed defendants in state court in Los Angeles County, California. On April 12, 2012, the Company removed the case to the United States District Court for the Central District of California. The plaintiff and members of the proposed class are alleged to be (or to have been) non-exempt hourly employees. The suit alleges that Ulta violated various provisions of the California labor laws and failed to provide plaintiff and members of the proposed class with full meal periods, paid rest breaks, certain wages, overtime compensation and premium pay. The suit seeks to recover damages and penalties as a result of these alleged practices. The Company denies plaintiff’s allegations and is vigorously defending the matter.

The Company is also involved in various legal proceedings that are incidental to the conduct of our business. In the opinion of management, the amount of any liability with respect to these proceedings, either individually or in the aggregate, will not be material.

Accrued liabilities
Accrued liabilities

5.    Accrued liabilities

Accrued liabilities consist of the following:

 

     February 2,
2013
     January 28,
2012
 

Accrued vendor liabilities (including accrued property and equipment costs)

   $ 17,254       $ 10,868   

Accrued customer liabilities

     21,638         17,978   

Accrued payroll, bonus and employee benefits

     30,418         24,449   

Accrued taxes, other

     9,991         7,619   

Other accrued liabilities

     12,826         13,497   
  

 

 

    

 

 

 

Accrued liabilities

   $ 92,127       $ 74,411   
  

 

 

    

 

 

 
Income taxes
Income taxes

6.    Income taxes

The provision for income taxes consists of the following:

 

     Fiscal
2012
    Fiscal
2011
     Fiscal
2010
 

Current:

       

Federal

   $ 83,606      $ 53,495       $ 32,288   

State

     14,832        11,022         7,070   
  

 

 

   

 

 

    

 

 

 

Total current

     98,438        64,517         39,358   

Deferred:

       

Federal

     8,950        10,796         8,076   

State

     (144     31         (335
  

 

 

   

 

 

    

 

 

 

Total deferred

     8,806        10,827         7,741   
  

 

 

   

 

 

    

 

 

 

Provision for income taxes

   $ 107,244      $ 75,344       $ 47,099   
  

 

 

   

 

 

    

 

 

 

A reconciliation of the federal statutory rate to the Company’s effective tax rate is as follows:

 

     Fiscal
2012
    Fiscal
2011
    Fiscal
2010
 

Federal statutory rate

     35.0     35.0     35.0

State effective rate, net of federal tax benefit

     3.4     3.7     3.7

Other

     (0.1 %)      (0.2 %)      1.2
  

 

 

   

 

 

   

 

 

 

Effective tax rate

     38.3     38.5     39.9
  

 

 

   

 

 

   

 

 

 

Significant components of the Company’s deferred tax assets and liabilities are as follows:

 

     February 2,
2013
    January 28,
2012
 

Deferred tax assets:

    

Reserves not currently deductible

   $ 18,160      $ 13,207   

Employee benefits

     5,029        4,970   

Net operating loss & credit carryforwards

     208        179   

Accrued liabilities

     3,854        3,499   

Inventory valuation

     1,280        1,570   
  

 

 

   

 

 

 

Total deferred tax assets

     28,531        23,425   

Deferred tax liabilities:

    

Property and equipment

     39,357        32,414   

Deferred rent obligation

     21,638        16,572   

Prepaid expenses

     8,140        6,370   
  

 

 

   

 

 

 

Total deferred tax liabilities

     69,135        55,356   
  

 

 

   

 

 

 

Net deferred tax liability

   $ (40,604   $ (31,931
  

 

 

   

 

 

 

At February 2, 2013, the Company had net operating loss carryforwards (NOLs) for federal income tax purposes of approximately $73, which expire between 2013 and 2014. Based on Internal Revenue Code Section 382 relating to changes in ownership of the Company, utilization of the federal NOLs is subject to an annual limitation of $440 for federal NOLs created prior to April 1, 1997. At February 2, 2013, the Company had $281 credit carryforwards for state income tax purposes.

 

The Company accounts for uncertainty in income taxes in accordance with the ASC rules for income taxes. Based on the Company’s best estimate of the potential liability for uncertain tax positions there was no reserve at February 2, 2013 and January 28, 2012.

The Company acknowledges that the amount of unrecognized tax benefits may change in the next twelve months. However, it does not expect the change to have a significant impact on its financial statements. Income tax-related interest and penalties were insignificant for fiscal 2012, 2011 and 2010.

The Company files tax returns in the U.S. Federal and State jurisdictions. The Company is no longer subject to U.S. Federal examinations by the Internal Revenue Services for the years before 2010 and, this applies to examinations by the State authorities before 2008.

Notes payable
Notes payable

7.    Notes payable

On October 19, 2011, the Company entered into an Amended and Restated Loan and Security Agreement (the Loan Agreement) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and a Lender thereunder, Wells Fargo Capital Finance LLC as a Lender, J.P. Morgan Securities LLC as a Lender, JP Morgan Chase Bank, N.A. as a Lender and PNC Bank, National Association, as a Lender. The Loan Agreement amended and restated the Loan and Security Agreement, dated as of August 31, 2010, by and among the lenders. The Loan Agreement extends the maturity of the Company’s credit facility to October 2016, provides maximum revolving loans equal to the lesser of $200,000 or a percentage of eligible owned inventory, contains a $10,000 subfacility for letters of credit and allows the Company to increase the revolving facility by an additional $50,000, subject to consent by each lender and other conditions. The Loan Agreement contains a requirement to maintain a minimum amount of excess borrowing availability at all times. Substantially all of the Company’s assets are pledged as collateral for outstanding borrowings under the facility. Outstanding borrowings will bear interest at the prime rate or Libor plus 1.50% and the unused line fee is 0.225%. As of February 2, 2013 and January 28, 2012, the Company had no borrowings outstanding under the credit facility and the Company was in compliance with all terms and covenants of the agreement.

On September 5, 2012, the Company entered into Amendment No. 1 to the Amended and Restated Loan and Security Agreement (the Amendment) with the lender group. The Amendment updated certain administrative terms and conditions and provides the Company greater flexibility to take certain corporate actions. There were no changes to the revolving loan amounts available, interest rates, covenants or maturity date under terms of the Loan Agreement.

Fair value measurements
Fair value measurements

8.    Fair value measurements

The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximates their estimated fair values due to the short maturities of these instruments.

On February 3, 2008, the Company adopted the ASC rules for fair value measurements and disclosures. The adoption had no impact on the Company’s financial statements. The new rules established a three-tier hierarchy for fair value measurements, which prioritizes the inputs used in measuring fair value as follows:

a. Level 1 — observable inputs such as quoted prices for identical instruments in active markets.

b. Level 2 — inputs other than quoted prices in active markets that are observable either directly or indirectly through corroboration with observable market data.

c. Level 3 — unobservable inputs in which there is little or no market data, which would require the Company to develop its own assumptions.

As of February 2, 2013, the Company held financial liabilities of $2,876 related to its non-qualified deferred compensation plan. The liabilities have been categorized as Level 2 as they are based on third-party reported net asset values which are based primarily on quoted market prices of underlying assets of the funds within the plan.

