ULTA BEAUTY, INC., 10-Q filed on 11/30/2017
Quarterly Report
Document and Entity Information
9 Months Ended
Oct. 28, 2017
Nov. 27, 2017
Document And Entity Information
 
 
Entity Registrant Name
Ulta Beauty, Inc. 
 
Entity Central Index Key
0001403568 
 
Document Type
10-Q 
 
Document Period End Date
Oct. 28, 2017 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--02-03 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
60,992,388 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q3 
 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Oct. 28, 2017
Jan. 28, 2017
Oct. 29, 2016
Current assets:
 
 
 
Cash and cash equivalents
$ 46,787 
$ 385,010 
$ 133,108 
Short-term investments
60,000 
30,000 
110,000 
Receivables, net
82,934 
88,631 
65,708 
Merchandise inventories, net
1,349,714 
943,975 
1,137,023 
Prepaid expenses and other current assets
101,403 
88,621 
85,611 
Prepaid income taxes
5,450 
 
7,015 
Total current assets
1,646,288 
1,536,237 
1,538,465 
Property and equipment, net
1,172,682 
1,004,358 
1,001,938 
Deferred compensation plan and other assets
15,903 
11,283 
10,798 
Total assets
2,834,873 
2,551,878 
2,551,201 
Current liabilities:
 
 
 
Accounts payable
447,293 
259,518 
425,071 
Accrued liabilities
266,435 
260,854 
229,569 
Accrued income taxes
984 
8,971 
 
Total current liabilities
714,712 
529,343 
654,640 
Deferred rent
400,477 
366,191 
361,667 
Deferred income taxes
78,647 
86,498 
62,669 
Other long-term liabilities
24,986 
19,628 
20,141 
Total liabilities
1,218,822 
1,001,660 
1,099,117 
Commitments and contingencies (Note 3)
   
   
   
Stockholders' equity:
 
 
 
Common stock, $0.01 par value, 400,000 shares authorized; 61,693, 62,733 and 62,920 shares issued; 61,074, 62,129 and 62,316 shares outstanding; at October 28, 2017 (unaudited), January 28, 2017 and October 29, 2016 (unaudited), respectively
617 
627 
629 
Treasury stock-common, at cost
(18,732)
(14,524)
(14,427)
Additional paid-in capital
691,075 
658,330 
653,036 
Retained earnings
943,091 
905,785 
812,846 
Total stockholders' equity
1,616,051 
1,550,218 
1,452,084 
Total liabilities and stockholders' equity
$ 2,834,873 
$ 2,551,878 
$ 2,551,201 
Consolidated Balance Sheets (Parenthetical) (USD $)
Oct. 28, 2017
Jan. 28, 2017
Oct. 29, 2016
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
61,693,000 
62,733,000 
62,920,000 
Common stock, shares outstanding
61,074,000 
62,129,000 
62,316,000 
Consolidated Statements of Income (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Oct. 28, 2017
Oct. 29, 2016
Consolidated Statements of Income
 
 
 
 
Net sales
$ 1,342,181 
$ 1,131,232 
$ 3,946,914 
$ 3,274,163 
Cost of sales
849,053 
704,179 
2,508,452 
2,071,842 
Gross profit
493,128 
427,053 
1,438,462 
1,202,321 
Selling, general and administrative expenses
320,729 
280,464 
887,601 
757,568 
Pre-opening expenses
9,732 
6,928 
19,989 
14,159 
Operating income
162,667 
139,661 
530,872 
430,594 
Interest income, net
(316)
(211)
(1,209)
(774)
Income before income taxes
162,983 
139,872 
532,081 
431,368 
Income tax expense
58,338 
52,310 
185,020 
161,826 
Net income
$ 104,645 
$ 87,562 
$ 347,061 
$ 269,542 
Net income per common share:
 
 
 
 
Basic
$ 1.71 
$ 1.40 
$ 5.62 
$ 4.30 
Diluted
$ 1.70 
$ 1.40 
$ 5.58 
$ 4.28 
Weighted average common shares outstanding:
 
 
 
 
Basic
61,299 
62,371 
61,778 
62,625 
Diluted
61,630 
62,692 
62,198 
62,932 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Operating activities
 
 
Net income
$ 347,061 
$ 269,542 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
187,710 
151,014 
Deferred income taxes
(7,851)
3,142 
Non-cash stock compensation charges
17,898 
14,203 
Excess tax benefits from stock-based compensation
 
(9,001)
Loss on disposal of property and equipment
5,707 
6,822 
Change in operating assets and liabilities:
 
 
Receivables
5,697 
(716)
Merchandise inventories
(405,739)
(375,230)
Prepaid expenses and other current assets
(12,782)
(13,063)
Income taxes
(13,437)
(10,716)
Accounts payable
187,775 
228,897 
Accrued liabilities
(18,721)
11,247 
Deferred rent
34,286 
39,878 
Other assets and liabilities
1,489 
6,999 
Net cash provided by operating activities
329,093 
323,018 
Investing activities
 
 
Purchases of short-term investments
(240,000)
(60,000)
Proceeds from short-term investments
210,000 
80,000 
Purchases of property and equipment
(337,639)
(281,203)
Net cash used in investing activities
(367,639)
(261,203)
Financing activities
 
