ULTA BEAUTY, INC., 10-K filed on 4/2/2014
Annual Report
Document and Entity Information (USD $)
12 Months Ended
Feb. 1, 2014
Mar. 27, 2014
Aug. 3, 2013
Document And Entity Information [Abstract]
 
 
 
Document Type
10-K 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Feb. 01, 2014 
 
 
Document Fiscal Year Focus
2014 
 
 
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
--02-01 
 
 
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
 
64,295,291 
 
Entity Public Float
 
 
$ 4,815,407,000 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Feb. 1, 2014
Feb. 2, 2013
Current assets:
 
 
Cash and cash equivalents
$ 419,476 
$ 320,475 
Receivables, net
47,049 
41,515 
Merchandise inventories, net
457,933 
361,125 
Prepaid expenses and other current assets
55,993 
50,452 
Deferred income taxes
22,246 
15,757 
Total current assets
1,002,697 
789,324 
Property and equipment, net
595,736 
483,059 
Deferred compensation plan assets
4,294 
2,866 
Total assets
1,602,727 
1,275,249 
Current liabilities:
 
 
Accounts payable
148,282 
118,886 
Accrued liabilities
103,180 
92,127 
Accrued income taxes
15,349 
10,054 
Total current liabilities
266,811 
221,067 
Deferred rent
261,630 
208,003 
Deferred income taxes
66,718 
56,361 
Other long-term liabilities
4,474 
2,876 
Total liabilities
599,633 
488,307 
Commitments and contingencies (note 4)
   
   
Stockholders' equity:
 
 
Common stock, $.01 par value, 400,000 shares authorized; 64,793 and 64,565 shares issued; 64,231 and 64,009 shares outstanding; at February 1, 2014, and February 2, 2013, respectively
647 
645 
Treasury stock-common, at cost
(8,125)
(7,494)
Additional paid-in capital
548,194 
496,930 
Retained earnings
462,378 
296,861 
Total stockholders' equity
1,003,094 
786,942 
Total liabilities and stockholders' equity
$ 1,602,727 
$ 1,275,249 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Per Share data, unless otherwise specified
Feb. 1, 2014
Feb. 2, 2013
Statement Of Financial Position [Abstract]
 
 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
400,000 
400,000 
Common stock, shares issued
64,793 
64,565 
Common stock, shares outstanding
64,231 
64,009 
Consolidated Statements of Income (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Feb. 1, 2014
Feb. 2, 2013
Jan. 28, 2012
Income Statement [Abstract]
 
 
 
Net sales
$ 2,670,573 
$ 2,220,256 
$ 1,776,151 
Cost of sales
1,729,325 
1,436,582 
1,159,311 
Gross profit
941,248 
783,674 
616,840 
Selling, general and administrative expenses
596,390 
488,880 
410,658 
Pre-opening expenses
17,270 
14,816 
9,987 
Operating income
327,588 
279,978 
196,195 
Interest (income) expense
(118)
185 
587 
Income before income taxes
327,706 
279,793 
195,608 
Income tax expense
124,857 
107,244 
75,344 
Net income
$ 202,849 
$ 172,549 
$ 120,264 
Net income per common share:
 
 
 
Basic
$ 3.17 
$ 2.73 
$ 1.96 
Diluted
$ 3.15 
$ 2.68 
$ 1.90 
Weighted average common shares outstanding:
 
 
 
Basic
63,992 
63,250 
61,259 
Diluted
64,461 
64,396 
63,334 
Dividends declared per common share
    
$ 1.00 
    
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Feb. 1, 2014
Feb. 2, 2013
Jan. 28, 2012
Operating activities
 
 
 
Net income
$ 202,849 
$ 172,549 
$ 120,264 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
106,283 
88,233 
75,931 
Deferred income taxes
3,868 
8,673 
10,827 
Non-cash stock compensation charges
16,003 
13,375 
11,605 
Excess tax benefits from stock-based compensation
(13,378)
(47,345)
(25,899)
Loss on disposal of property and equipment
3,902 
1,074 
1,324 
Change in operating assets and liabilities:
 
 
 
Receivables
(5,534)
(15,362)
(3,861)
Merchandise inventories
(96,808)
(116,478)
(26,131)
Prepaid expenses and other current assets
(5,541)
(9,888)
(10,640)
Income taxes
18,673 
53,397 
40,585 
Accounts payable
29,396 
32,444 
(651)
Accrued liabilities
14,215 
13,789 
(1,358)
Deferred rent
53,627 
44,540 
28,891 
Other assets and liabilities
170 
 
 
Net cash provided by operating activities
327,725 
239,001 
220,887 
Investing activities
 
 
 
Purchases of property and equipment
(226,024)
(188,578)
(128,636)
Net cash used in investing activities
(226,024)
(188,578)
(128,636)
Financing activities
 
 
 
Repurchase of common shares
(37,337)
 
 
Dividends paid
 
(62,482)
 
Excess tax benefits from stock-based compensation
13,378 
47,345 
25,899 
Stock options exercised
21,890 
31,530 
27,639 
Purchase of treasury shares
(631)
(79)
(3,236)
Net cash (used in) provided by financing activities
(2,700)
16,314 
50,302 
Net increase in cash and cash equivalents
99,001 
66,737 
142,553 
Cash and cash equivalents at beginning of year
320,475 
253,738 
111,185 
Cash and cash equivalents at end of year
419,476 
320,475 
253,738 
Supplemental cash flow information
 
 
 
Cash paid for income taxes (net of refunds)
101,598 
45,354 
24,162 
Noncash investing and financing activities:
 
 
 
Change in property and equipment included in accrued liabilities
$ (3,161)
$ 6,803 
$ (495)
Consolidated Statements of Stockholders' Equity (USD $)
In Thousands, except Share data
Total
Common Stock [Member]
Treasury - Common Stock [Member]
Additional Paid-In Capital [Member]
Retained Earnings [Member]
Balance at Jan. 29, 2011
$ 402,533 
$ 606 
$ (4,179)
$ 339,576 
$ 66,530 
Balance, Shares at Jan. 29, 2011
 
 
(505,000)
 
 
Balance, Shares at Jan. 29, 2011
 
60,707,000 
 
 
 
Stock options exercised
27,639 
21 
 
27,618 
 
Stock options exercised, Shares
 
2,057,000 
 
 
 
Purchase of treasury shares
(3,236)
 
(3,236)
 