Share-based awards
Share-based awards

9.    Share-based awards

Equity Incentive Plans

The Company has had a number of equity incentive plans over the years. The plans were adopted in order to attract and retain the best available personnel for positions of substantial authority and to provide additional incentive to employees, directors, and consultants to promote the success of the Company’s business. Incentive compensation was awarded under the Amended and Restated Restricted Stock Option Plan until April 2002 and under the 2002 Equity Incentive Plan through July 2007, at which time the 2007 Incentive Award Plan was adopted. All of the plans generally provided for the grant of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, and other types of awards to employees, consultants, and directors. Unless provided otherwise by the administrator of the plan, options vested over four years at the rate of 25% per year from the date of grant and most must be exercised within ten years. Options were granted with the exercise price equal to the fair value of the underlying stock on the date of grant.

2011 Incentive Award Plan

In June 2011, the Company adopted the 2011 Incentive Award Plan (the 2011 Plan). The 2011 Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards, dividend equivalent rights, stock payments, deferred stock and cash-based awards to employees, consultants, and directors. Following its adoption, awards are only being made under the 2011 Plan, and no further awards will be made under any prior plan. The 2011 Plan reserves for the issuance upon grant or exercise of awards up to 4,750 shares of the Company’s common stock plus 746 shares that were not issued under prior plans.

The Company measures share-based compensation cost on the grant date, based on the fair value of the award, and recognizes the expense on a straight-line method over the requisite service period for awards expected to vest. The Company estimated the grant date fair value of stock options using a Black-Scholes valuation model using the following weighted-average assumptions:

 

     Fiscal
2012
    Fiscal
2011
    Fiscal
2010
 

Volatility rate

     53.5     54.0     56.9

Average risk-free interest rate

     1.2     1.5     2.2

Average expected life (in years)

     6.3        6.3        5.6   

Dividend yield

     None        None        None   

The expected volatility is based on the historical volatility of a peer group of publicly-traded companies. The risk free interest rate is based on the United States Treasury yield curve in effect on the date of grant for the respective expected life of the option. The expected life represents the time the options granted are expected to be outstanding. We have limited historical data related to exercise behavior since our initial public offering on October 30, 2007. As a result, the Company has elected to generally use the shortcut approach to determine the expected life in accordance with the SEC Staff Accounting Bulletin on share-based payments. The Company does not currently pay a regular dividend. The dividend paid in May 2012 was a one-time special cash dividend.

The Company granted 241 stock options during fiscal 2012. The compensation cost that has been charged against income was $11,967, $9,731, and $9,918 for fiscal 2012, 2011, and 2010, respectively. The weighted-average grant date fair value of options granted in fiscal 2012, 2011 and 2010 was $46.29, $34.81 and $13.58, respectively. At February 2, 2013, there was approximately $26,529 of unrecognized compensation expense related to unvested stock options. The unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately two years.

The total intrinsic value of options exercised was $138,291, $86,030 and $42,118 in fiscal 2012, 2011 and 2010, respectively.

 

Restricted stock awards

During fiscal 2012 the Company issued restricted stock to certain employees and its board of directors. Employee grants will generally cliff vest after 3 years and director grants will cliff vest within one year. The compensation expense recorded in fiscal 2012 and 2011 was $1,408 and $1,874, respectively. At February 2, 2013 and January 28, 2012, unrecognized compensation cost related to restricted stock awards was $3,989 and $935, respectively.

A summary of the status of the Company’s stock option activity is presented in the following tables:

 

     Fiscal 2012      Fiscal 2011      Fiscal 2010  
     Shares     Weighted-
Average
Exercise Price
     Shares     Weighted-
Average
Exercise Price
     Shares     Weighted-
Average
Exercise Price
 

Common Stock Options Outstanding

              

Beginning of year

     3,559      $ 26.46         5,036      $ 16.55         5,791      $ 11.18   

Granted

     241        89.99         621        66.58         1,521        26.12   

Exercised

     (1,795     17.57         (1,936     14.28         (2,033     8.41   

Canceled

     (198     46.28         (162     17.75         (243     16.73   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

End of year

     1,807      $ 41.60         3,559      $ 26.46         5,036      $ 16.55   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Exercisable at end of year

     563        24.85         1,437      $ 14.27         2,272      $ 12.38   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Restricted Stock Outstanding

              

Beginning of year

     22      $ 55.72         128      $ 24.29              $   

Granted

     65        90.18         15        63.38         128        24.29   

Vested

     (5     66.88         (71     23.62                  

Forfeited

     (20     75.30         (50     23.52                  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

End of year

     62      $ 81.81         22      $ 55.72         128      $ 24.29   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

The Company completed an initial public offering during fiscal 2007 which resulted in compensation expense related to performance based grants of $425 in fiscal 2010. There was no compensation expense related to performance based grants in 2012 and 2011. No performance-based options were granted during fiscal 2012, 2011 and 2010.

Cash received from option exercises under all share-based payment arrangements for fiscal 2012, 2011 and 2010 was $31,530, $27,639 and $17,100, respectively. The total income tax benefit recognized in the income statement for equity compensation arrangements was $5,364, $3,545 and $3,300 for fiscal 2012, 2011 and 2010, respectively. The actual tax benefit realized for the tax deductions from option exercise and restricted stock vesting of the share-based payment arrangements totaled $51,886, $29,439 and $13,373, respectively, for fiscal 2012, 2011 and 2010.

 

The following table presents information related to options outstanding and options exercisable at February 2, 2013, under the Company’s stock option plans based on ranges of exercise prices:

 

 

     Options outstanding      Options exercisable  

Options outstanding

   Number of
options
     Weighted-
average
remaining
contractual life
(years)
     Weighted-
average
exercise price
     Number
of options
     Weighted-
average
remaining
contractual life
(years)
     Weighted-
average
exercise price
 

$   0.18 - 1.11

     11,813         2       $ 1.11         11,813         2       $ 1.11   

     1.12 - 2.62

     7,523         2         2.62         7,523         2         2.62   

     2.63 - 4.12

     8,116         4         3.83         8,116         4         3.83   

     4.13 - 9.18

     32,220         7         6.57         13,160         6         6.98   

     9.19 - 15.81

     346,052         6         13.04         255,975         6         12.95   

  15.82 - 37.85

     685,698         8         26.04         184,932         8         26.58   

  37.86 - 69.96

     502,637         9         66.65         81,311         9         68.89   

  69.97 - 101.53

     212,742         10         89.31                           
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

  End of year

     1,806,801         8       $ 41.60         562,850         7       $ 24.85   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The aggregate intrinsic value of outstanding and exercisable options as of February 2, 2013 was $101,965 and $41,756, respectively. The last reported sale price of our common stock on the NASDAQ Global Select Market on February 2, 2013 was $97.54 per share.

Net income per common share
Net income per common share

10.     Net income per common share

The following is a reconciliation of net income and the number of shares of common stock used in the computation of net income per basic and diluted share:

 

 

     Fiscal year ended  
     February 2,
2013
     January 28,
2012
     January 29,
2011
 

Numerator for diluted net income per share — net income

   $ 172,549       $ 120,264       $ 71,030   

Denominator for basic net income per share — weighted-average common shares

     63,250         61,259         58,959   

Dilutive effect of stock options and non-vested stock

     1,146         2,075         2,329   
  

 

 

    

 

 

    

 

 

 

Denominator for diluted net income per share

     64,396         63,334         61,288   

Net income per common share:

        

Basic

   $ 2.73       $ 1.96       $ 1.20   

Diluted

   $ 2.68       $ 1.90       $ 1.16   

The denominator for diluted net income per common share for fiscal years 2012, 2011 and 2010 exclude 533, 621 and 1,263 employee options, respectively, due to their anti-dilutive effects.