 
Repurchase of common shares
(309,767)
(296,994)
Stock options exercised
14,849 
16,188 
Excess tax benefits from stock-based compensation
 
9,001 
Purchase of treasury shares
(4,208)
(2,742)
Debt issuance costs
(551)
 
Net cash used in financing activities
(299,677)
(274,547)
Net decrease in cash and cash equivalents
(338,223)
(212,732)
Cash and cash equivalents at beginning of period
385,010 
345,840 
Cash and cash equivalents at end of period
46,787 
133,108 
Supplemental cash flow information
 
 
Cash paid for income taxes (net of refunds)
205,863 
168,471 
Non-cash investing activities:
 
 
Change in property and equipment included in accrued liabilities
$ 24,302 
$ 30,971 
Consolidated Statements of Stockholders' Equity (USD $)
In Thousands
Common Stock
Treasury - Common Stock
Additional Paid-in Capital
Retained Earnings
Total
Balance at Jan. 28, 2017
$ 627 
$ (14,524)
$ 658,330 
$ 905,785 
$ 1,550,218 
Balance, shares at Jan. 28, 2017
62,733 
(604)
 
 
62,733 
Stock options exercised and other awards
 
14,847 
 
14,849 
Stock options exercised and other awards, shares
198 
 
 
 
 
Purchase of treasury shares
 
(4,208)
 
 
(4,208)
Purchase of treasury shares, Shares
 
(15)
 
 
 
Net income
 
 
 
347,061 
347,061 
Stock compensation charge
 
 
17,898 
 
17,898 
Repurchase of common shares
(12)
 
 
(309,755)
(309,767)
Repurchase of common shares, Shares
(1,238)
 
 
 
 
Balance at Oct. 28, 2017
$ 617 
$ (18,732)
$ 691,075 
$ 943,091 
$ 1,616,051 
Balance, shares at Oct. 28, 2017
61,693 
(619)
 
 
61,693 
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 October 28, 2017, the Company operated 1,058 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

 

134

 

New Jersey

 

27

Colorado

 

24

 

New Mexico

 

6

Connecticut

 

13

 

New York

 

40

Delaware

 

3

 

North Carolina

 

28

District of Columbia

 

1

 

North Dakota

 

3

Florida

 

71

 

Ohio

 

40

Georgia

 

33

 

Oklahoma

 

18

Idaho

 

8

 

Oregon

 

12

Illinois

 

52

 

Pennsylvania

 

40

Indiana

 

21

 

Rhode Island

 

3

Iowa

 

9

 

South Carolina

 

15

Kansas

 

11

 

South Dakota

 

2

Kentucky

 

11

 

Tennessee

 

20

Louisiana

 

16

 

Texas

 

97

Maine

 

3

 

Utah

 

13

Maryland

 

18

 

Virginia

 

25

Massachusetts

 

15

 

Washington

 

25

Michigan

 

44

 

West Virginia

 

6

Minnesota

 

15

 

Wisconsin

 

20

Mississippi

 

9

 

Wyoming

 

2

Missouri

 

19

 

Total

 

1,058

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 and 39 weeks ended October 28, 2017 are not necessarily indicative of the results to be expected for the fiscal year ending February 3, 2018, 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 January 28, 2017. All amounts are stated in thousands, with the exception of per share amounts and number of stores.

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 January 28, 2017. 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 third quarter in fiscal 2017 and 2016 ended on October 28, 2017 and October 29, 2016, 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 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 for the periods indicated:

 

 

 

 

 

 

 

    

39 Weeks Ended

 

 

 

October 28,

 

October 29,

 

 

    

2017

    

2016

 

Volatility rate

 

30.9%

 

35.0%

 

Average risk-free interest rate

 

1.6%

 

1.2%

 

Average expected life (in years)

 

3.5

 

3.5

 

Dividend yield

 

None

 

None

 

The Company granted 106 and 109 stock options during the 39 weeks ended October 28, 2017 and October 29, 2016, respectively.  The compensation cost that has been charged against operating income for stock option grants was $2,212 and $1,983 for the 13 weeks ended October 28, 2017 and October 29, 2016, respectively.  The compensation cost that has been charged against operating income for stock option grants was $6,589 and $5,965 for the 39 weeks ended October 28, 2017 and October 29, 2016, respectively.  The weighted-average grant date fair value of these options was $69.61 and $52.95 for the 39 weeks ended October 28, 2017 and October 29, 2016, respectively.  At October 28, 2017, there was approximately $20,562 of unrecognized compensation expense related to unvested stock options.

The Company issued 45 and 52 restricted stock units during the 39 weeks ended October 28, 2017 and October 29, 2016, respectively.  The compensation cost that has been charged against operating income for restricted stock units was $2,419 and $1,890 for the 13 weeks ended October 28, 2017 and October 29, 2016, respectively.  The compensation cost that has been charged against operating income for restricted stock units was $6,872 and $5,335 for the 39 weeks ended October 28, 2017 and October 29, 2016, respectively.  At October 28, 2017, there was approximately $16,199 of unrecognized compensation expense related to restricted stock units.

