Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Nov. 03, 2018	Dec. 04, 2018
Document And Entity Information
Entity Registrant Name	Ulta Beauty, Inc.
Entity Central Index Key	0001403568
Document Type	10-Q
Document Period End Date	Nov. 03, 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		59,312,145
Entity Small Business	false
Entity Emerging Growth Company	false
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Trading Symbol	ULTA

Consolidated Balance Sheets - USD ($) $ in Thousands	Nov. 03, 2018	Feb. 03, 2018	Oct. 28, 2017
Current assets:
Cash and cash equivalents	$ 296,944	$ 277,445	$ 46,787
Short-term investments		120,000	60,000
Receivables, net	102,353	99,719	82,934
Merchandise inventories, net	1,484,565	1,096,424	1,349,714
Prepaid expenses and other current assets	119,817	98,666	101,403
Prepaid income taxes	22,294	1,489	5,450
Total current assets	2,025,973	1,693,743	1,646,288
Property and equipment, net	1,257,775	1,189,453	1,172,682
Goodwill	9,084	0
Other intangible assets	6,985
Deferred compensation plan assets	21,397	16,827	15,903
Other long-term assets	11,477	8,664
Total assets	3,332,691	2,908,687	2,834,873
Current liabilities:
Accounts payable	574,480	325,758	447,293
Accrued liabilities	409,603	302,307	266,435
Accrued income taxes		14,101	984
Total current liabilities	984,083	642,166	714,712
Deferred rent	432,052	407,916	400,477
Deferred income taxes	50,045	59,403	78,647
Other long-term liabilities	30,775	24,985	24,986
Total liabilities	1,496,955	1,134,470	1,218,822
Commitments and contingencies (Note 5)
Stockholders' equity:
Common stock, $0.01 par value, 400,000 shares authorized; 60,108, 61,441, and 61,693 shares issued; 59,461, 60,822, and 61,074 shares outstanding; at November 3, 2018 (unaudited), February 3, 2018, and October 28, 2017 (unaudited), respectively	601	614	617
Treasury stock-common, at cost	(24,706)	(18,767)	(18,732)
Additional paid-in capital	731,890	698,917	691,075
Retained earnings	1,127,951	1,093,453	943,091
Total stockholders' equity	1,835,736	1,774,217	1,616,051
Total liabilities and stockholders' equity	$ 3,332,691	$ 2,908,687	$ 2,834,873

Consolidated Balance Sheets (Parenthetical) - $ / shares	Nov. 03, 2018	Feb. 03, 2018	Oct. 28, 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	60,108,000	61,441,000	61,693,000
Common stock, shares outstanding	59,461,000	60,822,000	61,074,000

Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 03, 2018	Oct. 28, 2017	Nov. 03, 2018	Oct. 28, 2017
Consolidated Statements of Income
Net sales	$ 1,560,011	$ 1,342,181	$ 4,591,899	$ 3,946,914
Cost of sales	987,733	849,053	2,923,447	2,508,452
Gross profit	572,278	493,128	1,668,452	1,438,462
Selling, general and administrative expenses	395,453	320,729	1,078,219	887,601
Pre-opening expenses	7,612	9,732	17,363	19,989
Operating income	169,213	162,667	572,870	530,872
Interest income, net	(1,318)	(316)	(3,786)	(1,209)
Income before income taxes	170,531	162,983	576,656	532,081
Income tax expense	39,365	58,338	132,771	185,020
Net income	$ 131,166	$ 104,645	$ 443,885	$ 347,061
Net income per common share:
Basic	$ 2.20	$ 1.71	$ 7.38	$ 5.62
Diluted	$ 2.18	$ 1.70	$ 7.35	$ 5.58
Weighted average common shares outstanding:
Basic	59,724	61,299	60,135	61,778
Diluted	60,062	61,630	60,432	62,198