Employee benefit plans
Employee benefit plans

11.     Employee benefit plans

The Company provides a 401(k) retirement plan covering all employees who qualify as to age and length of service. The plan is funded through employee contributions and a Company match. In fiscal 2012, 2011 and 2010, the Company match was 100% of the first 3.0%, 2.5% and 2%, respectively, of eligible compensation. For fiscal years 2012, 2011 and 2010, the Company match was $3,040, $2,146 and $1,106, respectively.

On January 1, 2009, the Company established a non-qualified deferred compensation plan for highly compensated employees whose contributions are limited under qualified defined contribution plans. Amounts contributed and deferred under the plan are credited or charged with the performance of investment options offered under the plan as elected by the participants. In the event of bankruptcy, the assets of this plan are available to satisfy the claims of general creditors. The liability for compensation deferred under the Company’s plan included in other long-term liabilities was $2,876 as of February 2, 2013. The Company manages the risk of changes in the fair value of the liability for deferred compensation by electing to match its liability under the plan with investment vehicles that offset a substantial portion of its exposure. The cash value of the investment vehicles included in deferred compensation plan assets was $2,866 as of February 2, 2013. As of January 28, 2012 the liability for compensation deferred under the Company’s plan included in accrued liabilities was $1,855 and the corresponding asset included in prepaid expenses and other current assets was $1,968. The change in presentation of the asset and liability from current to noncurrent in fiscal 2012 is immaterial to the balance sheets ending February 2, 2013 and January 28, 2012. Total expense recorded under this plan is included in selling, general and administrative expenses and was insignificant during fiscal 2012 and 2011.

Valuation and qualifying accounts
Valuation and qualifying accounts

12.     Valuation and qualifying accounts

 

Description

   Balance at
beginning
of period
    Charged to
costs and
expenses
     Deductions     Balance at
end of
period
 

Fiscal 2012

         

Allowance for doubtful accounts

   $ 556      $ 419       $ (2 )(a)    $ 973   

Shrink reserve

     2,445        8,077         (6,502     4,020   

Inventory — lower of cost or market reserve

     2,070        1,099         (805     2,364   

Insurance:

         

Workers Comp / General Liability Prepaid Asset

     (2,084 )(b)      4,864         (5,180     (2,400

Employee Health Care Accrued Liability

     1,929        26,584         (26,281     2,232   

Fiscal 2011

         

Allowance for doubtful accounts

   $ 257      $ 607       $ (308 )(a)    $ 556   

Shrink reserve

     2,300        5,535         (5,390     2,445   

Inventory — lower of cost or market reserve

     3,316        870         (2,116     2,070   

Insurance:

         

Workers Comp / General Liability Prepaid Asset

     (970 )(b)      4,495         (5,609     (2,084

Employee Health Care Accrued Liability

     1,608        21,036         (20,715     1,929   

Fiscal 2010

         

Allowance for doubtful accounts

   $ 489      $ 189       $ (421 )(a)    $ 257   

Shrink reserve

     1,869        5,191         (4,760     2,300   

Inventory — lower of cost or market reserve

     4,014        881         (1,579     3,316   

Insurance:

         

Workers Comp / General Liability Prepaid Asset

     (1,181 )(b)      4,320         (4,109     (970

Employee Health Care Accrued Liability

     1,579        17,601         (17,572     1,608   

 

 

(a) Represents write-off of uncollectible accounts.

 

(b) Represents prepaid insurance
Selected quarterly financial data (unaudited)
Selected quarterly financial data (unaudited)

13.     Selected quarterly financial data (unaudited)

The following tables set forth the Company’s unaudited quarterly results of operations for each of the quarters in fiscal 2012 and fiscal 2011. The Company uses a 13 week (14 week in fourth quarter fiscal 2012) fiscal quarter ending on the last Saturday of the quarter.

 

 

    2012      2011  
    First     Second     Third      Fourth      First      Second      Third      Fourth  

Net sales

  $ 474,098      $ 481,683      $ 505,640       $ 758,835       $ 386,006       $ 394,567       $ 413,067       $ 582,511   

Cost of sales

    303,186        314,058        320,147         499,191         251,101         260,280         263,884         384,046   
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

    170,912        167,625        185,493         259,644         134,905         134,287         149,183         198,465   

Selling, general and administrative expenses

    110,943        106,040        117,934         153,963         94,615         90,811         100,997         124,235   

Pre-opening expenses

    2,523        4,126        6,252         1,915         1,230         3,816         3,958         983   
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

    57,446        57,459        61,307         103,766         39,060         39,660         44,228         73,247   

Interest expense

    21        104        39         21         173         147         176         91   
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

    57,425        57,355        61,268         103,745         38,887         39,513         44,052         73,156   

Income tax expense

    22,557        22,357        23,117         39,213         15,591         15,608         17,284         26,861   
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income

  $ 34,868      $ 34,998      $ 38,151       $ 64,532       $ 23,296       $ 23,905       $ 26,768       $ 46,295   
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income per common share:

                    

Basic

  $ 0.56        0.55        0.60       $ 1.01       $ 0.38       $ 0.39       $ 0.44       $ 0.75   

Diluted

  $ 0.54        0.54        0.59       $ 1.00       $ 0.37       $ 0.38       $ 0.42       $ 0.73   

The sum of the quarterly net income per common share may not equal the annual total due to quarterly changes in the weighted average shares and share equivalents outstanding.

Subsequent event
Subsequent event

14.     Subsequent event

On February 14, 2013, we announced the resignation of Carl S. Rubin as President, Chief Executive Officer and Director and the appointment of Dennis K. Eck as our Interim Chief Executive Officer until a permanent replacement is identified.

On March 12, 2013, we announced the permanent appointment of Scott M. Settersten as Chief Financial Officer and Assistant Secretary of the Company. Mr. Settersten previously served as Acting Chief Financial Officer and Assistant Secretary since October 18, 2012.

On March 18, 2013, we announced that our Board of Directors had authorized a stock repurchase program pursuant to which the Company may repurchase up to $150 million of the Company’s common stock. The repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise, at prices that the Company deems appropriate and subject to market conditions, applicable law and other factors deemed relevant in the Company’s sole discretion.

Summary of significant accounting policies (Policies)

Fiscal year

The Company’s fiscal year is the 52 or 53 weeks ending on the Saturday closest to January 31. The Company’s fiscal years ended February 2, 2013 (fiscal 2012), January 28, 2012 (fiscal 2011) and January 29, 2011 (fiscal 2010) were 53, 52 and 52 week years, respectively.

Use of estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the accounting period. Actual results could differ from those estimates.

Cash and cash equivalents

Cash and cash equivalents include cash on hand and highly liquid investments with maturities of three months or less from the date of purchase. Cash equivalents include amounts due from third-party credit card receivables because such amounts generally convert to cash within one to three days with little or no default risk.

Receivables

Receivables consist principally of amounts receivable from vendors related to allowances earned but not yet received. These receivables are computed based on provisions of the vendor agreements in place and the Company’s completed performance. The Company’s vendors are primarily U.S.-based producers of consumer products. The Company does not require collateral on its receivables and does not accrue interest. Credit risk with respect to receivables is limited due to the diversity of vendors comprising the Company’s vendor base. The Company performs ongoing credit evaluations of its vendors and evaluates the collectability of its receivables based on the length of time the receivable is past due and historical experience. The allowance for receivables totaled $973 and $556 as of February 2, 2013 and January 28, 2012, respectively.

Merchandise inventories

Merchandise inventories are stated at the lower of cost or market. Cost is determined using the weighted-average cost method and includes costs incurred to purchase and distribute goods. Inventory cost also includes vendor allowances related to co-op advertising, markdowns, and volume discounts. The Company maintains reserves for lower of cost or market and shrinkage.