 
Purchase of treasury shares, Shares
 
 
(50,000)
 
 
Net income
120,264 
 
 
 
120,264 
Excess tax benefits from stock-based compensation
25,899 
 
 
25,899 
 
Stock compensation charge
11,605 
 
 
11,605 
 
Balance at Jan. 28, 2012
584,704 
627 
(7,415)
404,698 
186,794 
Balance, Shares at Jan. 28, 2012
 
 
(555,000)
 
 
Balance, Shares at Jan. 28, 2012
 
62,764,000 
 
 
 
Stock options exercised and other awards
31,530 
18 
 
31,512 
 
Stock options exercised and other awards, Shares
 
1,801,000 
 
 
 
Purchase of treasury shares
(79)
 
(79)
 
 
Purchase of treasury shares, Shares
 
 
(1,000)
 
 
Net income
172,549 
 
 
 
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)
Balance at Feb. 02, 2013
786,942 
645 
(7,494)
496,930 
296,861 
Balance, Shares at Feb. 02, 2013
 
 
(556,000)
 
 
Balance, Shares at Feb. 02, 2013
 
64,565,000 
 
 
 
Stock options exercised and other awards
21,890 
 
21,883 
 
Stock options exercised and other awards, Shares
 
729,000 
 
 
 
Purchase of treasury shares
(631)
 
(631)
 
 
Purchase of treasury shares, Shares
 
 
(6,000)
 
 
Net income
202,849 
 
 
 
202,849 
Excess tax benefits from stock-based compensation
13,378 
 
 
13,378 
 
Stock compensation charge
16,003 
 
 
16,003 
 
Repurchase of common shares
(37,337)
(5)
 
 
(37,332)
Repurchase of common shares, Shares
 
(501,000)
 
 
Balance at Feb. 01, 2014
$ 1,003,094 
$ 647 
$ (8,125)
$ 548,194 
$ 462,378 
Balance, Shares at Feb. 01, 2014
 
 
(562,000)
 
 
Balance, Shares at Feb. 01, 2014
 
64,793,000 
 
 
 
Business and basis of presentation
Business and basis of presentation

1.    Business and basis of presentation

Ulta Salon, Cosmetics & Fragrance, Inc. 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 1, 2014, the Company operated 675 stores in 46 states. As used in these notes and throughout this Annual Report on Form 10-K, all references to “we,” “us,” “our,” “Ulta” or the “Company” refer to Ulta Salon, Cosmetics & Fragrance, Inc. and its consolidated subsidiary, Ulta Inc. 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 1, 2014 (fiscal 2013), February 2, 2013 (fiscal 2012) and January 28, 2012 (fiscal 2011) were 52, 53 and 52 week years, respectively.

Consolidation

The Company’s consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany accounts, transactions and unrealized profit were eliminated in consolidation.

Use of estimates

The preparation of consolidated 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 consolidated 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 and landlord construction allowances earned but not yet received. These receivables are computed based on provisions of the vendor and lease agreements in place and the Company’s completed performance. The Company’s vendors are primarily U.S.-based producers of consumer products and real estate developers and landlords. 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 and landlords 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 receivable for vendor allowances was $30,591 and $28,236 as of February 1, 2014 and February 2, 2013, respectively and the receivable for landlord allowances was $14,128 and $11,595 as of February 1, 2014 and February 2, 2013, respectively. The allowance for doubtful receivables totaled $915 and $973 as of February 1, 2014 and February 2, 2013, 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 1, 2014 and February 2, 2013.

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

During fiscal 2013, the Company operated 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. In early fiscal 2014 we converted the remaining The Club at Ulta loyalty customers to ULTAmate Rewards, a points-based program. ULTAmate Rewards enables customers to earn points based on their purchases. Points earned are valid for one year and may be redeemed on any product we sell. 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 1, 2014 and February 2, 2013 was $7,740 and $7,084 respectively. The cost of these programs, which was $27,588, $22,044 and $17,200 in fiscal 2013, 2012 and 2011, 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 $145,815, $121,357 and $98,479 for fiscal 2013, 2012 and 2011, 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 based on delivery of merchandise to the customer. E-commerce revenue amounted to $95,809, $55,086 and $41,333 for fiscal 2013, 2012 and 2011, respectively.

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. 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 $16,439 and $13,364 at February 1, 2014 and February 2, 2013, 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 $140,774, $118,365 and $99,446 for fiscal 2013, 2012 and 2011, respectively. Advertising expense as a percentage of sales was 5.3%, 5.3% and 5.6% for fiscal 2013, 2012 and 2011, respectively Prepaid advertising costs included in prepaid expenses and other current assets were $6,891 and $6,251 as of February 1, 2014 and February 2, 2013, 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 a majority of 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. 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

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 $16,003, $13,375 and $11,605 for fiscal 2013, 2012 and 2011, 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 per claim 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:

 

(In thousands)

   February 1,
2014
    February 2,
2013
 

Equipment and fixtures

   $ 390,650      $ 323,069   

Leasehold improvements

     376,796        307,624   

Electronic equipment and software

     218,979        169,997   

Construction-in-progress

     36,231        37,700   
  

 

 

   

 

 

 
     1,022,656        838,390   

Less accumulated depreciation and amortization

     (426,920     (355,331
  

 

 

   

 

 

 

Property and equipment, net

   $ 595,736      $ 483,059   
  

 

 

   

 

 

 

The Company had no capitalized interest for fiscal 2013 and 2012 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 2013, 2012 and 2011. Total rent expense under operating leases was $138,086, $115,755 and $94,175 for fiscal 2013, 2012 and 2011, respectively. Future minimum lease payments under operating leases as of February 1, 2014, are as follows:

 

Fiscal year

   Operating
Leases

(In  thousands)
 

2014

   $ 184,771   

2015

     188,655   

2016

     181,507   

2017

     168,732   

2018

     151,546   

2019 and thereafter

     532,453   
  

 

 

 

Total minimum lease payments

   $ 1,407,664   
  

 

 

 

Included in the operating lease schedule above is $164,771 of minimum lease payments for stores that are expected to open in fiscal 2014.