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Nov. 03, 2018	Oct. 28, 2017
Operating activities
Net income	$ 443,885	$ 347,061
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	207,652	187,710
Deferred income taxes	(408)	(7,851)
Non-cash stock compensation charges	20,308	17,898
Loss on disposal of property and equipment	1,339	5,707
Change in operating assets and liabilities:
Receivables	(2,594)	5,697
Merchandise inventories	(388,141)	(405,739)
Prepaid expenses and other current assets	(19,603)	(12,782)
Income taxes	(34,906)	(13,437)
Accounts payable	248,719	187,775
Accrued liabilities	44,114	(18,721)
Deferred rent	24,136	34,286
Other assets and liabilities	(2,287)	1,489
Net cash provided by operating activities	542,214	329,093
Investing activities
Purchases of short-term investments	(386,193)	(240,000)
Proceeds from short-term investments	506,193	210,000
Purchases of property and equipment	(256,415)	(337,639)
Acquisitions, net of cash acquired	(13,606)
Net cash used in investing activities	(150,021)	(367,639)
Financing activities
Repurchase of common shares	(379,423)	(309,767)
Stock options exercised	12,668	14,849
Purchase of treasury shares	(5,939)	(4,208)
Debt issuance costs		(551)
Net cash used in financing activities	(372,694)	(299,677)
Net increase (decrease) in cash and cash equivalents	19,499	(338,223)
Cash and cash equivalents at beginning of period	277,445	385,010
Cash and cash equivalents at end of period	296,944	46,787
Supplemental cash flow information
Cash paid for income taxes (net of refunds)	168,087	205,863
Non-cash investing activities:
Change in property and equipment included in accrued liabilities	$ 21,611	$ 24,302

Consolidated Statements of Stockholders' Equity - 9 months ended Nov. 03, 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
Net income				443,885	$ 443,885
Stock compensation charge			20,308		20,308
Adoption of accounting standards (Note 4)				(29,980)	(29,980)
Stock options exercised and other awards	$ 3		12,665		12,668
Stock options exercised and other awards (in shares)	249
Purchase of treasury shares		$ (5,939)			(5,939)
Purchase of treasury shares (in shares)		(28)
Repurchase of common shares	$ (16)			(379,407)	(379,423)
Repurchase of common shares (in shares)	(1,582)
Balance at Nov. 03, 2018	$ 601	$ (24,706)	$ 731,890	$ 1,127,951	$ 1,835,736
Balance (in shares) at Nov. 03, 2018	60,108	(647)			59,461

Business and basis of presentation

9 Months Ended

Nov. 03, 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 November 3, 2018, the Company operated 1,163 stores across 50 states, as shown in the table below.


	Number of		Number of
Location	stores	Location	stores
Alabama	18	Montana	6
Alaska	3	Nebraska	5
Arizona	27	Nevada	14
Arkansas	10	New Hampshire	7
California	149	New Jersey	34
Colorado	24	New Mexico	6
Connecticut	16	New York	45
Delaware	3	North Carolina	30
Florida	81	North Dakota	3
Georgia	35	Ohio	41
Hawaii	3	Oklahoma	20
Idaho	8	Oregon	14
Illinois	55	Pennsylvania	42
Indiana	22	Rhode Island	3
Iowa	10	South Carolina	18
Kansas	12	South Dakota	2
Kentucky	14	Tennessee	24
Louisiana	17	Texas	104
Maine	3	Utah	14
Maryland	21	Vermont	1
Massachusetts	18	Virginia	27
Michigan	46	Washington	31
Minnesota	16	West Virginia	7
Mississippi	9	Wisconsin	20
Missouri	23	Wyoming	2
		Total	1,163

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 and 39 weeks ended November 3, 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.

Summary of significant accounting policies

9 Months Ended

Nov. 03, 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 third quarter in fiscal 2018 and 2017 ended on November 3, 2018 and October 28, 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:


	39 Weeks Ended
	November 3,	October 28,
	2018	2017
Volatility rate	29.0%	30.9%
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 106 stock options during the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. The compensation cost charged against operating income for stock options was $2,134 and $2,212 for the 13 weeks ended November 3, 2018 and October 28, 2017, respectively. The compensation cost charged against operating income for stock options was $6,557 and $6,589 for the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. The weighted-average grant date fair value of these stock options was $50.10 and $69.61 for the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. At November 3, 2018, there was approximately $19,586 of unrecognized compensation expense related to unvested stock options.