Fair value of financial instruments

The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximates their estimated fair values due to the short maturities of these instruments. The Company had no outstanding debt as of February 2, 2013 and January 28, 2012.

Property and equipment

The Company’s property and equipment are stated at cost net of accumulated depreciation and amortization. Maintenance and repairs are charged to operating expense as incurred. The Company’s assets are depreciated or amortized using the straight-line method, over the shorter of their estimated useful lives or the expected lease term as follows:

 

Equipment and fixtures

     3 to 10 years   

Leasehold improvements

     10 years   

Electronic equipment and software

     3 to 5 years   

The Company capitalizes costs incurred during the application development stage in developing or obtaining internal use software. These costs are amortized over the estimated useful life of the software.

The Company periodically evaluates whether changes have occurred that would require revision of the remaining useful life of equipment and leasehold improvements or render them not recoverable. If such circumstances arise, the Company uses an estimate of the undiscounted sum of expected future operating cash flows during their holding period to determine whether the long-lived assets are impaired. If the aggregate undiscounted cash flows are less than the carrying amount of the assets, the resulting impairment charges to be recorded are calculated based on the excess of the carrying value of the assets over the fair value of such assets, with the fair value determined based on an estimate of discounted future cash flows.

Customer loyalty program

The Company currently operates two loyalty programs, ULTAmate Rewards and The Club at Ulta. The Club at Ulta is a certificate program offering customers reward certificates for free beauty products based on their level of purchases. Customers earn reward certificates to redeem during specific promotional periods throughout the year. ULTAmate Rewards is a points-based program in which customers earn points based on their purchases. Points earned are valid for one year and may be redeemed on any product or select salon service. The Company accrues the cost of anticipated redemptions related to these programs at the time of the initial purchase based on historical experience. The accrued liability related to both of the loyalty programs at February 2, 2013 and January 28, 2012 was $7,084 and $6,207, respectively. The cost of these programs, which was $22,044, $17,200 and $12,942 in fiscal 2012, 2011 and 2010, respectively, is included in cost of sales in the statements of income.

Deferred rent

Many of the Company’s operating leases contain predetermined fixed increases of the minimum rental rate during the lease. For these leases, the Company recognizes the related rental expense on a straight-line basis over the expected lease term, including cancelable option periods where failure to exercise such options would result in an economic penalty, and records the difference between the amounts charged to expense and the rent paid as deferred rent. The lease term commences on the earlier of the date when the Company becomes legally obligated for rent payments or the date the Company takes possession of the leased space.

As part of many lease agreements, the Company receives construction allowances from landlords for tenant improvements. These leasehold improvements made by the Company are capitalized and amortized over the shorter of their estimated useful lives or the lease term. The construction allowances are recorded as deferred rent and amortized on a straight-line basis over the lease term as a reduction of rent expense.

Revenue recognition

Net sales include merchandise sales and salon service revenue. Revenue from merchandise sales at stores is recognized at the time of sale, net of estimated returns. The Company provides refunds for product returns within 60 days from the original purchase date. Salon revenue is recognized when services are rendered. Salon service revenue amounted to $121,357, $98,479 and $86,484 for fiscal 2012, 2011 and 2010, respectively. Company coupons and other incentives are recorded as a reduction of net sales. State sales taxes are presented on a net basis as the Company considers itself a pass-through conduit for collecting and remitting state sales tax. E-commerce sales are recorded at the time of shipment.

The Company’s gift card sales are deferred and recognized in net sales when the gift card is redeemed for product or services. The Company’s gift cards do not expire and do not include service fees that decrease customer balances. The Company has maintained Company-specific, historical data related to its large pool of similar gift card transactions sold and redeemed over a significant time frame. During fiscal 2010, there was a change in facts and circumstances which resulted in the Company recognizing approximately $2.0 million of gift card breakage income which related primarily to gift cards sold in prior years. The Company recognizes gift card breakage to the extent there is no requirement for remitting balances to governmental agencies under unclaimed property laws. Gift card breakage is recognized over the same performance period, and in the same proportion, that the Company’s data has demonstrated that gift cards are redeemed. Gift card breakage is recorded as a decrease in selling, general and administrative expense in the statements of income. Deferred gift card revenue was $13,364 and $10,573 at February 2, 2013 and January 28, 2012, respectively, and is included in accrued liabilities – accrued customer liabilities (Note 5).

Vendor allowances

The Company receives allowances from vendors in the normal course of business including advertising and markdown allowances, purchase volume discounts and rebates, and reimbursement for defective merchandise, and certain selling and display expenses. Substantially all vendor allowances are recorded as a reduction of the vendor’s product cost and are recognized in cost of sales as the product is sold.

Advertising

Advertising expense consists principally of paper, print, and distribution costs related to the Company’s advertising circulars. The Company expenses the production and distribution costs related to its advertising circulars in the period the related promotional event occurs. Total advertising costs, exclusive of incentives from vendors and start-up advertising expense, amounted to $118,365, $99,446 and $84,796 for fiscal 2012, 2011 and 2010, respectively. Prepaid advertising costs included in prepaid expenses and other current assets were $6,251and $4,721 as of February 2, 2013 and January 28, 2012, respectively

Pre-opening expenses

Non-capital expenditures incurred prior to the grand opening of a new, remodeled or relocated store are charged against earnings as incurred.

Cost of sales

Cost of sales includes the cost of merchandise sold including all vendor allowances, which are treated as a reduction of merchandise costs; warehousing and distribution costs including labor and related benefits, freight, rent, depreciation and amortization, real estate taxes, utilities, and insurance; shipping and handling costs; store occupancy costs including rent, depreciation and amortization, real estate taxes, utilities, repairs and maintenance, insurance, licenses, and cleaning expenses; salon payroll and benefits; customer loyalty program expense; and shrink and inventory valuation reserves.

Selling, general and administrative expenses

Selling, general and administrative expenses includes payroll, bonus, and benefit costs for retail and corporate employees; advertising and marketing costs; occupancy costs related to our corporate office facilities; public company expense including Sarbanes-Oxley compliance expenses; stock-based compensation expense; depreciation and amortization for all assets except those related to our retail and warehouse operations which are included in cost of sales; and legal, finance, information systems and other corporate overhead costs.

Income taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes and the amounts reported were derived using the enacted tax rates in effect for the year the differences are expected to reverse.

Income tax benefits related to uncertain tax positions are recognized only when it is more likely than not that the tax position will be sustained on examination by the taxing authorities. The determination is based on the technical merits of the position and presumes that each uncertain tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information. Penalties and interest related to unrecognized tax positions are recorded in income tax expense.

Share-based compensation

The Company accounts for share-based compensation in accordance with the Accounting Standards CodificationTM (ASC) rules for stock compensation. Share-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized on a straight-line method over the requisite service period for awards expected to vest. The Company recorded stock compensation expense of $13,375, $11,605 and $11,155 for fiscal 2012, 2011 and 2010, respectively (see Note 9, “Share-based awards”).

Insurance expense

The Company has insurance programs with third party insurers for employee health, workers compensation and general liability, among others, to limit the Company’s liability exposure. The insurance programs are premium based and include retentions, deductibles and stop loss coverage. Current stop loss coverage is $150 for employee health claims, $100 for general liability claims and $250 for workers compensation claims. The Company makes collateral and premium payments during the plan year and accrues expenses in the event additional premium is due from the Company based on actual claim results.