The Company issued 21 and 24 performance-based restricted stock units during the 39 weeks ended October 28, 2017 and October 29, 2016, respectively.  The compensation cost that has been charged against operating income for performance-based restricted stock units was $1,618 and $1,468 for the 13 weeks ended October 28, 2017 and October 29, 2016, respectively. The compensation cost that has been charged against operating income for performance-based restricted stock units was $4,437 and $2,903 for the 39 weeks ended October 28, 2017 and October 29, 2016, respectively.  At October 28, 2017, there was approximately $9,708 of unrecognized compensation expense related to performance-based restricted stock units.

Recent accounting pronouncements not yet adopted

Revenue Recognition from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014‑09, Revenue from Contracts with Customers, issued as a new Topic, Accounting Standards Codification Topic 606 (ASU 2014‑09). The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that the Company will recognize revenue when the transfer of promised goods or services to customers occurs in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015‑14, Revenue from Contracts with Customers (Topic 606), which delayed the effective date of ASU 2014‑09 by one year. With the deferral, the revenue recognition standard is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods, with early adoption permitted. In March 2016, the FASB issued ASU 2016‑08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (ASU 2016‑08), which further clarifies how to implement revenue recognition guidance related to determining whether an entity is a principal or an agent in a revenue transaction. In April 2016, the FASB issued ASU 2016‑10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (ASU 2016‑10), which further clarifies the aspects of (a) identifying performance obligations and (b) the licensing implementation guidance. The effective date and transition requirements for ASU 2016‑08 and ASU 2016‑10 are the same as the effective date and transition requirements of ASU 2014‑09. These standards allow for either full retrospective or modified retrospective adoption.

The Company will adopt the new guidance in fiscal 2018 using the modified retrospective method. The Company’s project team has reached conclusions on key accounting policies based on the assessment of the effects of the standard. ASU 2014‑09 will impact the recognition timing or classification of revenues and expenses for the loyalty program (by using the deferred revenue method instead of the incremental cost method), private label credit card and co-branded credit card programs, gift card breakage (by including breakage within net sales instead of selling, general and administrative expenses under the proportional model), and sales refund reserve (by grossing up the balance sheet to record a refund obligation and right of return asset instead of recognizing revenue net of returns). 

The adoption of ASU 2014-09 will not have a material impact on the Company’s consolidated financial position, results of operations or cash flows. Upon adoption, the Company will recognize the cumulative effect of adopting this guidance as an adjustment to the opening balance of retained earnings. Prior periods will not be retrospectively adjusted. In addition, the Company does not expect significant changes to its internal control over financial reporting due to the adoption.

Leases

In February 2016, the FASB issued 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.

After further evaluation, 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.

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 should be applied either using a modified retrospective transition method or retrospectively. ASU 2016‑04 is effective for annual and interim periods beginning after December 15, 2017, and early adoption is permitted. The adoption of ASU 2016‑04 is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

Statement of Cash Flows

In August 2016, the FASB issued ASU 2016‑15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). ASU 2016‑15 provides classification guidance on certain cash receipts and cash payments, including, but not limited to, debt prepayment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of bank-owned life insurance policies and distributions received from equity method investees. The adoption of ASU 2016‑15 requires a retrospective transition method applied to each period presented. ASU 2016‑15 is effective for annual periods and interim periods beginning after December 15, 2017, and early adoption is permitted. The adoption of ASU 2016‑15 is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In November 2016, the FASB issued ASU 2016‑18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the Emerging Issues Task Force), which amends ASU Topic 230. ASU 2016‑18 requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer be required to present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. Entities will also have to disclose the nature of their restricted cash and restricted cash equivalent balances. ASU 2016‑18 is effective for fiscal years beginning after December 15, 2017 and interim periods within those years, and early adoption is permitted. Entities are required to apply the guidance retrospectively. The adoption of ASU 2016‑18 is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

Compensation – Stock Compensation: Scope of Modification Accounting

In May 2017, the FASB issued ASU 2017‑09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting, which provides clarification on when modification accounting should be used for changes to the terms or conditions of a share-based payment award. This ASU does not change the accounting for modifications but clarifies that modification accounting guidance should only be applied if there is a change to the value, vesting conditions, or award classification and would not be required if the changes are considered non-substantive. ASU 2017‑09 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and early adoption is permitted. The adoption of ASU 2017‑09 is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

Recently adopted accounting pronouncements

Compensation – Stock Compensation

In March 2016, the FASB issued ASU 2016‑09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This guidance changed how companies account for certain aspects of share-based payments to employees. Companies have to recognize all income tax effects of awards in the income statement when the awards vest or are settled, and additional paid-in capital pools were eliminated. The guidance on employer’s accounting for an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation and for forfeitures changed, and two practical expedients for non-public entities were added. ASU 2016‑09 was effective for annual and interim reporting periods beginning after December 15, 2016.