The Company issued 95 and 45 restricted stock units during the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. The compensation cost charged against operating income for restricted stock units was $3,449 and $2,419 for the 13 weeks ended November 3, 2018 and October 28, 2017, respectively. The compensation cost charged against operating income for restricted stock units was $9,244 and $6,872 for the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. At November 3, 2018, there was approximately $22,597 of unrecognized compensation expense related to restricted stock units.

The Company issued 33 and 21 performance-based restricted stock units during the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. The compensation cost charged against operating income for performance-based restricted stock units was $1,904 and $1,618 for the 13 weeks ended November 3, 2018 and October 28, 2017, respectively. The compensation cost charged against operating income for performance-based restricted stock units was $5,083 and $4,437 for the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. At November 3, 2018, there was approximately $11,403 of unrecognized compensation expense related to performance-based restricted stock units.

Goodwill and Other Intangible Assets

Goodwill, which represents the excess of cost over the fair value of net assets acquired, amounted to $9,084 and $0 at November 3, 2018 and February 3, 2018, respectively. The Company recognized $9,084 of goodwill during the 13 weeks and 39 weeks ended November 3, 2018 related to the acquisitions discussed in Note 3, “Acquisitions.” The Company reviews the recoverability of goodwill annually during the fourth quarter or more frequently if an event occurs or circumstances change that would indicate that impairment may exist.

Other intangible assets with finite useful lives are amortized over their useful lives. During the 13 weeks and 39 weeks ended November 3, 2018, the Company recognized $7,066 in intangibles related to the acquisitions discussed in Note 3, “Acquisitions.” The Company reviews the recoverability of long-lived assets whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.

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). The guidance in ASU 2016-02 and subsequently issued amendments requires lessees to capitalize virtually all leases with terms of more than twelve months on the balance sheet as a right-of-use asset and recognize an associated 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 or operating leases and their classification impacts the recognition of expense in the income statement. Entities are allowed to apply the modified retrospective approach (1) retrospectively to each comparative period presented or (2) retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment. ASU 2016‑02 is effective for public companies for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted.

The Company will adopt the new standard in the first quarter of fiscal 2019 using the modified retrospective approach with a cumulative-effect adjustment to opening retained earnings recorded at the beginning of the period of adoption. Therefore, upon adoption, the Company will recognize and measure leases without revising comparative period information or disclosures.

The Company formed a cross-functional project team to assess the impact of the standard on the consolidated financial statements and is progressing with the implementation plan, which includes identifying the lease population, updating the lease software, and identifying changes to processes and controls. The Company plans to implement the transition package of three practical expedients permitted within the standard, which among other things, allows for the carryforward of historical lease classifications. The Company will make an accounting policy election to keep leases with terms of twelve months or less off the balance sheet and result in recognizing those lease payments on a straight-line basis over the lease term. The Company has determined that the initial lease term will not differ under the new standard versus current accounting practice.

The adoption of ASU 2016‑02 will have a material impact on the Company’s consolidated financial position as there will be approximately 1,200 leased locations at the time of adoption, including the corporate office, stores, and distribution centers, however, 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.

Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies how all entities assess goodwill for impairment by eliminating Step 2 from the goodwill impairment test. As amended, the goodwill impairment test will consist of one step comparing the fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, except that the loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019 and should be applied prospectively. Early adoption is permitted. The adoption of ASU 2017-04 is not expected to have a material impact on the Company’s consolidated financial position, results of operation, or cash flows.

Intangibles – Goodwill and Other-Internal-Use Software

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which clarifies and aligns the accounting for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019 and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted. The adoption of ASU 2018-15 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

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 4, “Revenue”, for further details.

Acquisitions	9 Months Ended
Acquisitions	Nov. 03, 2018
Acquisitions
Acquisitions	3.Acquisitions The Company continues to make investments to evolve the customer experience, with a strong emphasis on integrating technology across the business. To support these efforts, the Company paid $13,606 to acquire two technology companies during the third quarter of fiscal 2018. On September 10, 2018, the Company acquired QM Scientific, an artificial intelligence technology company. The acquisition is not material to the Company’s consolidated financial statements. On October 29, 2018, the Company acquired GlamST, an augmented reality technology company. The acquisition is not material to the Company’s consolidated financial statements. The Company has not yet finalized the process of measuring the fair value of assets acquired and liabilities assumed as of November 3, 2018. Accordingly, the fair values reported may change along with a corresponding change in the goodwill recorded.