Net income per common share

Basic net income per common share is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share includes dilutive common stock equivalents, using the treasury stock method (see Note 10, “Net income per common share”).

Summary of significant accounting policies (Tables)
Estimated Useful Lives or Expected Lease Term

 The Company’s assets are depreciated or amortized using the straight-line method, over the shorter of their estimated useful lives or the expected lease term as follows:

 

Equipment and fixtures

     3 to 10 years   

Leasehold improvements

     10 years   

Electronic equipment and software

     3 to 5 years   
Property and equipment (Tables)
Components of Property and Equipment

Property and equipment consist of the following:

 

     February 2,
2013
    January 28,
2012
 

Equipment and fixtures

   $ 323,069      $ 256,479   

Leasehold improvements

     307,624        256,487   

Electronic equipment and software

     169,997        126,790   

Construction-in-progress

     37,700        33,598   
  

 

 

   

 

 

 
     838,390        673,354   

Less accumulated depreciation and amortization

     (355,331     (296,369
  

 

 

   

 

 

 

Property and equipment, net

   $ 483,059      $ 376,985   
  

 

 

   

 

 

 
Commitments and contingencies (Tables)
Schedule of Future Minimum Lease Payments Under Operating Leases

Future minimum lease payments under operating leases as of February 2, 2013, are as follows:

 

Fiscal year

   Operating
Leases
 

2013

   $ 155,542   

2014

     160,168   

2015

     153,441   

2016

     144,991   

2017

     133,574   

2018 and thereafter

     460,811   
  

 

 

 

Total minimum lease payments

   $ 1,208,527   
  

 

 

 
Accrued liabilities (Tables)
Schedule of Accrued liabilities

Accrued liabilities consist of the following:

 

     February 2,
2013
     January 28,
2012
 

Accrued vendor liabilities (including accrued property and equipment costs)

   $ 17,254       $ 10,868   

Accrued customer liabilities

     21,638         17,978   

Accrued payroll, bonus and employee benefits

     30,418         24,449   

Accrued taxes, other

     9,991         7,619   

Other accrued liabilities

     12,826         13,497   
  

 

 

    

 

 

 

Accrued liabilities

   $ 92,127       $ 74,411   
  

 

 

    

 

 

 
Income taxes (Tables)

The provision for income taxes consists of the following:

 

     Fiscal
2012
    Fiscal
2011
     Fiscal
2010
 

Current:

       

Federal

   $ 83,606      $ 53,495       $ 32,288   

State

     14,832        11,022         7,070   
  

 

 

   

 

 

    

 

 

 

Total current

     98,438        64,517         39,358   

Deferred:

       

Federal

     8,950        10,796         8,076   

State

     (144     31         (335
  

 

 

   

 

 

    

 

 

 

Total deferred

     8,806        10,827         7,741   
  

 

 

   

 

 

    

 

 

 

Provision for income taxes

   $ 107,244      $ 75,344       $ 47,099   
  

 

 

   

 

 

    

 

 

 

A reconciliation of the federal statutory rate to the Company’s effective tax rate is as follows:

 

     Fiscal
2012
    Fiscal
2011
    Fiscal
2010
 

Federal statutory rate

     35.0     35.0     35.0

State effective rate, net of federal tax benefit

     3.4     3.7     3.7

Other

     (0.1 %)      (0.2 %)      1.2
  

 

 

   

 

 

   

 

 

 

Effective tax rate

     38.3     38.5     39.9
  

 

 

   

 

 

   

 

 

 

Significant components of the Company’s deferred tax assets and liabilities are as follows:

 

     February 2,
2013
    January 28,
2012
 

Deferred tax assets:

    

Reserves not currently deductible

   $ 18,160      $ 13,207   

Employee benefits

     5,029        4,970   

Net operating loss & credit carryforwards

     208        179   

Accrued liabilities

     3,854        3,499   

Inventory valuation

     1,280        1,570   
  

 

 

   

 

 

 

Total deferred tax assets

     28,531        23,425   

Deferred tax liabilities:

    

Property and equipment

     39,357        32,414   

Deferred rent obligation

     21,638        16,572   

Prepaid expenses

     8,140        6,370   
  

 

 

   

 

 

 

Total deferred tax liabilities

     69,135        55,356   
  

 

 

   

 

 

 

Net deferred tax liability

   $ (40,604   $ (31,931
  

 

 

   

 

 

 
Share-based awards (Tables)

 The Company estimated the grant date fair value of stock options using a Black-Scholes valuation model using the following weighted-average assumptions:

 

     Fiscal
2012
    Fiscal
2011
    Fiscal
2010
 

Volatility rate

     53.5     54.0     56.9

Average risk-free interest rate

     1.2     1.5     2.2

Average expected life (in years)

     6.3        6.3        5.6   

Dividend yield

     None        None        None   

A summary of the status of the Company’s stock option activity is presented in the following tables:

 

     Fiscal 2012      Fiscal 2011      Fiscal 2010  
     Shares     Weighted-
Average
Exercise Price
     Shares     Weighted-
Average
Exercise Price
     Shares     Weighted-
Average
Exercise Price
 

Common Stock Options Outstanding

              

Beginning of year

     3,559      $ 26.46         5,036      $ 16.55         5,791      $ 11.18   

Granted

     241        89.99         621        66.58         1,521        26.12   

Exercised

     (1,795     17.57         (1,936     14.28         (2,033     8.41   

Canceled

     (198     46.28         (162     17.75         (243     16.73   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

End of year

     1,807      $ 41.60         3,559      $ 26.46         5,036      $ 16.55   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Exercisable at end of year

     563        24.85         1,437      $ 14.27         2,272      $ 12.38   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Restricted Stock Outstanding

              

Beginning of year

     22      $ 55.72         128      $ 24.29              $   

Granted

     65        90.18         15        63.38         128        24.29   

Vested

     (5     66.88         (71     23.62                  

Forfeited

     (20     75.30         (50     23.52                  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

End of year

     62      $ 81.81         22      $ 55.72         128      $ 24.29   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

The following table presents information related to options outstanding and options exercisable at February 2, 2013, under the Company’s stock option plans based on ranges of exercise prices:

 

 

     Options outstanding      Options exercisable  

Options outstanding

   Number of
options
     Weighted-
average
remaining
contractual life
(years)
     Weighted-
average
exercise price
     Number
of options
     Weighted-
average
remaining
contractual life
(years)
     Weighted-
average
exercise price
 

$   0.18 - 1.11

     11,813         2       $ 1.11         11,813         2       $ 1.11   

     1.12 - 2.62

     7,523         2         2.62         7,523         2         2.62   

     2.63 - 4.12

     8,116         4         3.83         8,116         4         3.83   

     4.13 - 9.18

     32,220         7         6.57         13,160         6         6.98   

     9.19 - 15.81

     346,052         6         13.04         255,975         6         12.95   

  15.82 - 37.85

     685,698         8         26.04         184,932         8         26.58   

  37.86 - 69.96

     502,637         9         66.65         81,311         9         68.89   

  69.97 - 101.53

     212,742         10         89.31                           
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

  End of year

     1,806,801         8       $ 41.60         562,850         7       $ 24.85   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Net income per common share (Tables)
Net Income Per Basic And Diluted Share

The following is a reconciliation of net income and the number of shares of common stock used in the computation of net income per basic and diluted share:

 

 

     Fiscal year ended  
     February 2,
2013
     January 28,
2012
     January 29,
2011
 

