ULTA BEAUTY, INC., 10-Q filed on 6/1/2018
Quarterly Report
v3.8.0.1
Document and Entity Information - shares
3 Months Ended
May 05, 2018
May 29, 2018
Document And Entity Information    
Entity Registrant Name Ulta Beauty, Inc.  
Entity Central Index Key 0001403568  
Document Type 10-Q  
Document Period End Date May 05, 2018  
Amendment Flag false  
Current Fiscal Year End Date --02-02  
Entity Current Reporting Status Yes  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   60,179,958
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q1  
Trading Symbol ULTA  
v3.8.0.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
May 05, 2018
Feb. 03, 2018
Apr. 29, 2017
Current assets:      
Cash and cash equivalents $ 231,886 $ 277,445 $ 321,725
Short-term investments 237,193 120,000 150,000
Receivables, net 100,274 99,719 62,936
Merchandise inventories, net 1,136,816 1,096,424 1,048,431
Prepaid expenses and other current assets 96,530 98,666 89,880
Prepaid income taxes   1,489  
Total current assets 1,802,699 1,693,743 1,672,972
Property and equipment, net 1,190,969 1,189,453 1,020,853
Deferred compensation plan assets 18,494 16,827 13,776
Other long-term assets 10,087 8,664  
Total assets 3,022,249 2,908,687 2,707,601
Current liabilities:      
Accounts payable 372,664 325,758 319,352
Accrued liabilities 320,423 302,307 210,379
Accrued income taxes 52,005 14,101 54,521
Total current liabilities 745,092 642,166 584,252
Deferred rent 414,219 407,916 372,478
Deferred income taxes 50,561 59,403 86,766
Other long-term liabilities 28,944 24,985 22,448
Total liabilities 1,238,816 1,134,470 1,065,944
Commitments and contingencies (Note 4)
Stockholders' equity:      
Common stock, $0.01 par value, 400,000 shares authorized; 60,998, 61,441, and 62,688 shares issued; 60,356, 60,822, and 62,075 shares outstanding; at May 5, 2018 (unaudited), February 3, 2018, and April 29, 2017 (unaudited), respectively 610 614 627
Treasury stock-common, at cost (23,598) (18,767) (17,033)
Additional paid-in capital 711,597 698,917 675,650
Retained earnings 1,094,824 1,093,453 982,413
Total stockholders' equity 1,783,433 1,774,217 1,641,657
Total liabilities and stockholders' equity $ 3,022,249 $ 2,908,687 $ 2,707,601
v3.8.0.1
Consolidated Balance Sheets (Parenthetical) - $ / shares
May 05, 2018
Feb. 03, 2018
Apr. 29, 2017
Consolidated Balance Sheets      
Common stock, par value $ 0.01 $ 0.01 $ 0.01
Common stock, shares authorized 400,000,000 400,000,000 400,000,000
Common stock, shares issued 60,998,000 61,441,000 62,688,000
Common stock, shares outstanding 60,356,000 60,822,000 62,075,000
v3.8.0.1
Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended
May 05, 2018
Apr. 29, 2017
Consolidated Statements of Income    
Net sales $ 1,543,667 $ 1,314,879
Cost of sales 982,954 838,871
Gross profit 560,713 476,008
Selling, general and administrative expenses 345,624 283,445
Pre-opening expenses 5,247 4,158
Operating income 209,842 188,405
Interest income, net (1,325) (338)
Income before income taxes 211,167 188,743
Income tax expense 46,771 60,520
Net income $ 164,396 $ 128,223
Net income per common share:    
Basic $ 2.71 $ 2.06
Diluted $ 2.70 $ 2.05
Weighted average common shares outstanding:    
Basic 60,610 62,101
Diluted 60,909 62,594
v3.8.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
3 Months Ended
May 05, 2018
Apr. 29, 2017
Operating activities    
Net income $ 164,396 $ 128,223
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 68,789 62,476
Deferred income taxes 1,473 268
Non-cash stock compensation charges 6,170 5,491
Loss on disposal of property and equipment 798 1,637
Change in operating assets and liabilities:    
Receivables (555) 25,695
Merchandise inventories (40,392) (104,456)
Prepaid expenses and other current assets 2,136 (1,259)
Income taxes 39,393 45,550
Accounts payable 46,906 59,834
Accrued liabilities (18,810) (54,329)
Deferred rent 6,303 6,287
Other assets and liabilities 656 327
Net cash provided by operating activities 277,263 175,744
Investing activities    
Purchases of short-term investments (237,193) (120,000)
Proceeds from short-term investments 120,000  
Purchases of property and equipment (74,259) (76,754)
Net cash used in investing activities (191,452) (196,754)
Financing activities    
Repurchase of common shares (133,051) (51,597)
Stock options exercised 6,512 11,831
Purchase of treasury shares (4,831) (2,509)
Net cash used in financing activities (131,370) (42,275)
Net decrease in cash and cash equivalents (45,559) (63,285)
Cash and cash equivalents at beginning of period 277,445 385,010
Cash and cash equivalents at end of period 231,886 321,725
Supplemental cash flow information    
Cash paid for income taxes (net of refunds) 5,617 14,442
Non-cash investing activities:    
Change in property and equipment included in accrued liabilities $ (3,369) $ 3,854
v3.8.0.1
Consolidated Statements of Stockholders' Equity - 3 months ended May 05, 2018 - USD ($)
shares in Thousands, $ in Thousands
Common Stock
Treasury - Common Stock
Additional Paid-In Capital
Retained Earnings
Total
Balance at Feb. 03, 2018 $ 614 $ (18,767) $ 698,917 $ 1,093,453 $ 1,774,217
Balance (in shares) at Feb. 03, 2018 61,441 (619)     60,822
Adoption of accounting standards       (29,980) $ (29,980)
Stock options exercised and other awards $ 2   6,510   6,512
Stock options exercised and other awards (in shares) 176        
Purchase of treasury shares   $ (4,831)     (4,831)
Purchase of treasury shares (in shares)   (23)      
Net income       164,396 164,396
Stock compensation charge     6,170   6,170
Repurchase of common shares $ (6)     (133,045) (133,051)
Repurchase of common shares (in shares) (619)        
Balance at May. 05, 2018 $ 610 $ (23,598) $ 711,597 $ 1,094,824 $ 1,783,433
Balance (in shares) at May. 05, 2018 60,998 (642)     60,356
v3.8.0.1
Business and basis of presentation
3 Months Ended
May 05, 2018
Business and basis of presentation  
Business and basis of presentation