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. On August 8, 2013, the plaintiff asked the court to certify the proposed class and the Company opposed the plaintiff’s request and is waiting for the court to issue a decision. 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 has not recorded any accruals for this matter because the Company’s potential liability for the matter is not probable and cannot be reasonably estimated based on currently available information. The Company cannot determine a reasonable estimate of the maximum possible loss or range of loss for this matter given that it is in the early stage of the litigation process and is subject to the inherent uncertainties of litigation (such as the strength of the Company’s legal defenses and the availability of insurance recovery). Although the maximum amount of liability that may ultimately result from this matter cannot be predicted with certainty, management expects that this matter, when ultimately resolved, will not have a material adverse effect on the Company’s consolidated financial position or liquidity. It is possible, however, that the ultimate resolution of this matter could have a material adverse effect on the Company’s results of operations in a particular quarter or year if such resolution results in a significant liability for the Company.

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:

 

(In thousands)

   February 1,
2014
     February 2,
2013
 

Accrued vendor liabilities (including accrued property and equipment costs)

   $ 15,631       $ 17,254   

Accrued customer liabilities

     25,507         21,638   

Accrued payroll, bonus and employee benefits

     33,642         30,418   

Accrued taxes, other

     12,788         9,991   

Other accrued liabilities

     15,612         12,826   
  

 

 

    

 

 

 

Accrued liabilities

   $ 103,180       $ 92,127   
  

 

 

    

 

 

 
Income taxes
Income taxes

6.    Income taxes

The provision for income taxes consists of the following:

 

(In thousands)

   Fiscal
2013
    Fiscal
2012
    Fiscal
2011
 

Current:

      

Federal

   $ 105,731      $ 83,606      $ 53,495   

State

     15,310        14,832        11,022   
  

 

 

   

 

 

   

 

 

 

Total current

     121,041        98,438        64,517   

Deferred:

      

Federal

     3,891        8,950        10,796   

State

     (75     (144     31   
  

 

 

   

 

 

   

 

 

 

Total deferred

     3,816        8,806        10,827   
  

 

 

   

 

 

   

 

 

 

Provision for income taxes

   $ 124,857      $ 107,244      $ 75,344   
  

 

 

   

 

 

   

 

 

 

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

 

     Fiscal
2013
    Fiscal
2012
    Fiscal
2011
 

Federal statutory rate

     35.0     35.0     35.0

State effective rate, net of federal tax benefit

     3.0     3.4     3.7

Other

     0.1     (0.1 %)      (0.2 %) 
  

 

 

   

 

 

   

 

 

 

Effective tax rate

     38.1     38.3     38.5
  

 

 

   

 

 

   

 

 

 

 

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

 

(In thousands)

   February 1,
2014
    February 2,
2013
 

Deferred tax assets:

    

Reserves not currently deductible

   $ 24,721      $ 18,160   

Employee benefits

     6,290        5,029   

Net operating loss & credit carryforwards

     402        208   

Accrued liabilities

     3,927        3,854   

Inventory valuation

     1,708        1,280   
  

 

 

   

 

 

 

Total deferred tax assets

     37,048        28,531   

Deferred tax liabilities:

    

Property and equipment

     44,288        39,357   

Deferred rent obligation

     28,529        21,638   

Prepaid expenses

     8,703        8,140   
  

 

 

   

 

 

 

Total deferred tax liabilities

     81,520        69,135   
  

 

 

   

 

 

 

Net deferred tax liability

   $ (44,472   $ (40,604
  

 

 

   

 

 

 

At February 1, 2014, the Company had $402 credit carryforwards for state income tax purposes.

The Company accounts for uncertainty in income taxes in accordance with the ASC rules for income taxes. The reserve for uncertain tax positions was $795 at February 1, 2014. The balance is the Company’s best estimate of the potential liability for uncertain tax positions. The increase in the liability for income taxes associated with uncertain tax positions relates to a current year position. There was no reserve for uncertain tax positions at February 2, 2013. A reconciliation of the Company’s unrecognized tax benefits, excluding interest and penalties, is as follows:

 

(In thousands)

   February 1,
2014
     February 2,
2013
 

Balance at beginning of the period

   $       $   —   

Increase due to a current year position

     795           

Decrease due to a prior period position

               
  

 

 

    

 

 

 

Balance at the end of the period

   $ 795       $   
  

 

 

    

 

 

 

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 consolidated financial statements. Income tax-related interest and penalties were insignificant for fiscal 2013, 2012 and 2011.

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 2011 and, this applies to examinations by the State authorities before 2009.

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.

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.

On December 6, 2013, the Company entered into Amendment No. 2 to the Amended and restated Loan and Security Agreement (the Loan Amendment) with the lender group. The Loan Amendment extends the maturity of the facility to December 2018. 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 0.20%.

As of February 1, 2014 and February 2, 2013, the Company had no borrowings outstanding under the credit facility and the Company was in compliance with all terms and covenants of the 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.

Fair value is measured using inputs from the three levels of the fair value hierarchy, which are described 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 1, 2014, the Company held financial liabilities of $3,678 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. As of February 1, 2014, the 2011 Plan reserves for the issuance upon grant or exercise of awards up to 4,691 shares of the Company’s common stock.

The Company recorded stock compensation expense of $16,003, $13,375 and $11,605 for fiscal 2013, 2012 and 2011, respectively. Cash received from option exercises under all share-based payment arrangements for fiscal 2013, 2012 and 2011 was $21,890, $31,530 and $27,639, respectively. The total income tax benefit recognized in the income statement for equity compensation arrangements was $4,812, $5,364 and $3,545 for fiscal 2013, 2012 and 2011, respectively. The actual tax benefit realized for the tax deductions from option exercise and restricted stock vesting of the share-based payment arrangements totaled $18,169, $51,886 and $29,439, respectively, for fiscal 2013, 2012 and 2011.

Employee stock options

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
2013
    Fiscal
2012
    Fiscal
2011
 

Volatility rate

     49.2     53.5     54.0

Average risk-free interest rate

     0.9     1.2     1.5

Average expected life (in years)

     4.4        6.3        6.3   

Dividend yield

     None        None        None   

During fiscal 2013 the Company made changes to update the valuation assumptions to Company specific information. These changes are reflected in the table above and had no material impact on the calculation. For fiscal 2013 the expected volatility was based on the historical volatility of the ULTA Common Shares. The risk free interest rate was 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. For fiscal 2013, the expected life of options granted was derived from historical data on ULTA stock option exercises. Prior to 2013, we had limited historical data related to exercise behavior since our initial public offering on October 30, 2007. As a result, the Company elected to use the shortcut approach to determine the expected life in accordance with the SEC Staff Accounting Bulletin on share-based payments and the expected volatility was based on the historical volatility of a peer group of publicly-traded companies. Beginning in fiscal 2013, the Company introduced a forfeiture rate. Forfeitures of options are estimated at the grant date based on historical rates of the Company’s stock option activity and reduce the compensation expense recognized. 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 302 stock options during fiscal 2013. The compensation cost that has been charged against income for stock option grants was $10,214, $11,967, and $9,731 for fiscal 2013, 2012, and 2011, respectively. The weighted-average grant date fair value of options granted in fiscal 2013, 2012 and 2011 was $34.31, $46.29 and $34.81, respectively. The total fair value of stock options issued that vested during fiscal 2013, 2012 and 2011 was $10,544, $12,089 and $10,451, respectively. At February 1, 2014, there was approximately $18,074 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 $49,404, $138,291 and $86,030 in fiscal 2013, 2012 and 2011, respectively.