Numerator for diluted net income per share — net income

   $ 172,549       $ 120,264       $ 71,030   

Denominator for basic net income per share — weighted-average common shares

     63,250         61,259         58,959   

Dilutive effect of stock options and non-vested stock

     1,146         2,075         2,329   
  

 

 

    

 

 

    

 

 

 

Denominator for diluted net income per share

     64,396         63,334         61,288   

Net income per common share:

        

Basic

   $ 2.73       $ 1.96       $ 1.20   

Diluted

   $ 2.68       $ 1.90       $ 1.16   
Valuation and qualifying accounts (Tables)
Valuation and Qualifying Accounts

Description

   Balance at
beginning
of period
    Charged to
costs and
expenses
     Deductions     Balance at
end of
period
 

Fiscal 2012

         

Allowance for doubtful accounts

   $ 556      $ 419       $ (2 )(a)    $ 973   

Shrink reserve

     2,445        8,077         (6,502     4,020   

Inventory — lower of cost or market reserve

     2,070        1,099         (805     2,364   

Insurance:

         

Workers Comp / General Liability Prepaid Asset

     (2,084 )(b)      4,864         (5,180     (2,400

Employee Health Care Accrued Liability

     1,929        26,584         (26,281     2,232   

Fiscal 2011

         

Allowance for doubtful accounts

   $ 257      $ 607       $ (308 )(a)    $ 556   

Shrink reserve

     2,300        5,535         (5,390     2,445   

Inventory — lower of cost or market reserve

     3,316        870         (2,116     2,070   

Insurance:

         

Workers Comp / General Liability Prepaid Asset

     (970 )(b)      4,495         (5,609     (2,084

Employee Health Care Accrued Liability

     1,608        21,036         (20,715     1,929   

Fiscal 2010

         

Allowance for doubtful accounts

   $ 489      $ 189       $ (421 )(a)    $ 257   

Shrink reserve

     1,869        5,191         (4,760     2,300   

Inventory — lower of cost or market reserve

     4,014        881         (1,579     3,316   

Insurance:

         

Workers Comp / General Liability Prepaid Asset

     (1,181 )(b)      4,320         (4,109     (970

Employee Health Care Accrued Liability

     1,579        17,601         (17,572     1,608   

 

 

(a) Represents write-off of uncollectible accounts.

 

(b) Represents prepaid insurance
Selected quarterly financial data (unaudited) (Tables)
Statements of Income
    2012      2011  
    First     Second     Third      Fourth      First      Second      Third      Fourth  

Net sales

  $ 474,098      $ 481,683      $ 505,640       $ 758,835       $ 386,006       $ 394,567       $ 413,067       $ 582,511   

Cost of sales

    303,186        314,058        320,147         499,191         251,101         260,280         263,884         384,046   
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

    170,912        167,625        185,493         259,644         134,905         134,287         149,183         198,465   

Selling, general and administrative expenses

    110,943        106,040        117,934         153,963         94,615         90,811         100,997         124,235   

Pre-opening expenses

    2,523        4,126        6,252         1,915         1,230         3,816         3,958         983   
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

    57,446        57,459        61,307         103,766         39,060         39,660         44,228         73,247   

Interest expense

    21        104        39         21         173         147         176         91   
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

    57,425        57,355        61,268         103,745         38,887         39,513         44,052         73,156   

Income tax expense

    22,557        22,357        23,117         39,213         15,591         15,608         17,284         26,861   
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income

  $ 34,868      $ 34,998      $ 38,151       $ 64,532       $ 23,296       $ 23,905       $ 26,768       $ 46,295   
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income per common share:

                    

Basic

  $ 0.56        0.55        0.60       $ 1.01       $ 0.38       $ 0.39       $ 0.44       $ 0.75   

Diluted

  $ 0.54        0.54        0.59       $ 1.00       $ 0.37       $ 0.38       $ 0.42       $ 0.73   
Business and basis of presentation - Additional Information (Detail)
Feb. 2, 2013
Segment
State
Store
Product Information [Line Items]
 
Number of stores
550 
Number of states in which entity operates
45 
Number of segments in which entity operates
Summary of significant accounting policies - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Feb. 2, 2013
Jan. 28, 2012
Jan. 29, 2011
Product Information [Line Items]
 
 
 
Allowance for receivables net
$ 973 
$ 556 
 
Outstanding debt
 
Accrued liability loyalty programs
7,084 
6,207 
 
Cost of loyalty programs
22,044 
17,200 
12,942 
Duration of refund for sales return
60 days 
 
 
Recognized income from gift cards breakage due to change in circumstances
 
 
2,000 
Deferred gift card revenue
13,364 
10,573 
 
Total advertising costs
118,365 
99,446 
84,796 
Prepaid advertising costs
6,251 
4,721 
 
Stock compensation expense
13,375 
11,605 
11,155 
Stop loss coverage of employee health claims
150 
 
 
Stop loss coverage of general liability claims
100 
 
 
Stop loss coverage of workers compensation claims
250 
 
 
Product [Member]
 
 
 
Product Information [Line Items]
 
 
 
Revenue from Salon Service
$ 121,357 
$ 98,479 
$ 86,484 
Summary of significant accounting policies - Estimated Useful Lives or Expected Lease Term (Detail)
12 Months Ended
Feb. 2, 2013
Minimum [Member] |
Equipment and fixtures [Member]
 
Interest Cost Capitalized And Depreciation And Amortization Expenses For Property, Plant and Equipment [Line Items]
 
Estimated useful lives or the expected lease term
3 years 
Minimum [Member] |
Electronic equipment and software [Member]
 
Interest Cost Capitalized And Depreciation And Amortization Expenses For Property, Plant and Equipment [Line Items]
 
Estimated useful lives or the expected lease term
3 years 
Maximum [Member] |
Equipment and fixtures [Member]
 
Interest Cost Capitalized And Depreciation And Amortization Expenses For Property, Plant and Equipment [Line Items]
 
Estimated useful lives or the expected lease term
10 years 
Maximum [Member] |
Electronic equipment and software [Member]
 
Interest Cost Capitalized And Depreciation And Amortization Expenses For Property, Plant and Equipment [Line Items]
 
Estimated useful lives or the expected lease term
5 years 
Average [Member] |
Leasehold improvements [Member]
 
Interest Cost Capitalized And Depreciation And Amortization Expenses For Property, Plant and Equipment [Line Items]
 
Estimated useful lives or the expected lease term
10 years 
Property and Equipment - Components of Property and Equipment (Detail) (USD $)
In Thousands, unless otherwise specified
Feb. 2, 2013
Jan. 28, 2012
Interest Cost Capitalized And Depreciation And Amortization Expenses For Property, Plant and Equipment [Line Items]
 
 
Property and equipment
$ 838,390 
$ 673,354 
Less accumulated depreciation and amortization
(355,331)
(296,369)
Property and equipment, net
483,059 
376,985 
Equipment And Fixtures [Member]
 
 
Interest Cost Capitalized And Depreciation And Amortization Expenses For Property, Plant and Equipment [Line Items]
 
 
Property and equipment
323,069 
256,479 
Leasehold improvements [Member]
 
 
Interest Cost Capitalized And Depreciation And Amortization Expenses For Property, Plant and Equipment [Line Items]
 
 
Property and equipment
307,624 
256,487 
Electronic Equipment And Software [Member]
 
 
Interest Cost Capitalized And Depreciation And Amortization Expenses For Property, Plant and Equipment [Line Items]
 
 
Property and equipment
169,997 
126,790 
Construction in Progress [Member]
 