Revenue

9 Months Ended

Nov. 03, 2018

Revenue

Revenue

4.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 third parties pay the Company for the credit card program costs such as advertising and loyalty points, which help promote the credit card program. The Company recognizes revenue 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						39 Weeks Ended
	November 3,			October 28,			November 3,			October 28,
(Dollars in thousands)	2018			2017			2018			2017
Retail stores	$	1,304,816	83%	$	1,155,497	86%	$	3,877,770	84%	$	3,422,849	87%
E-commerce		170,738	11%		119,806	9%		457,942	10%		320,413	8%
Salon services		74,012	5%		66,878	5%		223,691	5%		203,652	5%
Other		10,445	1%		-	0%		32,496	1%		-	0%
Total	$	1,560,011	100%	$	1,342,181	100%	$	4,591,899	100%	$	3,946,914	100%

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


	13 Weeks Ended		39 Weeks Ended
	November 3,	October 28,	November 3,	October 28,
(Percentage of net sales)	2018	2017	2018	2017
Cosmetics	53%	53%	52%	53%
Skincare, Bath & Fragrance	19%	19%	20%	19%
Haircare Products & Styling Tools	19%	19%	19%	19%
Salon Services	5%	5%	5%	5%
Other (nail products, accessories, and other)	4%	4%	4%	4%
	100%	100%	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 and 39 weeks ended November 3, 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):


	13 Weeks Ended		39 Weeks Ended
	November 3, 2018		November 3, 2018
Beginning balance	$	130,616	$	110,103
Adoption of ASC 606		-		38,773
Additions to contract liabilities		90,285		265,120
Deductions to contract liabilities		(85,305)		(278,400)
Ending balance	$	135,596	$	135,596

Commitments and contingencies	9 Months Ended
Commitments and contingencies	Nov. 03, 2018
Commitments and contingencies
Commitments and contingencies	5.Commitments and contingencies Leases – The Company leases retail stores, distribution centers, and corporate offices. 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 $66,779 and $60,687 for the 13 weeks ended November 3, 2018 and October 28, 2017, respectively. Total rent expense under operating leases was $196,282 and $175,282 for the 39 weeks ended November 3, 2018 and October 28, 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.

Notes payable	9 Months Ended
Notes payable	Nov. 03, 2018
Notes payable
Notes payable	6.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 November 3, 2018, February 3, 2018, and October 28, 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.

Fair value measurements

9 Months Ended

Nov. 03, 2018

Fair value measurements

Fair value measurements

7.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 November 3, 2018, February 3, 2018, and October 28, 2017, the Company held financial liabilities of $22,128, $15,942, and $16,143, 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.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Investments	9 Months Ended
Investments	Nov. 03, 2018
Investments
Investments	8.Investments The Company did not have any short-term investments as of November 3, 2018. The Company’s short-term investments as of February 3, 2018 and October 28, 2017 consisted of $120,000 and $60,000, respectively, in certificates of deposit. Short-term investments are carried at cost, which approximates fair value and are recorded in the consolidated balance sheets in short-term investments.

Income Taxes	9 Months Ended
Income Taxes	Nov. 03, 2018
Income Taxes
Income Taxes	9.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 $39,365 for the 13 weeks ended November 3, 2018 represents an effective tax rate of 23.1%, compared to $58,338 of tax expense representing an effective tax rate of 35.8% for the 13 weeks ended October 28, 2017. Income tax expense of $132,771 for the 39 weeks ended November 3, 2018 represents an effective tax rate of 23.0%, compared to $185,020 of tax expense representing an effective tax rate of 34.8% for the 39 weeks ended October 28, 2017. The lower effective tax rate is primarily due to tax reform.