 

A summary of the status of the Company’s stock option activity is presented in the following table (shares in thousands):

 

     Fiscal 2013      Fiscal 2012      Fiscal 2011  
     Shares     Weighted-
Average
Exercise Price
     Shares     Weighted-
Average
Exercise Price
     Shares     Weighted-
Average
Exercise Price
 

Common Stock Options Outstanding

              

Beginning of year

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

Granted

     302        84.50         241        89.99         621        66.58   

Exercised

     (705     31.07         (1,795     17.57         (1,936     14.28   

Forfeited

     (314     53.15         (198     46.28         (162     17.75   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

End of year

     1,090      $ 56.94         1,807      $ 41.60         3,559      $ 26.46   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Exercisable at end of year

     363      $ 34.37         563      $ 24.85         1,437      $ 14.27   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Vested and Expected to vest

     1,046      $ 56.47         1,807      $ 41.60         3,559      $ 26.46   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

The following table presents information related to options outstanding and options exercisable at February 1, 2014, under the Company’s stock option plans based on ranges of exercise prices (shares in thousands):

 

     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
 

$1.11 - 3.33

     5         1       $ 1.54         5         1       $ 1.54   

6.29 - 9.18

     19         5         6.46         19         5         6.46   

9.67 - 15.81

     146         5         13.30         146         5         13.30   

22.86 - 37.85

     251         6         28.02         89         7         29.16   

47.19 - 69.96

     292         8         66.80         74         8         68.28   

74.91 - 126.93

     377         9         88.69         30         8         91.07   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

End of year

     1,090         7       $ 56.94         363         6       $ 34.37   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The aggregate intrinsic value of outstanding and exercisable options as of February 1, 2014 was $33,864 and $18,809, respectively. The last reported sale price of our common stock on the NASDAQ Global Select Market on February 1, 2014 was $85.71 per share.

Restricted stock awards

The Company issues 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 2013, 2012 and 2011 was $5,789, $1,408 and $1,874, respectively. Beginning in fiscal 2013, the Company introduced a forfeiture rate. Forfeitures of restricted stock awards are estimated at the grant date based on historical rates of the Company’s restricted stock award activity and reduce the compensation expense recognized. At February 1, 2014, unrecognized compensation cost related to restricted stock awards was $9,100. The unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately two years.

 

A summary of the status of the Company’s restricted stock activity is presented in the following table (shares in thousands):

 

     Fiscal 2013      Fiscal 2012      Fiscal 2011  
     Shares     Weighted-
Average
Grant Date
Fair Value
     Shares     Weighted-
Average
Grant Date
Fair Value
     Shares     Weighted-
Average
Grant Date
Fair Value
 

Restricted Stock Outstanding

              

Beginning of year

     62      $ 81.81         22      $ 55.72         128      $ 24.29   

Granted

     141        86.07         65        90.18         15        63.38   

Vested

     (25     81.41         (5     66.88         (71     23.62   

Forfeited

     (16     75.39         (20     75.30         (50     23.52   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

End of year

     162      $ 87.54         62      $ 81.81         22      $ 55.72   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Expected to vest

     152        87.54         62      $ 81.81         22      $ 55.72   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

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  

(In thousands, except per share data)

   February 1,
2014
     February 2,
2013
     January 28,
2012
 

Numerator for diluted net income per share — net income

   $ 202,849       $ 172,549       $ 120,264   

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

     63,992         63,250         61,259   

Dilutive effect of stock options and non-vested stock

     469         1,146         2,075   
  

 

 

    

 

 

    

 

 

 

Denominator for diluted net income per share

     64,461         64,396         63,334   

Net income per common share:

        

Basic

   $ 3.17       $ 2.73       $ 1.96   

Diluted

   $ 3.15       $ 2.68       $ 1.90   

The denominator for diluted net income per common share for fiscal years 2013, 2012 and 2011 exclude 658, 533 and 621 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 2013, 2012 and 2011, the Company match was 100% of the first 3.0%, 3.0% and 2.5%, respectively, of eligible compensation. For fiscal years 2013, 2012 and 2011, the Company match was $3,532, $3,040 and $2,146, 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 $3,678 and 2,876 as of February 1, 2014 and February 2, 2013, respectively. 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 $4,294 and $2,866 as of February 1, 2014 and February 2, 2013, respectively. Total expense recorded under this plan is included in selling, general and administrative expenses and was insignificant during fiscal 2013 and 2012.

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
 
     (In thousands)  

Fiscal 2013

         

Allowance for doubtful accounts

   $ 973      $ 300       $ (358 )(a)    $ 915   

Shrink reserve

     4,020        16,298         (10,960     9,358   

Inventory — lower of cost or market reserve

     2,364        4,522         (2,025     4,861   

Insurance:

         

Workers Comp / General Liability Prepaid Asset

     (2,400 )(b)      7,060         (6,477     (1,817

Employee Health Care Accrued Liability

     2,232        34,422         (34,048     2,606   

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   

 

 

(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 2013 and fiscal 2012. The Company uses a 13 week (14 week in fourth quarter fiscal 2012) fiscal quarter ending on the last Saturday of the quarter.