The Company adopted the new guidance prospectively in the first quarter of fiscal 2017. The adoption resulted in a decrease in the provision for income taxes of $781 and $9,921 for the 13 weeks and 39 weeks ended October 28, 2017, respectively, due to the recognition of excess tax benefits for options exercised and the vesting of equity awards. The extent of excess tax benefits or deficiencies is subject to variation in the Company’s stock price and timing/extent of restricted stock units vesting and employee stock option exercises. Additionally, the consolidated statements of cash flows now present such tax benefits or deficiencies as an operating activity on a prospective basis. Based on the adoption methodology applied, the statement of cash flows classification of prior periods has not been adjusted. As allowed under the new guidance, the Company did not change its accounting principles relative to elements of this standard and continued its existing practice of estimating the number of awards that will be forfeited. 

Commitments and contingencies
Commitments and contingencies

3.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. Total rent expense under operating leases was $60,687 and $51,580 for the 13 weeks ended October 28, 2017 and October 29, 2016, respectively. Total rent expense under operating leases was $175,282 and $150,424 for the 39 weeks ended October 28, 2017 and October 29, 2016, 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.

Notes payable
Notes payable

4.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 October 28, 2017,  January 28, 2017 and October 29, 2016, 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.

Fair value measurements
Fair value measurements

5.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 October 28, 2017,  January 28, 2017 and October 29, 2016, the Company held financial liabilities of $16,143, $10,474 and $10,955, 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.

Investments
Investments

6.Investments

The Company’s short-term investments as of October 28, 2017, January 28, 2017 and October 29, 2016 consist of $60,000, $30,000 and $110,000, 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 October 28, 2017.

Net Income per Common Share
Net income per common share

7.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

 

39 Weeks Ended

 

 

October 28,

 

October 29,

 

October 28,

 

October 29,

(In thousands, except per share data)

    

2017

    

2016

    

2017

    

2016

Numerator for diluted net income per share – net income

    

$

104,645

 

$

87,562

 

$

347,061

 

$

269,542

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

 

 

61,299

 

 

62,371

 

 

61,778

 

 

62,625

Dilutive effect of stock options and non-vested stock

 

 

331

 

 

321

 

 

420

 

 

307

Denominator for diluted net income per share

 

 

61,630

 

 

62,692

 

 

62,198

 

 

62,932

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.71

 

$

1.40

 

$

5.62

 

$

4.30

Diluted

 

$

1.70

 

$

1.40

 

$

5.58

 

$

4.28

The denominator for diluted net income per common share for the 13 weeks ended October 28, 2017 and October 29, 2016 excludes 259 and 21 employee stock options, respectively, due to their anti-dilutive effects. The denominator for diluted net income per common share for the 39 weeks ended October 28, 2017 and October 29, 2016 excludes 172 and 184 employee stock options, 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.

Share Repurchase Program
Share repurchase program

8.Share repurchase program

On March 10, 2016, the Company announced that the Board of Directors authorized a share repurchase program (the 2016 Share Repurchase Program) pursuant to which the Company may repurchase up to $425,000 of the Company’s common stock. The 2016 Share Repurchase Program authorization revoked the previously authorized, but unused amounts of $172,386 from the earlier share repurchase program. The 2016 Share Repurchase Program did not have an expiration date, but provided for suspension or discontinuation at any time.

As part of the 2016 Share Repurchase Program, the Company entered into an Accelerated Share Repurchase (ASR) agreement with Goldman, Sachs & Co. to repurchase $200,000 of the Company’s common stock. Under the ASR agreement, the Company paid $200,000 to Goldman, Sachs & Co. and received an initial delivery of 852 shares in the first quarter of 2016, which were retired and represented 80% of the total shares the Company expected to receive based on the market price at the time of the initial delivery. In May 2016, the ASR settled and an additional 153 shares were delivered to the Company and retired. The final number of shares delivered upon settlement was determined with reference to the average price of the Company’s common stock over the term of the agreement. The transaction was accounted for as an equity transaction. The par value of shares received was recorded as a reduction to common stock with the remainder recorded as a reduction to additional paid-in capital and retained earnings. Upon receipt of the shares, there was an immediate reduction in the weighted average common shares calculation for basic and diluted earnings per share.

On March 9, 2017, the Company announced that the Board of Directors authorized a new share repurchase program (the 2017 Share Repurchase Program) pursuant to which the Company may repurchase up to $425,000 of the Company’s common stock. The 2017 Share Repurchase Program authorization revokes the previously authorized but unused amount of $79,863 from the 2016 Share Repurchase Program. The 2017 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time.

During the 39 weeks ended October 28, 2017, the Company purchased 1,238 shares of common stock for $309,767. During the 39 weeks ended October 29, 2016, excluding the shares repurchased under the ASR, the Company purchased 445 shares of common stock for $96,994.