Net income per common share

9 Months Ended

Nov. 03, 2018

Net income per common share

Net income per common share

10.Net income per common share

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


	13 Weeks Ended				39 Weeks Ended
	November 3,		October 28,		November 3,		October 28,
(In thousands, except per share data)	2018		2017		2018		2017
Numerator for diluted net income per share – net income	$	131,166	$	104,645	$	443,885	$	347,061

Denominator for basic net income per share – weighted-average common shares		59,724		61,299		60,135		61,778
Dilutive effect of stock options and non-vested stock		338		331		297		420
Denominator for diluted net income per share		60,062		61,630		60,432		62,198

Net income per common share:
Basic	$	2.20	$	1.71	$	7.38	$	5.62
Diluted	$	2.18	$	1.70	$	7.35	$	5.58

The denominator for diluted net income per common share for the 13 weeks ended November 3, 2018 and October 28, 2017 excludes 106 and 259 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects. The denominator for diluted net income per common share for the 39 weeks ended November 3, 2018 and October 28, 2017 excludes 298 and 172 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.

Share repurchase program	9 Months Ended
Share repurchase program	Nov. 03, 2018
Share repurchase program
Share repurchase program	11.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 39 weeks ended November 3, 2018, the Company purchased 1,582 shares of common stock for $379,423. During the 39 weeks ended October 28, 2017, the Company purchased 1,238 shares of common stock for $309,767.

Summary of significant accounting policies (Policies)

9 Months Ended

Nov. 03, 2018

Summary of significant accounting 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 2018 and 2017 ended on November 3, 2018 and October 28, 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:


	39 Weeks Ended
	November 3,	October 28,
	2018	2017
Volatility rate	29.0%	30.9%
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 106 stock options during the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. The compensation cost charged against operating income for stock options was $2,134 and $2,212 for the 13 weeks ended November 3, 2018 and October 28, 2017, respectively. The compensation cost charged against operating income for stock options was $6,557 and $6,589 for the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. The weighted-average grant date fair value of these stock options was $50.10 and $69.61 for the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. At November 3, 2018, there was approximately $19,586 of unrecognized compensation expense related to unvested stock options.

The Company issued 95 and 45 restricted stock units during the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. The compensation cost charged against operating income for restricted stock units was $3,449 and $2,419 for the 13 weeks ended November 3, 2018 and October 28, 2017, respectively. The compensation cost charged against operating income for restricted stock units was $9,244 and $6,872 for the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. At November 3, 2018, there was approximately $22,597 of unrecognized compensation expense related to restricted stock units.

The Company issued 33 and 21 performance-based restricted stock units during the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. The compensation cost charged against operating income for performance-based restricted stock units was $1,904 and $1,618 for the 13 weeks ended November 3, 2018 and October 28, 2017, respectively. The compensation cost charged against operating income for performance-based restricted stock units was $5,083 and $4,437 for the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. At November 3, 2018, there was approximately $11,403 of unrecognized compensation expense related to performance-based restricted stock units.

Goodwill and Other Intangible Assets

Goodwill, which represents the excess of cost over the fair value of net assets acquired, amounted to $9,084 and $0 at November 3, 2018 and February 3, 2018, respectively. The Company recognized $9,084 of goodwill during the 13 weeks and 39 weeks ended November 3, 2018 related to the acquisitions discussed in Note 3, “Acquisitions.” The Company reviews the recoverability of goodwill annually during the fourth quarter or more frequently if an event occurs or circumstances change that would indicate that impairment may exist.

Other intangible assets with finite useful lives are amortized over their useful lives. During the 13 weeks and 39 weeks ended November 3, 2018, the Company recognized $7,066 in intangibles related to the acquisitions discussed in Note 3, “Acquisitions.” The Company reviews the recoverability of long-lived assets whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.

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). The guidance in ASU 2016-02 and subsequently issued amendments requires lessees to capitalize virtually all leases with terms of more than twelve months on the balance sheet as a right-of-use asset and recognize an associated 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 or operating leases and their classification impacts the recognition of expense in the income statement. Entities are allowed to apply the modified retrospective approach (1) retrospectively to each comparative period presented or (2) retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment. ASU 2016‑02 is effective for public companies for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted.

The Company will adopt the new standard in the first quarter of fiscal 2019 using the modified retrospective approach with a cumulative-effect adjustment to opening retained earnings recorded at the beginning of the period of adoption. Therefore, upon adoption, the Company will recognize and measure leases without revising comparative period information or disclosures.