1.Business and basis of presentation

On January 29, 2017, Ulta Salon, Cosmetics & Fragrance, Inc. implemented a holding company reorganization. Pursuant to which Ulta Beauty, Inc., which was incorporated as a Delaware corporation in December 2016, became the successor to Ulta Salon, Cosmetics & Fragrance, Inc., the former publicly-traded company and now a wholly owned subsidiary of Ulta Beauty, Inc. As used in these notes and throughout this Quarterly Report on Form 10‑Q, all references to “we,” “us,” “our,” “Ulta Beauty,” or the “Company” refer to Ulta Beauty, Inc. and its consolidated subsidiaries.

The Company was originally founded in 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 May 5, 2018, the Company operated 1,107 stores in 48 states and the District of Columbia, as shown in the table below.

 

 

 

 

 

 

 

 

 

Number of

 

 

 

Number of

Location

    

stores

    

Location

    

stores

Alabama

 

17

 

Montana

 

6

Alaska

 

3

 

Nebraska

 

5

Arizona

 

25

 

Nevada

 

14

Arkansas

 

9

 

New Hampshire

 

7

California

 

140

 

New Jersey

 

30

Colorado

 

24

 

New Mexico

 

6

Connecticut

 

14

 

New York

 

44

Delaware

 

3

 

North Carolina

 

29

District of Columbia

 

1

 

North Dakota

 

3

Florida

 

76

 

Ohio

 

40

Georgia

 

34

 

Oklahoma

 

19

Idaho

 

8

 

Oregon

 

13

Illinois

 

53

 

Pennsylvania

 

43

Indiana

 

22

 

Rhode Island

 

3

Iowa

 

10

 

South Carolina

 

16

Kansas

 

11

 

South Dakota

 

2

Kentucky

 

11

 

Tennessee

 

22

Louisiana

 

17

 

Texas

 

102

Maine

 

3

 

Utah

 

13

Maryland

 

19

 

Virginia

 

26

Massachusetts

 

17

 

Washington

 

28

Michigan

 

46

 

West Virginia

 

6

Minnesota

 

15

 

Wisconsin

 

20

Mississippi

 

9

 

Wyoming

 

2

Missouri

 

21

 

Total

 

1,107

The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10‑Q and the U.S. Securities and Exchange Commission’s Article 10, Regulation S-X. These consolidated financial statements were prepared on a consolidated basis to include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts, transactions, and unrealized profit were eliminated in consolidation. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary to fairly state the financial position and results of operations and cash flows for the interim periods presented.

The Company’s business is subject to seasonal fluctuation. Significant portions of the Company’s net sales and net income are realized during the fourth quarter of the fiscal year due to the holiday selling season. The results for the 13 weeks ended May 5, 2018 are not necessarily indicative of the results to be expected for the fiscal year ending February 2, 2019, or for any other future interim period or for any future year.

These interim consolidated financial statements and the related notes should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10‑K for the year ended February 3, 2018. All amounts are stated in thousands, with the exception of per share amounts and number of stores.

v3.8.0.1
Summary of significant accounting policies
3 Months Ended
May 05, 2018
Summary of significant accounting policies  
Summary of significant accounting policies

2.Summary of significant accounting policies

Information regarding the Company’s significant accounting policies is contained in Note 2, “Summary of significant accounting policies,” to the consolidated financial statements in the Company’s Annual Report on Form 10‑K for the year ended February 3, 2018. Presented below and in the following notes is supplemental information that should be read in conjunction with “Notes to Consolidated Financial Statements” in the Annual Report.

Fiscal quarter

The Company’s quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31. The Company’s first quarter in fiscal 2018 and 2017 ended on May 5, 2018 and April 29, 2017, respectively.

Share-based compensation

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 basis 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 for the periods indicated:

 

 

 

 

 

 

    

13 Weeks Ended

 

 

May 5,

 

April 29,

 

    

2018

    

2017

Volatility rate

 

29.0%

 

31.0%

Average risk-free interest rate

 

2.4%

 

1.6%

Average expected life (in years)

 

3.4

 

3.5

Dividend yield

 

None

 

None

The Company granted 163 and 103 stock options during the 13 weeks ended May 5, 2018 and April 29, 2017, respectively. The compensation cost charged against operating income for stock options was $2,208 and $2,142 for the 13 weeks ended May 5, 2018 and April 29, 2017, respectively. The weighted-average grant date fair value of these stock options was $50.10 and $70.12 for the 13 weeks ended May 5, 2018 and April 29, 2017, respectively. At May 5, 2018, there was approximately $23,943 of unrecognized compensation expense related to unvested stock options.

The Company issued 83 and 35 restricted stock units during the 13 weeks ended May 5, 2018 and April 29, 2017, respectively. The compensation cost charged against operating income for restricted stock units was $2,505 and $2,099 for the 13 weeks ended May 5, 2018 and April 29, 2017, respectively. At May 5, 2018, there was approximately $26,810 of unrecognized compensation expense related to restricted stock units.

The Company issued 33 and 21 performance-based restricted stock units during the 13 weeks ended May 5, 2018 and April 29, 2017, respectively. The compensation cost charged against operating income for performance-based restricted stock units was $1,457 and $1,250 for the 13 weeks ended May 5, 2018 and April 29, 2017, respectively. At May 5, 2018, there was approximately $12,273 of unrecognized compensation expense related to performance-based restricted stock units.

Recent accounting pronouncements not yet adopted

Leases

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016‑02, Leases (Topic 842). This standard will change the way all leases of one year or more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on the balance sheet as a right-of-use asset and recognize an associated financing lease liability or capital lease liability. The right-of-use asset represents the lessee’s right to use, or control the use of, a specified asset for the specified lease term. The lease liability represents the lessee’s obligation to make lease payments arising from the lease, measured on a discounted basis. Based on certain characteristics, leases are classified as financing leases or operating leases. Financing lease liabilities, those that contain provisions similar to capitalized leases, are amortized like capital leases under current GAAP as amortization expense and interest expense in the statement of operations. Operating lease liabilities are amortized on a straight-line basis over the life of the lease as lease expense in the statement of operations. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, and have the option to use certain relief. ASU 2016‑02 is effective for public companies for annual reporting periods beginning after December 15, 2018, including interim reporting periods. Early adoption is permitted.