Summary of significant accounting policies (Policies)

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 third quarter in fiscal 2017 and 2016 ended on October 28, 2017 and October 29, 2016, 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 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 for the periods indicated:

 

 

 

 

 

 

 

    

39 Weeks Ended

 

 

 

October 28,

 

October 29,

 

 

    

2017

    

2016

 

Volatility rate

 

30.9%

 

35.0%

 

Average risk-free interest rate

 

1.6%

 

1.2%

 

Average expected life (in years)

 

3.5

 

3.5

 

Dividend yield

 

None

 

None

 

The Company granted 106 and 109 stock options during the 39 weeks ended October 28, 2017 and October 29, 2016, respectively.  The compensation cost that has been charged against operating income for stock option grants was $2,212 and $1,983 for the 13 weeks ended October 28, 2017 and October 29, 2016, respectively.  The compensation cost that has been charged against operating income for stock option grants was $6,589 and $5,965 for the 39 weeks ended October 28, 2017 and October 29, 2016, respectively.  The weighted-average grant date fair value of these options was $69.61 and $52.95 for the 39 weeks ended October 28, 2017 and October 29, 2016, respectively.  At October 28, 2017, there was approximately $20,562 of unrecognized compensation expense related to unvested stock options.

The Company issued 45 and 52 restricted stock units during the 39 weeks ended October 28, 2017 and October 29, 2016, respectively.  The compensation cost that has been charged against operating income for restricted stock units was $2,419 and $1,890 for the 13 weeks ended October 28, 2017 and October 29, 2016, respectively.  The compensation cost that has been charged against operating income for restricted stock units was $6,872 and $5,335 for the 39 weeks ended October 28, 2017 and October 29, 2016, respectively.  At October 28, 2017, there was approximately $16,199 of unrecognized compensation expense related to restricted stock units.

The Company issued 21 and 24 performance-based restricted stock units during the 39 weeks ended October 28, 2017 and October 29, 2016, respectively.  The compensation cost that has been charged against operating income for performance-based restricted stock units was $1,618 and $1,468 for the 13 weeks ended October 28, 2017 and October 29, 2016, respectively. The compensation cost that has been charged against operating income for performance-based restricted stock units was $4,437 and $2,903 for the 39 weeks ended October 28, 2017 and October 29, 2016, respectively.  At October 28, 2017, there was approximately $9,708 of unrecognized compensation expense related to performance-based restricted stock units.

Recent accounting pronouncements not yet adopted

Revenue Recognition from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014‑09, Revenue from Contracts with Customers, issued as a new Topic, Accounting Standards Codification Topic 606 (ASU 2014‑09). The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that the Company will recognize revenue when the transfer of promised goods or services to customers occurs in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015‑14, Revenue from Contracts with Customers (Topic 606), which delayed the effective date of ASU 2014‑09 by one year. With the deferral, the revenue recognition standard is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods, with early adoption permitted. In March 2016, the FASB issued ASU 2016‑08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (ASU 2016‑08), which further clarifies how to implement revenue recognition guidance related to determining whether an entity is a principal or an agent in a revenue transaction. In April 2016, the FASB issued ASU 2016‑10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (ASU 2016‑10), which further clarifies the aspects of (a) identifying performance obligations and (b) the licensing implementation guidance. The effective date and transition requirements for ASU 2016‑08 and ASU 2016‑10 are the same as the effective date and transition requirements of ASU 2014‑09. These standards allow for either full retrospective or modified retrospective adoption.

The Company will adopt the new guidance in fiscal 2018 using the modified retrospective method. The Company’s project team has reached conclusions on key accounting policies based on the assessment of the effects of the standard. ASU 2014‑09 will impact the recognition timing or classification of revenues and expenses for the loyalty program (by using the deferred revenue method instead of the incremental cost method), private label credit card and co-branded credit card programs, gift card breakage (by including breakage within net sales instead of selling, general and administrative expenses under the proportional model), and sales refund reserve (by grossing up the balance sheet to record a refund obligation and right of return asset instead of recognizing revenue net of returns). 

The adoption of ASU 2014-09 will not have a material impact on the Company’s consolidated financial position, results of operations or cash flows. Upon adoption, the Company will recognize the cumulative effect of adopting this guidance as an adjustment to the opening balance of retained earnings. Prior periods will not be retrospectively adjusted. In addition, the Company does not expect significant changes to its internal control over financial reporting due to the adoption.

Leases

In February 2016, the FASB issued 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.

After further evaluation, 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.

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 should be applied either using a modified retrospective transition method or retrospectively. ASU 2016‑04 is effective for annual and interim periods beginning after December 15, 2017, and early adoption is permitted. The adoption of ASU 2016‑04 is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

Statement of Cash Flows

In August 2016, the FASB issued ASU 2016‑15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). ASU 2016‑15 provides classification guidance on certain cash receipts and cash payments, including, but not limited to, debt prepayment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of bank-owned life insurance policies and distributions received from equity method investees. The adoption of ASU 2016‑15 requires a retrospective transition method applied to each period presented. ASU 2016‑15 is effective for annual periods and interim periods beginning after December 15, 2017, and early adoption is permitted. The adoption of ASU 2016‑15 is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In November 2016, the FASB issued ASU 2016‑18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the Emerging Issues Task Force), which amends ASU Topic 230. ASU 2016‑18 requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer be required to present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. Entities will also have to disclose the nature of their restricted cash and restricted cash equivalent balances. ASU 2016‑18 is effective for fiscal years beginning after December 15, 2017 and interim periods within those years, and early adoption is permitted. Entities are required to apply the guidance retrospectively. The adoption of ASU 2016‑18 is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