The Company formed a cross-functional project team to assess the impact of the standard on the consolidated financial statements and is progressing with the implementation plan, which includes identifying the lease population, updating the lease software, and identifying changes to processes and controls. The Company plans to implement the transition package of three practical expedients permitted within the standard, which among other things, allows for the carryforward of historical lease classifications. The Company will make an accounting policy election to keep leases with terms of twelve months or less off the balance sheet and result in recognizing those lease payments on a straight-line basis over the lease term. The Company has determined that the initial lease term will not differ under the new standard versus current accounting practice.

The adoption of ASU 2016‑02 will have a material impact on the Company’s consolidated financial position as there will be approximately 1,200 leased locations at the time of adoption, including the corporate office, stores, and distribution centers, however, 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.

Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies how all entities assess goodwill for impairment by eliminating Step 2 from the goodwill impairment test. As amended, the goodwill impairment test will consist of one step comparing the fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, except that the loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019 and should be applied prospectively. Early adoption is permitted. The adoption of ASU 2017-04 is not expected to have a material impact on the Company’s consolidated financial position, results of operation, or cash flows.

Intangibles – Goodwill and Other-Internal-Use Software

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which clarifies and aligns the accounting for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019 and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted. The adoption of ASU 2018-15 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

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 4, “Revenue”, for further details.

Business and basis of presentation (Tables)

9 Months Ended

Nov. 03, 2018

Business and basis of presentation

Schedule of stores operated by geographic area

As of November 3, 2018, the Company operated 1,163 stores across 50 states, as shown in the table below.


	Number of		Number of
Location	stores	Location	stores
Alabama	18	Montana	6
Alaska	3	Nebraska	5
Arizona	27	Nevada	14
Arkansas	10	New Hampshire	7
California	149	New Jersey	34
Colorado	24	New Mexico	6
Connecticut	16	New York	45
Delaware	3	North Carolina	30
Florida	81	North Dakota	3
Georgia	35	Ohio	41
Hawaii	3	Oklahoma	20
Idaho	8	Oregon	14
Illinois	55	Pennsylvania	42
Indiana	22	Rhode Island	3
Iowa	10	South Carolina	18
Kansas	12	South Dakota	2
Kentucky	14	Tennessee	24
Louisiana	17	Texas	104
Maine	3	Utah	14
Maryland	21	Vermont	1
Massachusetts	18	Virginia	27
Michigan	46	Washington	31
Minnesota	16	West Virginia	7
Mississippi	9	Wisconsin	20
Missouri	23	Wyoming	2
		Total	1,163

Summary of significant accounting policies (Tables)

9 Months Ended

Nov. 03, 2018

Summary of significant accounting policies

Schedule of weighted average assumptions to determine grant date fair value of employee stock options


	39 Weeks Ended
	November 3,	October 28,
	2018	2017
Volatility rate	29.0%	30.9%
Average risk-free interest rate	2.4%	1.6%
Average expected life (in years)	3.4	3.5
Dividend yield	None	None

Revenue (Tables)

9 Months Ended

Nov. 03, 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						39 Weeks Ended
	November 3,			October 28,			November 3,			October 28,
(Dollars in thousands)	2018			2017			2018			2017
Retail stores	$	1,304,816	83%	$	1,155,497	86%	$	3,877,770	84%	$	3,422,849	87%
E-commerce		170,738	11%		119,806	9%		457,942	10%		320,413	8%
Salon services		74,012	5%		66,878	5%		223,691	5%		203,652	5%
Other		10,445	1%		-	0%		32,496	1%		-	0%
Total	$	1,560,011	100%	$	1,342,181	100%	$	4,591,899	100%	$	3,946,914	100%

Schedule of approximate percentage of net sales attributed to each category


	13 Weeks Ended		39 Weeks Ended
	November 3,	October 28,	November 3,	October 28,
(Percentage of net sales)	2018	2017	2018	2017
Cosmetics	53%	53%	52%	53%
Skincare, Bath & Fragrance	19%	19%	20%	19%
Haircare Products & Styling Tools	19%	19%	19%	19%
Salon Services	5%	5%	5%	5%
Other (nail products, accessories, and other)	4%	4%	4%	4%
	100%	100%	100%	100%