The Company will adopt the new standard in fiscal 2019. The Company’s ability to adopt depends on system readiness, including software procured from third-party providers, and completing an analysis of information necessary to quantify the financial statement impact. The Company formed a project team to review the current accounting policies and practices and assess the effect of the standard on the consolidated financial statements. The team completed a preliminary assessment of the potential impact of adopting ASU 2016‑02 on the consolidated financial statements. The adoption of ASU 2016‑02 will have a material impact on the Company’s consolidated financial position, but the Company is not able to quantify the difference at this time. The Company does not believe adoption of this standard will have a material impact on the Company’s consolidated results of operations or cash flows.

Recently adopted accounting pronouncements

Revenue Recognition from Contracts with Customers

In May 2014, the FASB issued ASU 2014‑09, Revenue from Contracts with Customers (ASU 2014‑09), issued as a new Topic, Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition (ASC 605). The guidance in ASU 2014-09 and subsequently issued amendments outlines a comprehensive model for all entities to use in accounting for revenue arising from contracts with customers as well as required disclosures. Under the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration, which the entity expects to receive in exchange for those goods or services. The new standard requires additional disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers including significant judgments and changes in judgments.

The Company adopted the new revenue standard effective February 4, 2018 using the modified retrospective transition method applied to all contracts with the cumulative effect recorded to the opening balance of retained earnings as of the date of adoption. The comparative information has not been restated and continues to be reported under accounting standards in effect for those periods. The adoption of the new revenue standard did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows. The Company expects the impact of the adoption of the new revenue standard will be immaterial to net income on an ongoing basis. See Note 3, “Revenue”, for further details.

Liabilities – Extinguishments of Liabilities

In March 2016, the FASB issued ASU 2016‑04, Liabilities – Extinguishments of Liabilities (Subtopic 405‑20): Recognition of Breakage for Certain Prepaid Stored – Value Products. This update entitles a company to derecognize amounts related to expected breakage to the extent that it is probable a significant reversal of the recognized breakage amount will not subsequently occur. ASU 2016‑04 is effective for annual and interim periods beginning after December 15, 2017, and early adoption is permitted. The Company adopted the new guidance using the modified retrospective transition method in the first quarter of fiscal 2018. The adoption had no impact on the Company’s  consolidated financial position, results of operations, or cash flows.

v3.8.0.1
Revenue
3 Months Ended
May 05, 2018
Revenue  
Revenue

3.Revenue

Revenue from Contracts with Customers

On February 4, 2018, the Company adopted ASC 606 using the modified retrospective method applied to all contracts as of the date of adoption. The cumulative effect of initially applying the new revenue standard was recorded as an adjustment to the opening balance of retained earnings within the consolidated balance sheets. Under ASC 606, changes were made to the recognition timing or classification of revenues and expenses for the following:

 

 

 

 

Description

Policy under ASC 605

Policy under ASC 606

Credit card
program

Recognized amounts earned under the private label credit card and co-branded credit card programs as a reduction of cost of sales and selling, general and administrative expenses.

Recognize amounts earned under private label credit card and co-branded credit card programs within net sales.

Loyalty program

Recognized revenue under the incremental cost method at the time of purchase by the guest (when points were earned). Recorded a liability for the cost associated with the future performance obligation to the guest.

Recognize revenue under the deferred revenue method by deferring the recognition of the portion of revenue related to the earning of loyalty points to a future period when the guest redeems the points or the points expire.

Gift card breakage

Recognized gift card breakage (amounts not expected to be redeemed) within selling, general and administrative expenses.

Recognize gift card breakage in net sales proportionately as other gift card balances are redeemed. 

Sales refund
reserve

Recognized a sales refund reserve as a net liability within accrued liabilities.

Recognize a sales refund reserve on a gross basis as a liability within accrued liabilities and a right of return asset within prepaid expense and other current assets.

E-commerce
revenue

Recognized revenue based on delivery of merchandise to the guest.

Recognize revenue upon shipment of merchandise to the guest based on meeting the transfer of control criteria.

Upon the adoption of ASC 606, the Company recognized the cumulative effect of $29,980, net of tax, as a reduction to the opening balance of retained earnings as of February 4, 2018. The cumulative effect of adoption is primarily related to the change in accounting for the loyalty program. The comparative information has not been restated and continues to be reported under accounting standards in effect for those periods. The adoption of the new revenue standard did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows. The Company expects the impact of the adoption of the new revenue standard will be immaterial to net income on an ongoing basis.    

Revenue recognition policies

Revenue is recognized when control of the promised goods or services is transferred to the guest, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

 

The Company determines revenue recognition through the following steps:

·

Identification of the contract, or contracts, with a guest;

·

Identification of the performance obligations in the contract;

·

Determination of the transaction price;

·

Allocation of the transaction price to the performance obligations in the contract; and

·

Recognition of revenue when, or as, a performance obligation is satisfied.

 

The Company’s net sales include retail stores and e-commerce merchandise sales as well as salon services and other revenue. 

 

Revenue from merchandise sales at retail stores is recognized at the point of sale, net of estimated returns. Revenue from e-commerce merchandise sales is recognized upon shipment of the merchandise to the guest based on meeting the transfer of control criteria, net of estimated returns. Shipping and handling are treated as costs to fulfill the contract, and as a result, any fees received from guests are included in the transaction price allocated to the performance obligation of providing goods with a corresponding amount accrued within cost of sales for amounts paid to applicable carriers. The Company provides refunds for merchandise returns within 60 days from the original purchase date. 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. Company coupons and other incentives are recorded as a reduction of net sales. 

 

Salon services revenue is recognized at the time the service is provided to the guest.