 
Interest Cost Capitalized And Depreciation And Amortization Expenses For Property, Plant and Equipment [Line Items]
 
 
Property and equipment
$ 37,700 
$ 33,598 
Property and Equipment - Additional Information (Detail) (USD $)
12 Months Ended
Feb. 2, 2013
Jan. 28, 2012
Interest Cost Capitalized And Depreciation And Amortization Expenses For Property, Plant and Equipment [Line Items]
 
 
Capitalized interest
$ 0 
$ 0 
Commitments and Contingencies - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Feb. 2, 2013
Jan. 28, 2012
Jan. 29, 2011
Operating Leased Assets [Line Items]
 
 
 
Non-cancelable operating lease terms, minimum
3 years 
 
 
Non-cancelable operating lease terms, maximum
10 years 
 
 
Total rent expense under operating leases
$ 115,755 
$ 94,175 
$ 82,365 
Retail Stores [Member]
 
 
 
Operating Leased Assets [Line Items]
 
 
 
Minimum lease payments for stores to be opened in next fiscal year
$ 210,375 
 
 
Commitments and Contingencies - Schedule of Future Minimum Lease Payments Under Operating Leases (Detail) (USD $)
In Thousands, unless otherwise specified
Feb. 2, 2013
Operating Leases Future Minimum Payments Due [Line Items]
 
2013
$ 155,542 
2014
160,168 
2015
153,441 
2016
144,991 
2017
133,574 
2018 and thereafter
460,811 
Total minimum lease payments
$ 1,208,527 
Accrued Liabilities - Schedule of Accrued Liabilities (Detail) (USD $)
In Thousands, unless otherwise specified
Feb. 2, 2013
Jan. 28, 2012
Schedule Of Accrued Liabilities [Line Items]
 
 
Accrued vendor liabilities (including accrued property and equipment costs)
$ 17,254 
$ 10,868 
Accrued customer liabilities
21,638 
17,978 
Accrued payroll, bonus and employee benefits
30,418 
24,449 
Accrued taxes, other
9,991 
7,619 
Other accrued liabilities
12,826 
13,497 
Accrued liabilities
$ 92,127 
$ 74,411 
Income taxes - Provision for Income Taxes (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Feb. 2, 2013
Jan. 28, 2012
Jan. 29, 2011
Current:
 
 
 
Federal
$ 83,606 
$ 53,495 
$ 32,288 
State
14,832 
11,022 
7,070 
Total current
98,438 
64,517 
39,358 
Deferred:
 
 
 
Federal
8,950 
10,796 
8,076 
State
(144)
31 
(335)
Total deferred
8,806 
10,827 
7,741 
Provision for income taxes
$ 107,244 
$ 75,344 
$ 47,099 
Income taxes - Reconciliation of Federal Statutory Rate to Company's Effective Tax Rate (Detail)
12 Months Ended
Feb. 2, 2013
Jan. 28, 2012
Jan. 29, 2011
Effective Income Tax Rate Continuing Operations Tax Rate Reconciliation [Line Items]
 
 
 
Federal statutory rate
35.00% 
35.00% 
35.00% 
State effective rate, net of federal tax benefit
3.40% 
3.70% 
3.70% 
Other
(0.10%)
(0.20%)
1.20% 
Effective tax rate
38.30% 
38.50% 
39.90% 
Income taxes - Company's Deferred Tax Assets and Liabilities (Detail) (USD $)
In Thousands, unless otherwise specified
Feb. 2, 2013
Jan. 28, 2012
Deferred tax assets:
 
 
Reserves not currently deductible
$ 18,160 
$ 13,207 
Employee benefits
5,029 
4,970 
Net operating loss & credit carryforwards
208 
179 
Accrued liabilities
3,854 
3,499 
Inventory valuation
1,280 
1,570 
Total deferred tax assets
28,531 
23,425 
Deferred tax liabilities:
 
 
Property and equipment
39,357 
32,414 
Deferred rent obligation
21,638 
16,572 
Prepaid expenses
8,140 
6,370 
Total deferred tax liabilities
69,135 
55,356 
Net deferred tax liability
$ (40,604)
$ (31,931)
Income taxes - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Feb. 2, 2013
Jan. 28, 2012
Feb. 2, 2013
Minimum [Member]
Feb. 2, 2013
Maximum [Member]
Income Tax Contingency [Line Items]
 
 
 
 
Net operating loss carryforwards (NOLs) for federal income tax purposes
$ 73 
 
 
 
Maximum utilization of net operating loss carryforwards (NOLs) annually
 
 
 
440 
Expiry Period of net operating loss carryforwards (NOLs)
 
 
2013 
2014 
Credit carryforwards for state income tax
281 
 
 
 
Reserve for uncertain tax positions
$ 0 
$ 0 
 
 
Notes payable - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Feb. 2, 2013
Jan. 28, 2012
Line Of Credit Facility Covenant Compliance [Line Items]
 
 
Letters of credit sub facility, maximum borrowing capacity
$ 10,000 
 
Additional credit available under the revolving facility with consent by each lender and other conditions
50,000 
 
Interest rate on outstanding borrowing under facility
Libor plus 1.50% 
 
Percentage of interest rate on outstanding borrowing under facility
1.50% 
 
Percentage of unused Line of Credit Facility Fee
0.225% 
 
Borrowings outstanding
Standby Letters of Credit [Member]
 
 
Line Of Credit Facility Covenant Compliance [Line Items]
 
 
Letters of credit sub facility, maximum borrowing capacity
$ 200,000 
 
Fair Value Measurements - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
Jan. 28, 2012
Feb. 2, 2013
Fair Value Inputs Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Financial liabilities related to non-qualified deferred compensation plan
$ 1,855 
$ 2,876 
Share Based Awards - Additional Information (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Feb. 2, 2013
Jan. 28, 2012
Jan. 29, 2011
Stock Based Awards [Line Items]
 
 
 
Director vesting period
10 years 
 
 
Employee vesting period
4 years 
 
 
Options Vesting rate
25.00% 
 
 
Stock options granted
241 
 
 
Compensation expense related to performance based grants
$ 0 
$ 0 
$ 425 
Cash received from option exercises under all share-based payment arrangements
31,530 
27,639 
17,100 
Total income tax benefit recognized in the income statement for the share-based compensation arrangements
5,364 
3,545 
3,300 
Actual tax benefit realized for the tax deductions from option exercise and restricted stock vesting
51,886 
29,439 
13,373 
Aggregate intrinsic value of outstanding options
101,965 
 
 
Aggregate intrinsic value of exercisable options
41,756 
 
 
Sale price of our common stock on the NASDAQ Global Select Market
$ 97.54 
 
 
Performance Based [Member]
 
 
 
Stock Based Awards [Line Items]
 
 
 
Performance-based options granted
Restricted Stock Award [Member]
 
 
 
Stock Based Awards [Line Items]
 
 
 
Director vesting period
 
1 year 
 
Employee vesting period
 
3 years 
 
Unrecognized compensation cost
3,989 
935 
 
Compensation expense
1,408 
1,874 
 
2011 Incentive Award Plan [Member]
 
 
 
Stock Based Awards [Line Items]
 
 
 
Issuance upon grant or exercise of awards
4,750 
 
 
Unissued shares under prior plan
746 
 
 
Compensation cost
11,967 
9,731 
9,918 
Weighted-average fair value of stock options granted
$ 46.29 
$ 34.81 
$ 13.58 
Unrecognized compensation cost
26,529 
 