Compensation – Stock Compensation: Scope of Modification Accounting

In May 2017, the FASB issued ASU 2017‑09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting, which provides clarification on when modification accounting should be used for changes to the terms or conditions of a share-based payment award. This ASU does not change the accounting for modifications but clarifies that modification accounting guidance should only be applied if there is a change to the value, vesting conditions, or award classification and would not be required if the changes are considered non-substantive. ASU 2017‑09 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and early adoption is permitted. The adoption of ASU 2017‑09 is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

Recently adopted accounting pronouncements

Compensation – Stock Compensation

In March 2016, the FASB issued ASU 2016‑09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This guidance changed how companies account for certain aspects of share-based payments to employees. Companies have to recognize all income tax effects of awards in the income statement when the awards vest or are settled, and additional paid-in capital pools were eliminated. The guidance on employer’s accounting for an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation and for forfeitures changed, and two practical expedients for non-public entities were added. ASU 2016‑09 was effective for annual and interim reporting periods beginning after December 15, 2016.

The Company adopted the new guidance prospectively in the first quarter of fiscal 2017. The adoption resulted in a decrease in the provision for income taxes of $781 and $9,921 for the 13 weeks and 39 weeks ended October 28, 2017, respectively, due to the recognition of excess tax benefits for options exercised and the vesting of equity awards. The extent of excess tax benefits or deficiencies is subject to variation in the Company’s stock price and timing/extent of restricted stock units vesting and employee stock option exercises. Additionally, the consolidated statements of cash flows now present such tax benefits or deficiencies as an operating activity on a prospective basis. Based on the adoption methodology applied, the statement of cash flows classification of prior periods has not been adjusted. As allowed under the new guidance, the Company did not change its accounting principles relative to elements of this standard and continued its existing practice of estimating the number of awards that will be forfeited.

Business and basis of presentation (Tables)
Schedule of stores operated by geographic area

As of October 28, 2017, the Company operated 1,058 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

 

134

 

New Jersey

 

27

Colorado

 

24

 

New Mexico

 

6

Connecticut

 

13

 

New York

 

40

Delaware

 

3

 

North Carolina

 

28

District of Columbia

 

1

 

North Dakota

 

3

Florida

 

71

 

Ohio

 

40

Georgia

 

33

 

Oklahoma

 

18

Idaho

 

8

 

Oregon

 

12

Illinois

 

52

 

Pennsylvania

 

40

Indiana

 

21

 

Rhode Island

 

3

Iowa

 

9

 

South Carolina

 

15

Kansas

 

11

 

South Dakota

 

2

Kentucky

 

11

 

Tennessee

 

20

Louisiana

 

16

 

Texas

 

97

Maine

 

3

 

Utah

 

13

Maryland

 

18

 

Virginia

 

25

Massachusetts

 

15

 

Washington

 

25

Michigan

 

44

 

West Virginia

 

6

Minnesota

 

15

 

Wisconsin

 

20

Mississippi

 

9

 

Wyoming

 

2

Missouri

 

19

 

Total

 

1,058

 

Summary of significant accounting policies (Tables)
Schedule of weighted average assumptions to estimate grant date fair value of stock options

 

 

 

 

 

 

 

    

39 Weeks Ended

 

 

 

October 28,

 

October 29,

 

 

    

2017

    

2016

 

Volatility rate

 

30.9%

 

35.0%

 

Average risk-free interest rate

 

1.6%

 

1.2%

 

Average expected life (in years)

 

3.5

 

3.5

 

Dividend yield

 

None

 

None

 

 

Net Income per Common Share (Tables)
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

 

39 Weeks Ended

 

 

October 28,

 

October 29,

 

October 28,

 

October 29,

(In thousands, except per share data)

    

2017

    

2016

    

2017

    

2016

Numerator for diluted net income per share – net income

    

$

104,645

 

$

87,562

 

$

347,061

 

$

269,542

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

 

 

61,299

 

 

62,371

 

 

61,778

 

 

62,625

Dilutive effect of stock options and non-vested stock

 

 

331

 

 

321

 

 

420

 

 

307

Denominator for diluted net income per share

 

 

61,630

 

 

62,692

 

 

62,198

 

 

62,932

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.71

 

$

1.40

 

$

5.62

 

$

4.30

Diluted

 

$

1.70

 

$

1.40

 

$

5.58

 

$

4.28

 

Business and Basis of Presentation - Store Locations (Details)
Oct. 28, 2017
state
store
Stores by state
 
Number of stores operated
1,058 
Number of states in which entity operates
48 
Alabama
 
Stores by state
 
Number of stores operated
17 
Alaska
 
Stores by state
 
Number of stores operated
Arizona
 
Stores by state
 
Number of stores operated
25 
Arkansas
 
Stores by state
 
Number of stores operated
California
 
Stores by state
 
Number of stores operated
134 
Colorado
 
Stores by state
 
Number of stores operated
24 
Connecticut
 
Stores by state
 
Number of stores operated
13 
Delaware
 
Stores by state
 
Number of stores operated
District of Columbia
 
Stores by state
 
Number of stores operated
Florida
 
Stores by state
 
Number of stores operated
71 
Georgia
 
Stores by state
 
Number of stores operated
33 
Idaho
 
Stores by state
 
Number of stores operated
Illinois
 
Stores by state
 
Number of stores operated
52 
Indiana
 
Stores by state
 
Number of stores operated
21 
Iowa
 
Stores by state
 
Number of stores operated
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
16 
Maine
 