 

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

 

Credit card program

 

The Company has agreements (the Agreements) with third parties to provide guests with private label credit cards and/or co-branded credit cards (collectively, the Credit Cards). The private label credit card can be used at any store location and online, and the co-branded credit card can be used anywhere the co-branded card is accepted. A third-party financing company is the sole owner of the accounts and underwrites the credit issued under the Credit Card programs. The Company’s performance obligation is to maintain the Ultamate Rewards loyalty program as only guests enrolled in the loyalty program can apply for the Credit Cards. Loyalty members earn points through purchases at Ulta Beauty and anywhere the co-branded credit card is accepted.

 

The Company receives payments and reimbursements of expenses in accordance with the Agreements and based on usage of the Credit Cards. The third parties reimburse the Company for the credit card program costs such as advertising and loyalty points, which help promote the credit card program. The Company recognizes income when collectability is reasonably assured, under the assumption the amounts are not constrained and it is probable that a significant revenue reversal will not occur in future periods, which is generally the time at which the actual usage of the Credit Cards or specified transaction occurs.

 

The Company accounts for the amounts associated with the Agreements as a single contract with the sole commercial objective to maintain the Credit Card programs. As a result, all amounts associated with the Agreements are recognized within net sales on the consolidated statements of income.

 

Consistent with the accounting for the customer loyalty program, the Company defers the value of the Ultamate Rewards points earned at the time of the initial purchase in accrued liabilities on the consolidated balance sheets until the points are redeemed or expire. Other administrative costs related to the Credit Card programs, including payroll, marketing expenses, and other direct costs, are included in selling, general and administrative expenses on the consolidated statements of income.

 

Loyalty program

 

The Company maintains a customer loyalty program, Ultamate Rewards, in which program members earn points based on purchases of merchandise or services. Points earned by members are valid for at least one year and may be redeemed on any product the Company sells.

 

In the Ultamate Rewards loyalty program there is a contract with the guest that creates enforceable rights and obligations. In exchange for the guest’s consideration (i.e. payment), the guest is granted the right to a certain number of Ultamate Rewards points depending upon the program level and any active promotional multipliers. The points earned are a distinct promise from the original purchase that can be exchanged for future goods, which creates a performance obligation for the Company to provide goods until those points are redeemed or expire.

The standalone selling price of the goods or services provided is directly observable, as it is the price paid by the guest for those goods or services at the time of sale. The standalone selling price of the Ultamate Rewards points awarded is not directly observable and as such that amount must be estimated. The Company utilizes the expected retail value to account for Ultamate Rewards points earned and considers the expected redemption rate as part of that calculation. The estimated redemption rate is based on historical experience and other assumptions. The estimates are evaluated on an on-going basis. The Company does not believe there is a reasonable likelihood there will be a material change in the future estimates or assumptions used to calculate the redemption rates. The Company defers the value of the Ultamate Rewards points earned at the time of the initial purchase in accrued liabilities on the consolidated balance sheets until the points are redeemed or expire.

 

Gift card program

 

The Company’s gift card sales are deferred within accrued liabilities on the consolidated balance sheets 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 guest balances. The Company has maintained historical data related to gift card transactions sold and redeemed over a significant time frame. The Company recognizes gift card breakage (amounts not expected to be redeemed) to the extent there is no requirement for remitting balances to governmental agencies under unclaimed property laws. Estimated gift card breakage revenue is recognized over time in proportion to actual gift card redemptions.

 

Disaggregated revenue

The following table sets forth the amount of net sales attributable to retail stores, e-commerce, salon services, and other:

 

 

 

 

 

 

 

 

 

 

 

 

  

13 Weeks Ended

 

May 5,

 

April 29,

(Dollars in thousands)

2018

 

2017

Retail stores

$

1,301,551

 

84%

 

$

1,141,873

 

87%

E-commerce

 

154,383

 

10%

 

 

104,278

 

8%

Salon services

 

75,675

 

5%

 

 

68,728

 

5%

Other

 

12,058

 

1%

 

 

 -

 

0%

Total

$

1,543,667

 

100%

 

$

1,314,879

 

100%

 

The following table sets forth the approximate percentage of net sales by primary category:

 

 

 

 

 

 

13 Weeks Ended

 

May 5,

 

April 29,

(Percentage of net sales)

2018

 

2017

Cosmetics

54%

  

54%

Skincare, Bath & Fragrance

20%

 

19%

Haircare Products & Styling Tools

17%

 

18%

Salon Services

5%

 

5%

Other (nail products, accessories, and other)

4%

 

4%

 

100%

 

100%

 

Deferred Revenue

Contract liabilities primarily represent the Company’s obligation to transfer additional goods or services to a guest for which the Company has received consideration, such as Ultamate Rewards loyalty points and unredeemed Ulta Beauty gift cards. In addition, the Company recognizes breakage on gift cards proportionately as redemption occurs.

 

During the 13 weeks ended May 5, 2018, the contract liabilities balance includes additions related to the earnings of Ultamate Rewards loyalty points or issuances of Ulta Beauty gift cards and deductions for revenues recognized during the period as a result of the redemption of Ultamate Rewards loyalty points or Ulta Beauty gift cards and breakage of Ulta Beauty gift cards. The following table provides a summary of the changes in deferred revenue (included in accrued liabilities):

 

 

 

(In thousands)

 

 

Balance at February 3, 2018

$

110,103

Adoption of ASC 606

 

38,773

Additions to contract liabilities

 

85,834

Deductions to contract liabilities

 

(104,119)

Balance at May 5, 2018

$

130,591

 

v3.8.0.1
Commitments and contingencies
3 Months Ended
May 05, 2018
Commitments and contingencies  
Commitments and contingencies

4.Commitments and contingencies

Leases – The Company leases retail stores, distribution centers, corporate offices, and certain equipment. Original non-cancelable lease terms range from three to ten years, and store leases generally contain renewal options for additional years. Total rent expense under operating leases was $65,755 and $56,784 for the 13 weeks ended May 5, 2018 and April 29, 2017, respectively.