 

    2013     2012  
    First     Second     Third     Fourth     First     Second     Third     Fourth  
(In thousands, except per
share data)
                                               

Net sales

  $ 582,712      $ 600,998      $ 618,781      $ 868,082      $ 474,098      $ 481,683      $ 505,640      $ 758,835   

Cost of sales

    378,763        388,921        387,120        574,521        303,186        314,058        320,147        499,191   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

    203,949        212,077        231,661        293,561        170,912        167,625        185,493        259,644   

Selling, general and administrative expenses

    133,048        134,400        151,306        177,636        110,943        106,040        117,934        153,963   

Pre-opening expenses

    3,206        4,809        7,468        1,787        2,523        4,126        6,252        1,915   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    67,695        72,868        72,887        114,138        57,446        57,459        61,307        103,766   

Interest (income) expense

    (24     (18     (7     (69     21        104        39        21   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

    67,719        72,886        72,894        114,207        57,425        57,355        61,268        103,745   

Income tax expense

    25,893        27,975        27,464        43,525        22,557        22,357        23,117        39,213   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $ 41,826      $ 44,911      $ 45,430      $ 70,682      $ 34,868      $ 34,998      $ 38,151      $ 64,532   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share:

               

Basic

  $ 0.66        0.70        0.71      $ 1.10      $ 0.56        0.55        0.60      $ 1.01   

Diluted

  $ 0.65        0.70        0.70      $ 1.09      $ 0.54        0.54        0.59      $ 1.00   

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.

Stock repurchase program
Stock repurchase program
14. Stock repurchase program

On March 18, 2013, the Company 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. The stock repurchase program does not have an expiration date and may be suspended or discontinued at any time. During fiscal 2013, we purchased 500,500 shares of common stock for $37.3 million at an average price of $74.58.

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 1, 2014 (fiscal 2013), February 2, 2013 (fiscal 2012) and January 28, 2012 (fiscal 2011) were 52, 53 and 52 week years, respectively.

Consolidation

The Company’s consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany accounts, transactions and unrealized profit were eliminated in consolidation.

Use of estimates

The preparation of consolidated 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 consolidated 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 and landlord construction allowances earned but not yet received. These receivables are computed based on provisions of the vendor and lease agreements in place and the Company’s completed performance. The Company’s vendors are primarily U.S.-based producers of consumer products and real estate developers and landlords. 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 and landlords 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 receivable for vendor allowances was $30,591 and $28,236 as of February 1, 2014 and February 2, 2013, respectively and the receivable for landlord allowances was $14,128 and $11,595 as of February 1, 2014 and February 2, 2013, respectively. The allowance for doubtful receivables totaled $915 and $973 as of February 1, 2014 and February 2, 2013, 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 1, 2014 and February 2, 2013.

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

During fiscal 2013, the Company operated 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. In early fiscal 2014 we converted the remaining The Club at Ulta loyalty customers to ULTAmate Rewards, a points-based program. ULTAmate Rewards enables customers to earn points based on their purchases. Points earned are valid for one year and may be redeemed on any product we sell. 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 1, 2014 and February 2, 2013 was $7,740 and $7,084 respectively. The cost of these programs, which was $27,588, $22,044 and $17,200 in fiscal 2013, 2012 and 2011, 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 $145,815, $121,357 and $98,479 for fiscal 2013, 2012 and 2011, 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 based on delivery of merchandise to the customer. E-commerce revenue amounted to $95,809, $55,086 and $41,333 for fiscal 2013, 2012 and 2011, respectively.

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. 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 $16,439 and $13,364 at February 1, 2014 and February 2, 2013, 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 $140,774, $118,365 and $99,446 for fiscal 2013, 2012 and 2011, respectively. Advertising expense as a percentage of sales was 5.3%, 5.3% and 5.6% for fiscal 2013, 2012 and 2011, respectively Prepaid advertising costs included in prepaid expenses and other current assets were $6,891 and $6,251 as of February 1, 2014 and February 2, 2013, 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 a majority of 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. 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

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 $16,003, $13,375 and $11,605 for fiscal 2013, 2012 and 2011, 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 per claim 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)
Summary of 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:

 

(In thousands)

   February 1,
2014
    February 2,
2013
 

Equipment and fixtures

   $ 390,650      $ 323,069   

Leasehold improvements

     376,796        307,624   

Electronic equipment and software

     218,979        169,997   

Construction-in-progress

     36,231        37,700   
  

 

 

   

 

 

 
     1,022,656        838,390   

Less accumulated depreciation and amortization

     (426,920     (355,331
  

 

 

   

 

 

 

Property and equipment, net

   $ 595,736      $ 483,059   
  

 

 

   

 

 

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

Future minimum lease payments under operating leases as of February 1, 2014, are as follows:

 

Fiscal year

   Operating
Leases

(In  thousands)
 

2014

   $ 184,771   

2015

     188,655   

2016

     181,507   

2017

     168,732   

2018

     151,546   

2019 and thereafter

     532,453   
  

 

 

 

Total minimum lease payments

   $ 1,407,664   
  

 

 

 

Accrued liabilities (Tables)
Schedule of Accrued Liabilities

Accrued liabilities consist of the following:

 

(In thousands)

   February 1,
2014
     February 2,
2013
 

Accrued vendor liabilities (including accrued property and equipment costs)

   $ 15,631       $ 17,254   

Accrued customer liabilities

     25,507         21,638   

Accrued payroll, bonus and employee benefits

     33,642         30,418   

Accrued taxes, other

     12,788         9,991   

Other accrued liabilities

     15,612         12,826   
  

 

 

    

 

 

 

Accrued liabilities

   $ 103,180       $ 92,127   
  

 

 

    

 

 

 
Income taxes (Tables)

The provision for income taxes consists of the following:

 

(In thousands)

   Fiscal
2013
    Fiscal
2012
    Fiscal
2011
 

Current:

      

Federal

   $ 105,731      $ 83,606      $ 53,495   

State

     15,310        14,832        11,022   
  

 

 

   

 

 

   

 

 

 

Total current

     121,041        98,438        64,517   

Deferred:

      

Federal

     3,891        8,950        10,796   

State

     (75     (144     31   
  

 

 

   

 

 

   

 

 

 

Total deferred

     3,816        8,806        10,827   
  

 

 

   

 

 

   

 

 

 

Provision for income taxes

   $ 124,857      $ 107,244      $ 75,344   
  

 

 

   

 

 

   

 

 

 

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

 

     Fiscal
2013
    Fiscal
2012
    Fiscal
2011
 

Federal statutory rate

     35.0     35.0     35.0

State effective rate, net of federal tax benefit

     3.0     3.4     3.7

Other

     0.1     (0.1 %)      (0.2 %) 
  

 

 

   

 

 

   

 

 

 

Effective tax rate

     38.1     38.3     38.5
  

 

 

   

 

 