Stores by state
 
Number of stores operated
Maryland
 
Stores by state
 
Number of stores operated
18 
Massachusetts
 
Stores by state
 
Number of stores operated
15 
Michigan
 
Stores by state
 
Number of stores operated
44 
Minnesota
 
Stores by state
 
Number of stores operated
15 
Mississippi
 
Stores by state
 
Number of stores operated
Missouri
 
Stores by state
 
Number of stores operated
19 
Montana
 
Stores by state
 
Number of stores operated
Nebraska
 
Stores by state
 
Number of stores operated
Nevada
 
Stores by state
 
Number of stores operated
14 
New Hampshire
 
Stores by state
 
Number of stores operated
New Jersey
 
Stores by state
 
Number of stores operated
27 
New Mexico
 
Stores by state
 
Number of stores operated
New York
 
Stores by state
 
Number of stores operated
40 
North Carolina
 
Stores by state
 
Number of stores operated
28 
North Dakota
 
Stores by state
 
Number of stores operated
Ohio
 
Stores by state
 
Number of stores operated
40 
Oklahoma
 
Stores by state
 
Number of stores operated
18 
Oregon
 
Stores by state
 
Number of stores operated
12 
Pennsylvania
 
Stores by state
 
Number of stores operated
40 
Rhode Island
 
Stores by state
 
Number of stores operated
South Carolina
 
Stores by state
 
Number of stores operated
15 
South Dakota
 
Stores by state
 
Number of stores operated
Tennessee
 
Stores by state
 
Number of stores operated
20 
Texas
 
Stores by state
 
Number of stores operated
97 
Utah
 
Stores by state
 
Number of stores operated
13 
Virginia
 
Stores by state
 
Number of stores operated
25 
Washington
 
Stores by state
 
Number of stores operated
25 
West Virginia
 
Stores by state
 
Number of stores operated
Wisconsin
 
Stores by state
 
Number of stores operated
20 
Wyoming
 
Stores by state
 
Number of stores operated
Summary of Significant Accounting Policies - Fiscal Quarter (Details)
3 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Summary of significant accounting policies
 
 
Fiscal period
91 days 
91 days 
Summary of Significant Accounting Policies - Assumptions to Estimate Fair Value of Stock Options (Details) (Stock options)
9 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Stock options
 
 
Weighted-average assumptions to estimate fair value
 
 
Volatility rate (as a percent)
30.90% 
35.00% 
Average risk-free interest rate (as a percent)
1.60% 
1.20% 
Average expected life
3 years 6 months 
3 years 6 months 
Dividend yield (as a percent)
0.00% 
0.00% 
Summary of Significant Accounting Policies - Share-based Compensation - Stock Options (Details) (Stock options, USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Oct. 28, 2017
Oct. 29, 2016
Stock options
 
 
 
 
Stock options
 
 
 
 
Granted (in shares)
 
 
106 
109 
Compensation expense
$ 2,212 
$ 1,983 
$ 6,589 
$ 5,965 
Weighted-average grant date fair value of options granted (in dollars per share)
 
 
$ 69.61 
$ 52.95 
Unrecognized compensation expense
$ 20,562 
 
$ 20,562 
 
Summary of Significant Accounting Policies - Share-based Compensation - Restricted Stock Units (Details) (Restricted stock units, USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Oct. 28, 2017
Oct. 29, 2016
Restricted stock units
 
 
 
 
Restricted stock units
 
 
 
 
Issued (in shares)
 
 
45 
52 
Compensation expense
$ 2,419 
$ 1,890 
$ 6,872 
$ 5,335 
Unrecognized compensation cost
$ 16,199 
 
$ 16,199 
 
Summary of Significant Accounting Policies - Share-based Compensation - Performance-based Restricted Stock Units (Details) (Performance-based restricted stock units, USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Oct. 28, 2017
Oct. 29, 2016
Performance-based restricted stock units
 
 
 
 
Performance-based restricted stock units
 
 
 
 
Issued (in shares)
 
 
21 
24 
Compensation expense
$ 1,618 
$ 1,468 
$ 4,437 
$ 2,903 
Unrecognized compensation cost
$ 9,708 
 
$ 9,708 
 
Summary of Significant Accounting Policies - Accounting Change for Income Tax Effects of Stock Compensation (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Oct. 28, 2017
Oct. 29, 2016
Item effected
 
 
 
 
Effect on provision for income tax
$ 58,338 
$ 52,310 
$ 185,020 
$ 161,826 
ASU 2016 09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
 
 
 
 
Item effected
 
 
 
 
Effect on provision for income tax
$ (781)
 
$ (9,921)
 
Commitments and Contingencies - Leases (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Oct. 28, 2017
Oct. 29, 2016
Leases
 
 
 
 
Total rent expense under operating leases
$ 60,687 
$ 51,580 
$ 175,282 
$ 150,424 
Minimum
 
 
 
 
Leases
 
 
 