General litigation – The Company is involved in various legal proceedings that are incidental to the conduct of the business. In the opinion of management, the amount of any liability with respect to these proceedings, either individually or in the aggregate, will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.

v3.8.0.1
Notes payable
3 Months Ended
May 05, 2018
Notes payable  
Notes payable

5.Notes payable

On August 23, 2017, the Company entered into a Second Amended and Restated Loan Agreement (the Loan Agreement) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and a Lender thereunder, Wells Fargo Bank, National Association and JPMorgan Chase Bank, N.A., as Lead Arrangers and Bookrunners, JPMorgan Chase Bank, N.A., as Syndication Agent and a Lender, PNC Bank, National Association, as Documentation Agent and a Lender, and the other lenders party thereto. The Loan Agreement matures on August 23, 2022, provides maximum revolving loans equal to the lesser of $400,000 or a percentage of eligible owned inventory (which borrowing base may, at the election of the Company and satisfaction of certain conditions, include a percentage of eligible owned receivables and qualified cash), contains a $20,000 subfacility for letters of credit and allows the Company to increase the revolving facility by an additional $50,000, subject to the consent by each lender and other conditions. The Loan Agreement contains a requirement to maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 during such periods when availability under the Loan Agreement falls below a specified threshold. Substantially all of the Company’s assets are pledged as collateral for outstanding borrowings under the Loan Agreement. Outstanding borrowings will bear interest at either a base rate or the London Interbank Offered Rate plus 1.25%, and the unused line fee is 0.20% per annum.

As of May 5, 2018,  February 3, 2018, and April 29, 2017, the Company had no borrowings outstanding under the credit facility and the Company was in compliance with all terms and covenants of the Loan Agreement.

v3.8.0.1
Fair value measurements
3 Months Ended
May 05, 2018
Fair value measurements  
Fair value measurements

6.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:

·

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

·

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

·

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 May 5, 2018,  February 3, 2018, and April 29, 2017, the Company held financial liabilities of $19,346,  $15,942, and $13,259, respectively, related to its non-qualified deferred compensation plan. The liabilities have been categorized as Level 2 as they are based on third-party reported values, which are based primarily on quoted market prices of underlying assets of the funds within the plan.

v3.8.0.1
Investments
3 Months Ended
May 05, 2018
Investments  
Investments

7.Investments

The Company’s short-term investments as of May 5, 2018, February 3, 2018, and April 29, 2017 consist of $237,193,  $120,000, and $150,000, respectively, in certificates of deposit. These short-term investments are carried at cost, which approximates fair value and are recorded in the consolidated balance sheets in short-term investments. The contractual maturity of the Company’s investments was less than twelve months at May 5, 2018.

v3.8.0.1
Income Taxes
3 Months Ended
May 05, 2018
Income Taxes  
Income Taxes

8.Income Taxes

Income tax expense reflects the federal statutory tax rate and the weighted average state statutory tax rate for the states in which the Company operates stores. Income tax expense of $46,771 for the 13 weeks ended May 5, 2018 represents an effective tax rate of 22.1%, compared to $60,520 of tax expense representing an effective tax rate of 32.1% for the 13 weeks ended April 29, 2017. The lower effective tax rate is primarily due to tax reform.

v3.8.0.1
Net income per common share
3 Months Ended
May 05, 2018
Net income per common share  
Net income per common share

9.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:

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

 

May 5,

 

April 29,

(In thousands, except per share data)

    

2018

    

2017

Numerator for diluted net income per share – net income

    

$

164,396

 

$

128,223

 

 

 

 

 

 

 

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

 

 

60,610

 

 

62,101

Dilutive effect of stock options and non-vested stock

 

 

299

 

 

493

Denominator for diluted net income per share

 

 

60,909

 

 

62,594

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

Basic

 

$

2.71

 

$

2.06

Diluted

 

$

2.70

 

$

2.05

The denominator for diluted net income per common share for the 13 weeks ended May 5, 2018 and April 29, 2017 excludes 461 and 163 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects. Outstanding performance-based restricted stock units are included in the computation of dilutive shares only to the extent that the underlying performance conditions are satisfied prior to the end of the reporting period or would be considered satisfied if the end of the reporting period were the end of the related contingency period and the results would be dilutive under the treasury stock method.

v3.8.0.1
Share repurchase program
3 Months Ended
May 05, 2018
Share repurchase program  
Share repurchase program

10.Share repurchase program

On March 9, 2017, the Company announced that the Board of Directors authorized a share repurchase program (the 2017 Share Repurchase Program) pursuant to which the Company could repurchase up to $425,000 of the Company’s common stock. The 2017 Share Repurchase Program authorization revoked the previously authorized but unused amount of $79,863 from the earlier share repurchase program. The 2017 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

On March 15, 2018, the Company announced that the Board of Directors authorized a new share repurchase program (the 2018 Share Repurchase Program) pursuant to which the Company may repurchase up to $625,000 of the Company’s common stock. The 2018 Share Repurchase Program authorization revoked the previously authorized but unused amount of $41,317 from the 2017 Share Repurchase Program. The 2018 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time.

During the 13 weeks ended May 5, 2018, the Company purchased 619 shares of common stock for $133,051. During the 13 weeks ended April 29, 2017, the Company purchased 185 shares of common stock for $51,597.  

v3.8.0.1
Summary of significant accounting policies (Policies)
3 Months Ended
May 05, 2018
Summary of significant accounting policies  
Fiscal quarter

Fiscal quarter

The Company’s quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31. The Company’s first quarter in fiscal 2018 and 2017 ended on May 5, 2018 and April 29, 2017, respectively.

Share-based compensation

Share-based compensation

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 basis 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 for the periods indicated:

 

 

 

 

 

 

    

13 Weeks Ended

 

 

May 5,

 

April 29,

 

    

2018

    

2017

Volatility rate

 

29.0%

 

31.0%

Average risk-free interest rate

 

2.4%

 

1.6%

Average expected life (in years)

 

3.4

 

3.5

Dividend yield

 

None

 

None

The Company granted 163 and 103 stock options during the 13 weeks ended May 5, 2018 and April 29, 2017, respectively. The compensation cost charged against operating income for stock options was $2,208 and $2,142 for the 13 weeks ended May 5, 2018 and April 29, 2017, respectively. The weighted-average grant date fair value of these stock options was $50.10 and $70.12 for the 13 weeks ended May 5, 2018 and April 29, 2017, respectively. At May 5, 2018, there was approximately $23,943 of unrecognized compensation expense related to unvested stock options.