   

 

 

 

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

 

(In thousands)

   February 1,
2014
    February 2,
2013
 

Deferred tax assets:

    

Reserves not currently deductible

   $ 24,721      $ 18,160   

Employee benefits

     6,290        5,029   

Net operating loss & credit carryforwards

     402        208   

Accrued liabilities

     3,927        3,854   

Inventory valuation

     1,708        1,280   
  

 

 

   

 

 

 

Total deferred tax assets

     37,048        28,531   

Deferred tax liabilities:

    

Property and equipment

     44,288        39,357   

Deferred rent obligation

     28,529        21,638   

Prepaid expenses

     8,703        8,140   
  

 

 

   

 

 

 

Total deferred tax liabilities

     81,520        69,135   
  

 

 

   

 

 

 

Net deferred tax liability

   $ (44,472   $ (40,604
  

 

 

   

 

 

 

A reconciliation of the Company’s unrecognized tax benefits, excluding interest and penalties, is as follows:

 

(In thousands)

   February 1,
2014
     February 2,
2013
 

Balance at beginning of the period

   $       $   —   

Increase due to a current year position

     795           

Decrease due to a prior period position

               
  

 

 

    

 

 

 

Balance at the end of the period

   $ 795       $   
  

 

 

    

 

 

 
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
2013
    Fiscal
2012
    Fiscal
2011
 

Volatility rate

     49.2     53.5     54.0

Average risk-free interest rate

     0.9     1.2     1.5

Average expected life (in years)

     4.4        6.3        6.3   

Dividend yield

     None        None        None   

The following table presents information related to options outstanding and options exercisable at February 1, 2014, under the Company’s stock option plans based on ranges of exercise prices (shares in thousands):

 

     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
 

$1.11 - 3.33

     5         1       $ 1.54         5         1       $ 1.54   

6.29 - 9.18

     19         5         6.46         19         5         6.46   

9.67 - 15.81

     146         5         13.30         146         5         13.30   

22.86 - 37.85

     251         6         28.02         89         7         29.16   

47.19 - 69.96

     292         8         66.80         74         8         68.28   

74.91 - 126.93

     377         9         88.69         30         8         91.07   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

End of year

     1,090         7       $ 56.94         363         6       $ 34.37   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

A summary of the status of the Company’s stock option activity is presented in the following table (shares in thousands):

 

     Fiscal 2013      Fiscal 2012      Fiscal 2011  
     Shares     Weighted-
Average
Exercise Price
     Shares     Weighted-
Average
Exercise Price
     Shares     Weighted-
Average
Exercise Price
 

Common Stock Options Outstanding

              

Beginning of year

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

Granted

     302        84.50         241        89.99         621        66.58   

Exercised

     (705     31.07         (1,795     17.57         (1,936     14.28   

Forfeited

     (314     53.15         (198     46.28         (162     17.75   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

End of year

     1,090      $ 56.94         1,807      $ 41.60         3,559      $ 26.46   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Exercisable at end of year

     363      $ 34.37         563      $ 24.85         1,437      $ 14.27   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Vested and Expected to vest

     1,046      $ 56.47         1,807      $ 41.60         3,559      $ 26.46   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

A summary of the status of the Company’s restricted stock activity is presented in the following table (shares in thousands):

 

     Fiscal 2013      Fiscal 2012      Fiscal 2011  
     Shares     Weighted-
Average
Grant Date
Fair Value
     Shares     Weighted-
Average
Grant Date
Fair Value
     Shares     Weighted-
Average
Grant Date
Fair Value
 

Restricted Stock Outstanding

              

Beginning of year

     62      $ 81.81         22      $ 55.72         128      $ 24.29   

Granted

     141        86.07         65        90.18         15        63.38   

Vested

     (25     81.41         (5     66.88         (71     23.62   

Forfeited

     (16     75.39         (20     75.30         (50     23.52   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

End of year

     162      $ 87.54         62      $ 81.81         22      $ 55.72   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Expected to vest

     152        87.54         62      $ 81.81         22      $ 55.72   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
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  

(In thousands, except per share data)

   February 1,
2014
     February 2,
2013
     January 28,
2012
 

Numerator for diluted net income per share — net income

   $ 202,849       $ 172,549       $ 120,264   

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

     63,992         63,250         61,259   

Dilutive effect of stock options and non-vested stock

     469         1,146         2,075   
  

 

 

    

 

 

    

 

 

 

Denominator for diluted net income per share

     64,461         64,396         63,334   

Net income per common share:

        

Basic

   $ 3.17       $ 2.73       $ 1.96   

Diluted

   $ 3.15       $ 2.68       $ 1.90   

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
 
     (In thousands)  

Fiscal 2013

         

Allowance for doubtful accounts

   $ 973      $ 300       $ (358 )(a)    $ 915   

Shrink reserve

     4,020        16,298         (10,960     9,358   

Inventory — lower of cost or market reserve

     2,364        4,522         (2,025     4,861   

Insurance:

         

Workers Comp / General Liability Prepaid Asset

     (2,400 )(b)      7,060         (6,477     (1,817

Employee Health Care Accrued Liability

     2,232        34,422         (34,048     2,606   

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   

 

 

(a) Represents write-off of uncollectible accounts.

 

(b) Represents prepaid insurance
Selected quarterly financial data (unaudited) (Tables)
Statements of Income
2013     2012  
    First     Second     Third     Fourth     First     Second     Third     Fourth  
(In thousands, except per
share data)
                                               

Net sales

  $ 582,712      $ 600,998      $ 618,781      $ 868,082      $ 474,098      $ 481,683      $ 505,640      $ 758,835   

Cost of sales

    378,763        388,921        387,120        574,521        303,186        314,058        320,147        499,191   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

    203,949        212,077        231,661        293,561        170,912        167,625        185,493        259,644   

Selling, general and administrative expenses

    133,048        134,400        151,306        177,636        110,943        106,040        117,934        153,963   

Pre-opening expenses

    3,206        4,809        7,468        1,787        2,523        4,126        6,252        1,915   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    67,695        72,868        72,887        114,138        57,446        57,459        61,307        103,766   

Interest (income) expense

    (24     (18     (7     (69     21        104        39        21   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

    67,719        72,886        72,894        114,207        57,425        57,355        61,268        103,745   

Income tax expense

    25,893        27,975        27,464        43,525        22,557        22,357        23,117        39,213   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $ 41,826      $ 44,911      $ 45,430      $ 70,682      $ 34,868      $ 34,998      $ 38,151      $ 64,532   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share:

               

Basic

  $ 0.66        0.70        0.71      $ 1.10      $ 0.56        0.55        0.60      $ 1.01   

Diluted

  $ 0.65        0.70        0.70      $ 1.09      $ 0.54        0.54        0.59      $ 1.00

Business and Basis of Presentation - Additional Information (Detail)
12 Months Ended
Feb. 1, 2014
Segment
Store
State
Organization Consolidation And Presentation Of Financial Statements [Abstract]
 
Number of stores
675 
Number of states in which entity operates
46 
Number of operating segments
Number of reportable segments
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Feb. 1, 2014
Feb. 2, 2013
Jan. 28, 2012
Product Information [Line Items]
 
 
 
Allowance for doubtful receivable
$ 915 
$ 973 
 
Outstanding debt
 
Accrued liability loyalty programs
7,740 
7,084 
 
Cost of loyalty programs
27,588 
22,044 
17,200 
Duration of refund for sales return
60 days 
 
 
Deferred gift card revenue
16,439 
13,364 
 
Total advertising costs
140,774 
118,365 
99,446 
Prepaid advertising costs
6,891 
6,251 
 
Stock compensation expense
16,003 
13,375 
11,605 
Stop loss coverage of employee health claims
150 
 
 
Stop loss coverage of general liability claims
100 
 
 
Stop loss coverage of workers compensation claims
250 
 
 
Sales [Member]
 
 
 
Product Information [Line Items]
 
 
 
Percentage of advertisement expense to sales
5.30% 
5.30% 
5.60% 
Salon service [Member]
 
 
 
Product Information [Line Items]
 
 
 
Revenue from Salon service
145,815 
121,357 
98,479 
E-commerce [Member]
 
 
 
Product Information [Line Items]
 
 
 
Revenue from E-Commerce
95,809 
55,086 
41,333 
Vendor Allowances [Member]
 
 
 
Product Information [Line Items]
 
 
 
Allowances receivable
30,591 
28,236 
 
Landlord Allowances [Member]
 
 
 
Product Information [Line Items]
 
 
 
Allowances receivable
$ 14,128 
$ 11,595 
 
Summary of Significant Accounting Policies - Summary of Estimated Useful Lives or Expected Lease Term (Detail)
12 Months Ended
Feb. 1, 2014
Equipment and fixtures [Member] |
Minimum [Member]
 
Property, Plant and Equipment [Line Items]
 
Estimated useful lives or the expected lease term
3 years 
Equipment and fixtures [Member] |
Maximum [Member]
 
Property, Plant and Equipment [Line Items]
 
Estimated useful lives or the expected lease term
10 years 
Leasehold improvements [Member] |
Average [Member]
 
Property, Plant and Equipment [Line Items]
 
Estimated useful lives or the expected lease term
10 years 
Electronic equipment and software [Member] |
Minimum [Member]
 
Property, Plant and Equipment [Line Items]
 
Estimated useful lives or the expected lease term
3 years 
Electronic equipment and software [Member] |
Maximum [Member]
 
Property, Plant and Equipment [Line Items]
 
Estimated useful lives or the expected lease term
5 years 
Property and Equipment - Components of Property and Equipment (Detail) (USD $)
In Thousands, unless otherwise specified
Feb. 1, 2014
Feb. 2, 2013
Property, Plant and Equipment [Line Items]
 
 
Property plant and equipment, gross
$ 1,022,656 
$ 838,390 
Less accumulated depreciation and amortization
(426,920)
(355,331)
Property and equipment, net
595,736 
483,059 
Equipment and fixtures [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property plant and equipment, gross
390,650 
323,069 
Leasehold improvements [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property plant and equipment, gross
376,796 
307,624 
Electronic equipment and software [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property plant and equipment, gross
218,979 
169,997 
Construction-in-progress [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property plant and equipment, gross
$ 36,231 
$ 37,700 
Property and Equipment - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Feb. 1, 2014
Feb. 2, 2013
Property Plant And Equipment [Abstract]
 
 
Capitalized interest
$ 0 
$ 0 
Commitments and Contingencies - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Feb. 1, 2014
Feb. 2, 2013
Jan. 28, 2012
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
$ 138,086 
$ 115,755 
$ 94,175 
Retail Stores [Member]
 
 
 
Operating Leased Assets [Line Items]
 
 
 
Minimum lease payments for stores to be opened in next fiscal year
$ 164,771 
 
 
Commitments and Contingencies - Schedule of Future Minimum Lease Payments Under Operating Leases (Detail) (USD $)
In Thousands, unless otherwise specified
Feb. 1, 2014
Operating Leases Future Minimum Payments Due [Abstract]
 
2014
$ 184,771 
2015
188,655 
2016
181,507 
2017
168,732 
2018
151,546 
2019 and thereafter
532,453 
Total minimum lease payments
$ 1,407,664 
Accrued Liabilities - Schedule of Accrued Liabilities (Detail) (USD $)
In Thousands, unless otherwise specified
Feb. 1, 2014
Feb. 2, 2013
Schedule Of Accrued Liabilities [Abstract]
 
 
Accrued vendor liabilities (including accrued property and equipment costs)
$ 15,631 
$ 17,254 
Accrued customer liabilities
25,507 
21,638 
Accrued payroll, bonus and employee benefits
33,642 
30,418 
Accrued taxes, other
12,788 
9,991 
Other accrued liabilities
15,612 
12,826 
Accrued liabilities
$ 103,180 
$ 92,127 
Income Taxes - Schedule of Provision for Income Taxes (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Feb. 1, 2014
Nov. 2, 2013
Aug. 3, 2013
May 4, 2013
Feb. 2, 2013
Oct. 27, 2012
Jul. 28, 2012
Apr. 28, 2012
Feb. 1, 2014
Feb. 2, 2013
Jan. 28, 2012
Current:
 
 
 
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
$ 105,731 
$ 83,606 
$ 53,495 
State
 
 
 
 
 
 
 
 
15,310 
14,832 
11,022 
Total current
 
 
 
 
 
 
 
 
121,041 
98,438 
64,517 
Deferred:
 
 
 
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
3,891 
8,950 
10,796 
State
 
 
 
 
 
 
 
 
(75)
(144)
31 
Total deferred
 
 
 
 
 
 
 