Summary of changes in deferred revenue


	13 Weeks Ended		39 Weeks Ended
	November 3, 2018		November 3, 2018
Beginning balance	$	130,616	$	110,103
Adoption of ASC 606		-		38,773
Additions to contract liabilities		90,285		265,120
Deductions to contract liabilities		(85,305)		(278,400)
Ending balance	$	135,596	$	135,596

Net income per common share (Tables)

9 Months Ended

Nov. 03, 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				39 Weeks Ended
	November 3,		October 28,		November 3,		October 28,
(In thousands, except per share data)	2018		2017		2018		2017
Numerator for diluted net income per share – net income	$	131,166	$	104,645	$	443,885	$	347,061

Denominator for basic net income per share – weighted-average common shares		59,724		61,299		60,135		61,778
Dilutive effect of stock options and non-vested stock		338		331		297		420
Denominator for diluted net income per share		60,062		61,630		60,432		62,198

Net income per common share:
Basic	$	2.20	$	1.71	$	7.38	$	5.62
Diluted	$	2.18	$	1.70	$	7.35	$	5.58

Business and Basis of Presentation (Details)	Nov. 03, 2018 store state
Stores by state
Number of stores operated	1,163
Number of states in which entity operates \| state	50
Alabama
Stores by state
Number of stores operated	18
Alaska
Stores by state
Number of stores operated	3
Arizona
Stores by state
Number of stores operated	27
Arkansas
Stores by state
Number of stores operated	10
California
Stores by state
Number of stores operated	149
Colorado
Stores by state
Number of stores operated	24
Connecticut
Stores by state
Number of stores operated	16
Delaware
Stores by state
Number of stores operated	3
Florida
Stores by state
Number of stores operated	81
Georgia
Stores by state
Number of stores operated	35
Hawaii
Stores by state
Number of stores operated	3
Idaho
Stores by state
Number of stores operated	8
Illinois
Stores by state
Number of stores operated	55
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	12
Kentucky
Stores by state
Number of stores operated	14
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	21
Massachusetts
Stores by state
Number of stores operated	18
Michigan
Stores by state
Number of stores operated	46
Minnesota
Stores by state
Number of stores operated	16
Mississippi
Stores by state
Number of stores operated	9
Missouri
Stores by state
Number of stores operated	23
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	34
New Mexico
Stores by state
Number of stores operated	6
New York
Stores by state
Number of stores operated	45
North Carolina
Stores by state
Number of stores operated	30
North Dakota
Stores by state
Number of stores operated	3
Ohio
Stores by state
Number of stores operated	41
Oklahoma
Stores by state
Number of stores operated	20
Oregon
Stores by state
Number of stores operated	14
Pennsylvania
Stores by state
Number of stores operated	42
Rhode Island
Stores by state
Number of stores operated	3
South Carolina
Stores by state
Number of stores operated	18
South Dakota
Stores by state
Number of stores operated	2
Tennessee
Stores by state
Number of stores operated	24
Texas
Stores by state
Number of stores operated	104
Utah
Stores by state
Number of stores operated	14
Vermont
Stores by state
Number of stores operated	1
Virginia
Stores by state
Number of stores operated	27
Washington
Stores by state
Number of stores operated	31
West Virginia
Stores by state
Number of stores operated	7
Wisconsin
Stores by state
Number of stores operated	20
Wyoming
Stores by state
Number of stores operated	2

Summary of significant accounting policies - Fiscal Quarter (Details)	9 Months Ended
	Nov. 03, 2018	Oct. 28, 2017
Summary of significant accounting policies
Fiscal period	91 days	91 days