The Company issued 83 and 35 restricted stock units during the 13 weeks ended May 5, 2018 and April 29, 2017, respectively. The compensation cost charged against operating income for restricted stock units was $2,505 and $2,099 for the 13 weeks ended May 5, 2018 and April 29, 2017, respectively. At May 5, 2018, there was approximately $26,810 of unrecognized compensation expense related to restricted stock units.

The Company issued 33 and 21 performance-based restricted stock units during the 13 weeks ended May 5, 2018 and April 29, 2017, respectively. The compensation cost charged against operating income for performance-based restricted stock units was $1,457 and $1,250 for the 13 weeks ended May 5, 2018 and April 29, 2017, respectively. At May 5, 2018, there was approximately $12,273 of unrecognized compensation expense related to performance-based restricted stock units.

Recent accounting pronouncements not yet adopted and Recently adopted accounting pronouncements

Recent accounting pronouncements not yet adopted

Leases

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016‑02, Leases (Topic 842). This standard will change the way all leases of one year or more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on the balance sheet as a right-of-use asset and recognize an associated financing lease liability or capital lease liability. The right-of-use asset represents the lessee’s right to use, or control the use of, a specified asset for the specified lease term. The lease liability represents the lessee’s obligation to make lease payments arising from the lease, measured on a discounted basis. Based on certain characteristics, leases are classified as financing leases or operating leases. Financing lease liabilities, those that contain provisions similar to capitalized leases, are amortized like capital leases under current GAAP as amortization expense and interest expense in the statement of operations. Operating lease liabilities are amortized on a straight-line basis over the life of the lease as lease expense in the statement of operations. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, and have the option to use certain relief. ASU 2016‑02 is effective for public companies for annual reporting periods beginning after December 15, 2018, including interim reporting periods. Early adoption is permitted.

The Company will adopt the new standard in fiscal 2019. The Company’s ability to adopt depends on system readiness, including software procured from third-party providers, and completing an analysis of information necessary to quantify the financial statement impact. The Company formed a project team to review the current accounting policies and practices and assess the effect of the standard on the consolidated financial statements. The team completed a preliminary assessment of the potential impact of adopting ASU 2016‑02 on the consolidated financial statements. The adoption of ASU 2016‑02 will have a material impact on the Company’s consolidated financial position, but the Company is not able to quantify the difference at this time. The Company does not believe adoption of this standard will have a material impact on the Company’s consolidated results of operations or cash flows.

Recently adopted accounting pronouncements

Revenue Recognition from Contracts with Customers

In May 2014, the FASB issued ASU 2014‑09, Revenue from Contracts with Customers (ASU 2014‑09), issued as a new Topic, Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition (ASC 605). The guidance in ASU 2014-09 and subsequently issued amendments outlines a comprehensive model for all entities to use in accounting for revenue arising from contracts with customers as well as required disclosures. Under the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration, which the entity expects to receive in exchange for those goods or services. The new standard requires additional disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers including significant judgments and changes in judgments.

The Company adopted the new revenue standard effective February 4, 2018 using the modified retrospective transition method applied to all contracts with the cumulative effect recorded to the opening balance of retained earnings as of the date of adoption. The comparative information has not been restated and continues to be reported under accounting standards in effect for those periods. The adoption of the new revenue standard did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows. The Company expects the impact of the adoption of the new revenue standard will be immaterial to net income on an ongoing basis. See Note 3, “Revenue”, for further details.

Liabilities – Extinguishments of Liabilities

In March 2016, the FASB issued ASU 2016‑04, Liabilities – Extinguishments of Liabilities (Subtopic 405‑20): Recognition of Breakage for Certain Prepaid Stored – Value Products. This update entitles a company to derecognize amounts related to expected breakage to the extent that it is probable a significant reversal of the recognized breakage amount will not subsequently occur. ASU 2016‑04 is effective for annual and interim periods beginning after December 15, 2017, and early adoption is permitted. The Company adopted the new guidance using the modified retrospective transition method in the first quarter of fiscal 2018. The adoption had no impact on the Company’s  consolidated financial position, results of operations, or cash flows.

v3.8.0.1
Business and basis of presentation (Tables)
3 Months Ended
May 05, 2018
Business and basis of presentation  
Schedule of stores operated by geographic area

As of May 5, 2018, the Company operated 1,107 stores in 48 states and the District of Columbia, as shown in the table below.

 

 

 

 

 

 

 

 

 

Number of

 

 

 

Number of

Location

    

stores

    

Location

    

stores

Alabama

 

17

 

Montana

 

6

Alaska

 

3

 

Nebraska

 

5

Arizona

 

25

 

Nevada

 

14

Arkansas

 

9

 

New Hampshire

 

7

California

 

140

 

New Jersey

 

30

Colorado

 

24

 

New Mexico

 

6

Connecticut

 

14

 

New York

 

44

Delaware

 

3

 

North Carolina

 

29

District of Columbia

 

1

 

North Dakota

 

3

Florida

 

76

 

Ohio

 

40

Georgia

 

34

 

Oklahoma

 

19

Idaho

 

8

 

Oregon

 

13

Illinois

 

53

 

Pennsylvania

 

43

Indiana

 

22

 

Rhode Island

 

3

Iowa

 

10

 

South Carolina

 

16

Kansas

 

11

 

South Dakota

 

2

Kentucky

 

11

 

Tennessee

 

22

Louisiana

 

17

 

Texas

 

102

Maine

 

3

 

Utah

 

13

Maryland

 

19

 

Virginia

 

26

Massachusetts

 

17

 

Washington

 

28

Michigan

 

46

 

West Virginia

 

6

Minnesota

 

15

 

Wisconsin

 

20

Mississippi

 

9

 

Wyoming

 

2

Missouri

 

21

 

Total

 

1,107

 

v3.8.0.1
Summary of significant accounting policies (Tables)
3 Months Ended
May 05, 2018
Summary of significant accounting policies  
Schedule of weighted average assumptions to determine grant date fair value of employee stock options

 

 

 

 

 

 

    

13 Weeks Ended

 

 

May 5,

 

April 29,

 

    

2018

    

2017

Volatility rate

 

29.0%

 

31.0%

Average risk-free interest rate

 

2.4%

 

1.6%

Average expected life (in years)

 

3.4

 

3.5

Dividend yield

 

None

 

None

 

v3.8.0.1
Revenue (Tables)
3 Months Ended
May 05, 2018
Revenue  
Summary of changes made to the recognition timing or classification of revenues and expenses under ASC 606

 

 

 

Description

Policy under ASC 605

Policy under ASC 606

Credit card
program

Recognized amounts earned under the private label credit card and co-branded credit card programs as a reduction of cost of sales and selling, general and administrative expenses.