 
Unrecognized compensation expense is expected to be recognized over a weighted-average period
2 years 
 
 
Total intrinsic value of options exercised
$ 138,291 
$ 86,030 
$ 42,118 
Share based awards - Estimated Grant Date Fair Value of Stock Options Weighted-Average Assumptions (Detail)
12 Months Ended
Feb. 2, 2013
Y
Jan. 28, 2012
Y
Jan. 29, 2011
Y
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Volatility rate
53.50% 
54.00% 
56.90% 
Average risk-free interest rate
1.20% 
1.50% 
2.20% 
Average expected life (in years)
6.3 
6.3 
5.6 
Dividend yield
   
   
   
Share based awards - Stock Option Activity (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Feb. 2, 2013
Jan. 28, 2012
Jan. 29, 2011
Compensation Related Costs Disclosure [Line Items]
 
 
 
Common Stock Options Outstanding Shares, Granted
241 
 
 
Employee Stock Option [Member]
 
 
 
Compensation Related Costs Disclosure [Line Items]
 
 
 
Common Stock Options Outstanding Shares, Beginning of year
3,559 
5,036 
5,791 
Common Stock Options Outstanding Shares, Granted
241 
621 
1,521 
Common Stock Options Outstanding Shares, Exercised
(1,795)
(1,936)
(2,033)
Common Stock Options Outstanding Shares, Canceled
(198)
(162)
(243)
Common Stock Options Outstanding Shares, End of year
1,807 
3,559 
5,036 
Common Stock Options Outstanding Shares, Exercisable at end of year
563 
1,437 
2,272 
Common Stock Options Outstanding Weighted- Average Exercise Price, Beginning of year
$ 26.46 
$ 16.55 
$ 11.18 
Common Stock Options Outstanding Weighted- Average Exercise Price, Granted
$ 89.99 
$ 66.58 
$ 26.12 
Common Stock Options Outstanding Weighted- Average Exercise Price, Exercised
$ 17.57 
$ 14.28 
$ 8.41 
Common Stock Options Outstanding Weighted- Average Exercise Price, Canceled
$ 46.28 
$ 17.75 
$ 16.73 
Common Stock Options Outstanding Weighted- Average Exercise Price, End of year
$ 41.60 
$ 26.46 
$ 16.55 
Common Stock Options Outstanding Weighted- Average Exercise Price, Exercisable at end of year
$ 24.85 
$ 14.27 
$ 12.38 
Restricted Stock [Member] |
Employee Stock Option [Member]
 
 
 
Compensation Related Costs Disclosure [Line Items]
 
 
 
Restricted Stock Outstanding Shares, Beginning of Year
22 
128 
 
Restricted Stock Outstanding Shares, Granted
65 
15 
128 
Restricted Stock Outstanding Shares, Vested
(5)
(71)
 
Restricted Stock Outstanding Shares, forfeited
(20)
(50)
 
Restricted Stock Outstanding Shares, End of year
62 
22 
128 
Restricted Stock Outstanding Weighted- Average Exercise Price, Beginning of year
$ 55.72 
$ 24.29 
 
Restricted Stock Outstanding Weighted- Average Exercise Price, Granted
$ 90.18 
$ 63.38 
$ 24.29 
Restricted Stock Outstanding Weighted- Average Exercise Price, Vested
$ 66.88 
$ 23.62 
 
Restricted Stock Outstanding Weighted- Average Exercise Price, Forfeited
$ 75.30 
$ 23.52 
 
Restricted Stock Outstanding Weighted- Average Exercise Price, End of year
$ 81.81 
$ 55.72 
$ 24.29 
Share based awards - Summary of Options Outstanding and Options Exercisable Under Stock Option Plan (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Feb. 2, 2013
Y
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding Weighted- average remaining contractual life (years)
Options exercisable Weighted- average remaining contractual life (years)
Number of options, outstanding
1,806,801 
Number of options, exercisable
562,850 
Weighted- average exercise price, options outstanding
$ 41.60 
Weighted- average exercise price, options exercisable
$ 24.85 
0.18 - 1.11 [Member]
 
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding Weighted- average remaining contractual life (years)
Options exercisable Weighted- average remaining contractual life (years)
Number of options, outstanding
11,813 
Number of options, exercisable
11,813 
Weighted- average exercise price, options outstanding
$ 1.11 
Weighted- average exercise price, options exercisable
$ 1.11 
1.12 - 2.62 [Member]
 
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding Weighted- average remaining contractual life (years)
Options exercisable Weighted- average remaining contractual life (years)
Number of options, outstanding
7,523 
Number of options, exercisable
7,523 
Weighted- average exercise price, options outstanding
$ 2.62 
Weighted- average exercise price, options exercisable
$ 2.62 
2.63 - 4.12 [Member]
 
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding Weighted- average remaining contractual life (years)
Options exercisable Weighted- average remaining contractual life (years)
Number of options, outstanding
8,116 
Number of options, exercisable
8,116 
Weighted- average exercise price, options outstanding
$ 3.83 
Weighted- average exercise price, options exercisable
$ 3.83 
4.13 - 9.18 [Member]
 
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding Weighted- average remaining contractual life (years)
Options exercisable Weighted- average remaining contractual life (years)
Number of options, outstanding
32,220 
Number of options, exercisable
13,160 
Weighted- average exercise price, options outstanding
$ 6.57 
Weighted- average exercise price, options exercisable
$ 6.98 
9.19 - 15.81 [Member]
 
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding Weighted- average remaining contractual life (years)
Options exercisable Weighted- average remaining contractual life (years)
Number of options, outstanding
346,052 
Number of options, exercisable
255,975 
Weighted- average exercise price, options outstanding
$ 13.04 
Weighted- average exercise price, options exercisable
$ 12.95 
15.82 - 37.85 [Member]
 
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding Weighted- average remaining contractual life (years)
Options exercisable Weighted- average remaining contractual life (years)
Number of options, outstanding
685,698 
Number of options, exercisable
184,932 
Weighted- average exercise price, options outstanding
$ 26.04 
Weighted- average exercise price, options exercisable
$ 26.58 
37.86 - 69.96 [Member]
 
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding Weighted- average remaining contractual life (years)
Options exercisable Weighted- average remaining contractual life (years)
Number of options, outstanding
502,637 
Number of options, exercisable
81,311 
Weighted- average exercise price, options outstanding
$ 66.65 
Weighted- average exercise price, options exercisable
$ 68.89 
69.97 - 101.53 [Member]
 
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding Weighted- average remaining contractual life (years)
10 
Options exercisable Weighted- average remaining contractual life (years)
   
Number of options, outstanding
212,742 
Number of options, exercisable
   
Weighted- average exercise price, options outstanding
$ 89.31 
Weighted- average exercise price, options exercisable
   
Minimum [Member] |
0.18 - 1.11 [Member]
 
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding
$ 0.18 
Minimum [Member] |
1.12 - 2.62 [Member]
 
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding
$ 1.12 
Minimum [Member] |
2.63 - 4.12 [Member]
 
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding
$ 2.63 
Minimum [Member] |
4.13 - 9.18 [Member]
 
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding
$ 4.13 
Minimum [Member] |
9.19 - 15.81 [Member]
 
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding
$ 9.19 
Minimum [Member] |
15.82 - 37.85 [Member]
 
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding
$ 15.82 
Minimum [Member] |
37.86 - 69.96 [Member]
 
Compensation Related Costs Disclosure [Line Items]
 
Options outstanding
$ 37.86