 
Original non-cancelable lease term
 
 
3 years 
 
Maximum
 
 
 
 
Leases
 
 
 
 
Original non-cancelable lease term
 
 
10 years 
 
Notes Payable (Details) (USD $)
0 Months Ended 9 Months Ended
Oct. 28, 2017
Jan. 28, 2017
Oct. 29, 2016
Oct. 28, 2017
Second Amended and Restated Loan Agreement
Oct. 28, 2017
Second Amended and Restated Loan Agreement
Minimum
Oct. 28, 2017
Second Amended and Restated Loan Agreement
London Interbank Offered Rate
Oct. 28, 2017
Second Amended and Restated Loan Agreement
Revolving loans
Oct. 28, 2017
Second Amended and Restated Loan Agreement
Letters of credit
Notes payable
 
 
 
 
 
 
 
 
Maximum borrowing capacity
 
 
 
 
 
 
$ 400,000,000 
$ 20,000,000 
Contingent increase to revolving facility
 
 
 
 
 
 
50,000,000 
 
Interest rate margin (as a percent)
 
 
 
 
 
1.25% 
 
 
Fixed charge coverage ratio covenant (as a percent)
 
 
 
 
100.00% 
 
 
 
Unused line fee (as a percent)
 
 
 
0.20% 
 
 
 
 
Outstanding borrowings under credit facility
$ 0 
$ 0 
$ 0 
 
 
 
 
 
Fair Value Measurements (Details) (Level 2, Non-qualified plan, USD $)
In Thousands, unless otherwise specified
Oct. 28, 2017
Jan. 28, 2017
Oct. 29, 2016
Level 2 |
Non-qualified plan
 
 
 
Fair value measurements
 
 
 
Fair value of financial liabilities
$ 16,143 
$ 10,474 
$ 10,955 
Investments (Details) (USD $)
In Thousands, unless otherwise specified
Oct. 28, 2017
Jan. 28, 2017
Oct. 29, 2016
Investments
 
 
 
Certificates of deposit
$ 60,000 
$ 30,000 
$ 110,000 
Net Income Per Common Share - Reconciliation (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Oct. 28, 2017
Oct. 29, 2016
Net income per common share
 
 
 
 
Numerator for diluted net income per share - net income
$ 104,645 
$ 87,562 
$ 347,061 
$ 269,542 
Denominator for basic net income per share - weighted-average common shares
61,299 
62,371 
61,778 
62,625 
Dilutive effect of stock options and non-vested stock
331 
321 
420 
307 
Denominator for diluted net income per share
61,630 
62,692 
62,198 
62,932 
Net income per common share:
 
 
 
 
Basic
$ 1.71 
$ 1.40 
$ 5.62 
$ 4.30 
Diluted
$ 1.70 
$ 1.40 
$ 5.58 
$ 4.28 
Net Income Per Common Share - Anti-dilutive Shares (Details)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Oct. 28, 2017
Oct. 29, 2016
Net income per common share
 
 
 
 
Employee stock options excluded due to their anti-dilutive effects
259 
21 
172 
184 
Share Repurchase Program (Details) (USD $)
Share data in Thousands, unless otherwise specified
9 Months Ended 3 Months Ended 1 Months Ended 3 Months Ended 9 Months Ended
Oct. 28, 2017
Oct. 29, 2016
Oct. 28, 2017
Common Stock
Mar. 8, 2017
2016 Share Repurchase Program
Mar. 10, 2016
2016 Share Repurchase Program
Maximum
Apr. 30, 2016
Accelerated Share Repurchase Agreement (ASR)
Mar. 10, 2016
Accelerated Share Repurchase Agreement (ASR)
May 28, 2016
Accelerated Share Repurchase Agreement (ASR)
Common Stock
Apr. 30, 2016
Accelerated Share Repurchase Agreement (ASR)
Common Stock
Mar. 9, 2016
2014 Share Repurchase Program
Mar. 9, 2017
2017 Share Repurchase Program
Maximum
Oct. 28, 2017
Share Repurchase Programs
Oct. 28, 2017
Share Repurchase Programs
Common Stock
Oct. 29, 2016
Share repurchase programs, excluding Accelerated Share Repurchase
Oct. 29, 2016
Share repurchase programs, excluding Accelerated Share Repurchase
Common Stock
Share repurchase program
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Authorized amount of share repurchase program
 
 
 
 
$ 425,000,000 
 
$ 200,000,000 
 
 
 
$ 425,000,000 
 
 
 
 
Amount remaining of authorized amount
 
 
 
79,863,000 
 
 
 
 
 
172,386,000 
 
 
 
 
 
Amount paid upon entering into agreement
 
 
 
 
 
200,000,000 
 
 
 
 
 
 
 
 
 
Shares repurchased and retired (in shares)
 
 
1,238 
 
 
 
 
153 
852 
 
 
 
1,238 
 
445 
Percentage of initial shares received to the total shares expected to be received
 
 
 
 
 
80.00% 
 
 
 
 
 
 
 
 
 
Shares repurchased and retired
$ 309,767,000 
$ 296,994,000 
 
 
 
 
 
 
 
 
 
$ 309,767,000 
 
$ 96,994,000