Recognize amounts earned under private label credit card and co-branded credit card programs within net sales.

Loyalty program

Recognized revenue under the incremental cost method at the time of purchase by the guest (when points were earned). Recorded a liability for the cost associated with the future performance obligation to the guest.

Recognize revenue under the deferred revenue method by deferring the recognition of the portion of revenue related to the earning of loyalty points to a future period when the guest redeems the points or the points expire.

Gift card breakage

Recognized gift card breakage (amounts not expected to be redeemed) within selling, general and administrative expenses.

Recognize gift card breakage in net sales proportionately as other gift card balances are redeemed. 

Sales refund
reserve

Recognized a sales refund reserve as a net liability within accrued liabilities.

Recognize a sales refund reserve on a gross basis as a liability within accrued liabilities and a right of return asset within prepaid expense and other current assets.

E-commerce
revenue

Recognized revenue based on delivery of merchandise to the guest.

Recognize revenue upon shipment of merchandise to the guest based on meeting the transfer of control criteria.

 

Schedule of revenue

 

 

 

 

 

 

 

 

 

 

 

  

13 Weeks Ended

 

May 5,

 

April 29,

(Dollars in thousands)

2018

 

2017

Retail stores

$

1,301,551

 

84%

 

$

1,141,873

 

87%

E-commerce

 

154,383

 

10%

 

 

104,278

 

8%

Salon services

 

75,675

 

5%

 

 

68,728

 

5%

Other

 

12,058

 

1%

 

 

 -

 

0%

Total

$

1,543,667

 

100%

 

$

1,314,879

 

100%

 

Schedule of approximate percentage of net sales attributed to each category

 

 

 

 

 

13 Weeks Ended

 

May 5,

 

April 29,

(Percentage of net sales)

2018

 

2017

Cosmetics

54%

  

54%

Skincare, Bath & Fragrance

20%

 

19%

Haircare Products & Styling Tools

17%

 

18%

Salon Services

5%

 

5%

Other (nail products, accessories, and other)

4%

 

4%

 

100%

 

100%

 

Summary of changes in deferred revenue

 

 

 

(In thousands)

 

 

Balance at February 3, 2018

$

110,103

Adoption of ASC 606

 

38,773

Additions to contract liabilities

 

85,834

Deductions to contract liabilities

 

(104,119)

Balance at May 5, 2018

$

130,591

 

v3.8.0.1
Net income per common share (Tables)
3 Months Ended
May 05, 2018
Net income per common share  
Schedule of reconciliation of net income and number of shares of common stock used in computation of net income per basic and diluted share

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

 

May 5,

 

April 29,

(In thousands, except per share data)

    

2018

    

2017

Numerator for diluted net income per share – net income

    

$

164,396

 

$

128,223

 

 

 

 

 

 

 

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

 

 

60,610

 

 

62,101

Dilutive effect of stock options and non-vested stock

 

 

299

 

 

493

Denominator for diluted net income per share

 

 

60,909

 

 

62,594

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

Basic

 

$

2.71

 

$

2.06

Diluted

 

$

2.70

 

$

2.05

 