 
3,816 
8,806 
10,827 
Provision for income taxes
$ 43,525 
$ 27,464 
$ 27,975 
$ 25,893 
$ 39,213 
$ 23,117 
$ 22,357 
$ 22,557 
$ 124,857 
$ 107,244 
$ 75,344 
Income Taxes - Schedule of Reconciliation of Federal Statutory Rate to Effective Tax Rate (Detail)
12 Months Ended
Feb. 1, 2014
Feb. 2, 2013
Jan. 28, 2012
Effective Income Tax Rate Continuing Operations Tax Rate Reconciliation [Abstract]
 
 
 
Federal statutory rate
35.00% 
35.00% 
35.00% 
State effective rate, net of federal tax benefit
3.00% 
3.40% 
3.70% 
Other
0.10% 
(0.10%)
(0.20%)
Effective tax rate
38.10% 
38.30% 
38.50% 
Income Taxes - Components of Deferred Tax Assets and Liabilities (Detail) (USD $)
In Thousands, unless otherwise specified
Feb. 1, 2014
Feb. 2, 2013
Deferred tax assets:
 
 
Reserves not currently deductible
$ 24,721 
$ 18,160 
Employee benefits
6,290 
5,029 
Net operating loss & credit carryforwards
402 
208 
Accrued liabilities
3,927 
3,854 
Inventory valuation
1,708 
1,280 
Total deferred tax assets
37,048 
28,531 
Deferred tax liabilities:
 
 
Property and equipment
44,288 
39,357 
Deferred rent obligation
28,529 
21,638 
Prepaid expenses
8,703 
8,140 
Total deferred tax liabilities
81,520 
69,135 
Net deferred tax liability
$ (44,472)
$ (40,604)
Income Taxes - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
Feb. 1, 2014
Feb. 2, 2013
Income Tax Disclosure [Abstract]
 
 
Credit carryforwards for state income tax
$ 402 
 
Reserve for uncertain tax positions
$ 795 
$ 0 
Income Taxes - Reconciliation of Company's Unrecognized Tax Benefits, Excluding Interest and Penalties (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Feb. 1, 2014
Feb. 2, 2013
Unrecognized Tax Benefits Income Tax Penalties And Interest Accrued [Abstract]
 
 
Balance at beginning of the period
   
   
Increase due to a current year position
795 
   
Decrease due to a prior period position
   
   
Balance at the end of the period
$ 795 
    
Notes Payable - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Feb. 1, 2014
Feb. 2, 2013
Line of Credit Facility [Line Items]
 
 
Letters of credit, maximum borrowing capacity
$ 200,000 
 
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 unused Line of Credit Facility Fee
0.20% 
 
Outstanding debt
Subfacility for Standby Letters of Credit [Member]
 
 
Line of Credit Facility [Line Items]
 
 
Letters of credit, maximum borrowing capacity
$ 10,000 
 
Fair Value Measurements - Additional Information (Detail) (Fair Value Inputs Level 2 [Member], USD $)
In Thousands, unless otherwise specified
Feb. 1, 2014
Fair Value Inputs Level 2 [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Deferred compensation plan liability included in accrued liabilities
$ 3,678 
Share-based Awards - Additional Information (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Feb. 1, 2014
Feb. 2, 2013
Jan. 28, 2012
Stock Based Awards [Line Items]
 
 
 
Share-based Compensation
$ 16,003 
$ 13,375 
$ 11,605 
Stock options exercised
21,890 
31,530 
27,639 
Employee Stock Option [Member]
 
 
 
Stock Based Awards [Line Items]
 
 
 
Aggregate intrinsic value of outstanding options
33,864 
 
 
Sale price of our common stock on the NASDAQ Global Select Market
$ 85.71 
 
 
Restricted Stock Award [Member]
 
 
 
Stock Based Awards [Line Items]
 
 
 
Employee vesting period
3 years 
 
 
Unrecognized compensation cost
9,100 
 
 
Unrecognized compensation expense is expected to be recognized over a weighted-average period
2 years 
 
 
Director vesting period
1 year 
 
 
Compensation expense
5,789 
1,408 
1,874 
2011 Incentive Award Plan [Member]
 
 
 
Stock Based Awards [Line Items]
 
 
 
Issuance upon grant or exercise of awards
4,691 
 
 
Share-based Compensation
16,003 
13,375 
11,605 
Stock options exercised
21,890 
31,530 
27,639 
Total income tax benefit recognized in the income statement for the share-based compensation arrangements
4,812 
5,364 
3,545 
Actual tax benefit realized for the tax deductions from option exercise and restricted stock vesting
18,169 
51,886 
29,439 
2011 Incentive Award Plan [Member] |
Employee Stock Option [Member]
 
 
 
Stock Based Awards [Line Items]
 
 
 
Expiration period
10 years 
 
 
Employee vesting period
4 years 
 
 
Options vesting rate
25.00% 
 
 
Compensation cost
10,214 
11,967 
9,731 
Weighted-average fair value of stock options granted
$ 34.31 
$ 46.29 
$ 34.81 
Total fair value stock options issued and vested
10,544 
12,089 
10,451 
Unrecognized compensation cost
18,074 
 
 
Unrecognized compensation expense is expected to be recognized over a weighted-average period
2 years 
 
 
Total intrinsic value of options exercised
49,404 
138,291 
86,030 
Aggregate intrinsic value of exercisable options
$ 18,809 
 
 
Share-based Awards - Estimated Grant Date Fair Value of Stock Options Weighted-Average Assumptions (Detail)
12 Months Ended
Feb. 1, 2014
Feb. 2, 2013
Jan. 28, 2012
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
 
 
 
Volatility rate
49.20% 
53.50% 
54.00% 
Average risk-free interest rate
0.90% 
1.20% 
1.50% 
Average expected life (in years)
4 years 4 months 24 days 
6 years 3 months 18 days 
6 years 3 months 18 days 
Dividend yield
   
   
   
Share-based Awards - Stock Option Activity (Detail) (Employee Stock Option [Member], USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Feb. 1, 2014
Feb. 2, 2013
Jan. 28, 2012
Employee Stock Option [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Common Stock Options Outstanding Shares, Beginning of year
1,807 
3,559 
5,036 
Common Stock Options Outstanding Shares, Granted
302 
241 
621 
Common Stock Options Outstanding Shares, Exercised
(705)
(1,795)
(1,936)
Common Stock Options Outstanding Shares, Forfeited
(314)
(198)
(162)