v3.8.0.1
Business and Basis of Presentation (Details)
May 05, 2018
store
state
Stores by state  
Number of stores operated 1,107
Number of states in which entity operates | state 48
Alabama  
Stores by state  
Number of stores operated 17
Alaska  
Stores by state  
Number of stores operated 3
Arizona  
Stores by state  
Number of stores operated 25
Arkansas  
Stores by state  
Number of stores operated 9
California  
Stores by state  
Number of stores operated 140
Colorado  
Stores by state  
Number of stores operated 24
Connecticut  
Stores by state  
Number of stores operated 14
Delaware  
Stores by state  
Number of stores operated 3
District of Columbia  
Stores by state  
Number of stores operated 1
Florida  
Stores by state  
Number of stores operated 76
Georgia  
Stores by state  
Number of stores operated 34
Idaho  
Stores by state  
Number of stores operated 8
Illinois  
Stores by state  
Number of stores operated 53
Indiana  
Stores by state  
Number of stores operated 22
Iowa  
Stores by state  
Number of stores operated 10
Kansas  
Stores by state  
Number of stores operated 11
Kentucky  
Stores by state  
Number of stores operated 11
Louisiana  
Stores by state  
Number of stores operated 17
Maine  
Stores by state  
Number of stores operated 3
Maryland  
Stores by state  
Number of stores operated 19
Massachusetts  
Stores by state  
Number of stores operated 17
Michigan  
Stores by state  
Number of stores operated 46
Minnesota  
Stores by state  
Number of stores operated 15
Mississippi  
Stores by state  
Number of stores operated 9
Missouri  
Stores by state  
Number of stores operated 21
Montana  
Stores by state  
Number of stores operated 6
Nebraska  
Stores by state  
Number of stores operated 5
Nevada  
Stores by state  
Number of stores operated 14
New Hampshire  
Stores by state  
Number of stores operated 7
New Jersey  
Stores by state  
Number of stores operated 30
New Mexico  
Stores by state  
Number of stores operated 6
New York  
Stores by state  
Number of stores operated 44
North Carolina  
Stores by state  
Number of stores operated 29
North Dakota  
Stores by state  
Number of stores operated 3
Ohio  
Stores by state  
Number of stores operated 40
Oklahoma  
Stores by state  
Number of stores operated 19
Oregon  
Stores by state  
Number of stores operated 13
Pennsylvania  
Stores by state  
Number of stores operated 43
Rhode Island  
Stores by state  
Number of stores operated 3
South Carolina  
Stores by state  
Number of stores operated 16
South Dakota  
Stores by state  
Number of stores operated 2
Tennessee  
Stores by state  
Number of stores operated 22
Texas  
Stores by state  
Number of stores operated 102
Utah  
Stores by state  
Number of stores operated 13
Virginia  
Stores by state  
Number of stores operated 26
Washington  
Stores by state  
Number of stores operated 28
West Virginia  
Stores by state  
Number of stores operated 6
Wisconsin  
Stores by state  
Number of stores operated 20
Wyoming  
Stores by state  
Number of stores operated 2
v3.8.0.1
Summary of significant accounting policies - Fiscal Quarter (Details)
3 Months Ended
May 05, 2018
Apr. 29, 2017
Summary of significant accounting policies    
Fiscal period 91 days 91 days
v3.8.0.1
Summary of significant accounting policies – Share-based compensation (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended
May 05, 2018
Apr. 29, 2017
Stock options    
Weighted-average assumptions to estimate fair value    
Volatility rate (as a percent) 29.00% 31.00%
Average risk-free interest rate (as a percent) 2.40% 1.60%
Average expected life 3 years 4 months 24 days 3 years 6 months
Dividend yield (as a percent) 0.00% 0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures 163 103
Compensation expense $ 2,208 $ 2,142
Weighted-average grant date fair value of options granted (in dollars per share) $ 50.10 $ 70.12
Unrecognized compensation expense $ 23,943  
Restricted stock units    
Weighted-average assumptions to estimate fair value    
Compensation expense 2,505 $ 2,099
Unrecognized compensation expense $ 26,810  
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period 83 35
Performance-based restricted stock units    
Weighted-average assumptions to estimate fair value    
Compensation expense $ 1,457 $ 1,250
Unrecognized compensation expense $ 12,273  
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period 33 21
v3.8.0.1
Revenue - Disaggregated revenue (Details) - USD ($)
$ in Thousands
3 Months Ended
Feb. 04, 2018
May 05, 2018
Apr. 29, 2017
Disaggregated revenue      
Term of refund for product returns   60 days  
Minimum term that loyalty program points are valid   1 year  
Net sales   $ 1,543,667 $ 1,314,879
Sales Revenue      
Disaggregated revenue      
Concentration (as a percent)   100.00% 100.00%
Sales Revenue | Cosmetics      
Disaggregated revenue      
Concentration (as a percent)   54.00% 54.00%
Sales Revenue | Skincare, Bath and Fragrance      
Disaggregated revenue      
Concentration (as a percent)   20.00% 19.00%
Sales Revenue | Haircare Products and Styling Tools      
Disaggregated revenue      
Concentration (as a percent)   17.00% 18.00%
Sales Revenue | Salon Services      
Disaggregated revenue      
Concentration (as a percent)   5.00% 5.00%
Sales Revenue | Other categories      
Disaggregated revenue      
Concentration (as a percent)   4.00% 4.00%
Accounting Standards Update (ASU) 2014 09, Revenue from Contracts with Customers      
Disaggregated revenue      
Cumulative effect reduction to opening balance of retained earnings $ (29,980)    
Retail stores      
Disaggregated revenue      
Net sales   $ 1,301,551 $ 1,141,873
Retail stores | Sales Revenue      
Disaggregated revenue      
Concentration (as a percent)   84.00% 87.00%
E-commerce      
Disaggregated revenue      
Net sales   $ 154,383 $ 104,278
E-commerce | Sales Revenue      
Disaggregated revenue      
Concentration (as a percent)   10.00% 8.00%
Salon services      
Disaggregated revenue      
Net sales   $ 75,675 $ 68,728
Salon services | Sales Revenue      
Disaggregated revenue      
Concentration (as a percent)   5.00% 5.00%
Other      
Disaggregated revenue      
Net sales   $ 12,058  
Other | Sales Revenue      
Disaggregated revenue      
Concentration (as a percent)   1.00% 0.00%
v3.8.0.1
Revenue - Deferred revenue (Details)
$ in Thousands
3 Months Ended
May 05, 2018
USD ($)
Summary of changes in deferred revenue  
Balance at beginning of period $ 110,103
Adoption of ASC 606 38,773
Additions to contract liabilities 85,834
Deductions to contract liabilities (104,119)
Balance at end of period $ 130,591
v3.8.0.1
Commitments and contingencies (Details) - USD ($)
$ in Thousands
3 Months Ended
May 05, 2018
Apr. 29, 2017
Leases    
Total rent expense under operating leases $ 65,755 $ 56,784
Minimum    
Leases    
Original non-cancelable lease term 3 years  
Maximum    
Leases    
Original non-cancelable lease term 10 years  
v3.8.0.1
Notes payable (Details)
3 Months Ended
May 05, 2018
USD ($)
Feb. 03, 2018
USD ($)
Apr. 29, 2017
USD ($)
Notes payable      
Outstanding borrowings under credit facility $ 0 $ 0 $ 0
Second Amended and Restated Loan Agreement      
Notes payable      
Unused line fee (as a percent) 0.20%    
Second Amended and Restated Loan Agreement | Minimum      
Notes payable      
Fixed charge coverage ratio covenant 1.0    
Second Amended and Restated Loan Agreement | London Interbank Offered Rate      
Notes payable      
Interest rate margin (as a percent) 1.25%    
Second Amended and Restated Loan Agreement | Revolving loans      
Notes payable      
Maximum borrowing capacity $ 400,000,000    
Contingent increase to revolving facility 50,000,000    
Second Amended and Restated Loan Agreement | Letters of credit      
Notes payable      
Maximum borrowing capacity $ 20,000,000    
v3.8.0.1
Fair value measurements (Details) - USD ($)
$ in Thousands
May 05, 2018
Feb. 03, 2018
Apr. 29, 2017
Level 2 | Non-qualified deferred compensation plan      
Fair value measurements      
Fair value of financial liabilities $ 19,346 $ 15,942 $ 13,259
v3.8.0.1
Investments (Details) - USD ($)
$ in Thousands
May 05, 2018
Feb. 03, 2018
Apr. 29, 2017
Investments      
Short-term investments $ 237,193 $ 120,000 $ 150,000