Summary of significant accounting policies – Share-based compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 03, 2018	Oct. 28, 2017	Nov. 03, 2018	Oct. 28, 2017
Stock options
Weighted-average assumptions to estimate fair value
Volatility rate (as a percent)			29.00%	30.90%
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	106
Compensation expense	$ 2,134	$ 2,212	$ 6,557	$ 6,589
Weighted-average grant date fair value of options granted (in dollars per share)			$ 50.10	$ 69.61
Unrecognized compensation expense	19,586		$ 19,586
Restricted stock units
Weighted-average assumptions to estimate fair value
Compensation expense	3,449	2,419	9,244	$ 6,872
Unrecognized compensation expense	22,597		$ 22,597
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			95	45
Performance-based restricted stock units
Weighted-average assumptions to estimate fair value
Compensation expense	1,904	$ 1,618	$ 5,083	$ 4,437
Unrecognized compensation expense	$ 11,403		$ 11,403
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			33	21

Summary of significant accounting policies – Goodwill and other intangible assets (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Nov. 03, 2018	Nov. 03, 2018	Feb. 03, 2018
Goodwill and Intangible Assets
Goodwill	$ 9,084	$ 9,084	$ 0
Acquisition of technology companies
Goodwill and Intangible Assets
Goodwill recognized related to acquisitions	9,084	9,084
Intangibles recognized related to acquisitions	$ 7,066	$ 7,066

Summary of significant accounting policies – Leases (Details)	Nov. 03, 2018 property
Summary of significant accounting policies
Number of expected lease locations	1,200

Acquisitions (Details) - Acquisition of technology companies $ in Thousands	3 Months Ended
	Nov. 03, 2018 USD ($) company
Acquisitions
Payments to acquired companies \| $	$ 13,606
Number of companies acquired \| company	2

Revenue - Disaggregated revenue (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Feb. 04, 2018	Nov. 03, 2018	Oct. 28, 2017	Nov. 03, 2018	Oct. 28, 2017
Disaggregated revenue
Term of refund for product returns				60 days
Minimum term that loyalty program points are valid				1 year
Net sales		$ 1,560,011	$ 1,342,181	$ 4,591,899	$ 3,946,914
Sales Revenue
Disaggregated revenue
Concentration (as a percent)		100.00%	100.00%	100.00%	100.00%
Sales Revenue \| Cosmetics
Disaggregated revenue
Concentration (as a percent)		53.00%	53.00%	52.00%	53.00%
Sales Revenue \| Skincare, Bath and Fragrance
Disaggregated revenue
Concentration (as a percent)		19.00%	19.00%	20.00%	19.00%
Sales Revenue \| Haircare Products and Styling Tools
Disaggregated revenue
Concentration (as a percent)		19.00%	19.00%	19.00%	19.00%
Sales Revenue \| Salon Services
Disaggregated revenue
Concentration (as a percent)		5.00%	5.00%	5.00%	5.00%
Sales Revenue \| Other categories
Disaggregated revenue
Concentration (as a percent)		4.00%	4.00%	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		$ 1,304,816	$ 1,155,497	$ 3,877,770	$ 3,422,849
Retail stores \| Sales Revenue
Disaggregated revenue
Concentration (as a percent)		83.00%	86.00%	84.00%	87.00%
E-commerce
Disaggregated revenue
Net sales		$ 170,738	$ 119,806	$ 457,942	$ 320,413
E-commerce \| Sales Revenue
Disaggregated revenue
Concentration (as a percent)		11.00%	9.00%	10.00%	8.00%
Salon services
Disaggregated revenue
Net sales		$ 74,012	$ 66,878	$ 223,691	$ 203,652
Salon services \| Sales Revenue
Disaggregated revenue
Concentration (as a percent)		5.00%	5.00%	5.00%	5.00%
Other
Disaggregated revenue
Net sales		$ 10,445		$ 32,496
Other \| Sales Revenue
Disaggregated revenue
Concentration (as a percent)		1.00%	0.00%	1.00%	0.00%

Revenue - Deferred revenue (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Nov. 03, 2018	Nov. 03, 2018
Summary of changes in deferred revenue
Balance at beginning of period	$ 130,616	$ 110,103
Adoption of ASC 606		38,773
Additions to contract liabilities	90,285	265,120
Deductions to contract liabilities	(85,305)	(278,400)
Balance at end of period	$ 135,596	$ 135,596

Commitments and contingencies (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 03, 2018	Oct. 28, 2017	Nov. 03, 2018	Oct. 28, 2017
Leases
Total rent expense under operating leases	$ 66,779	$ 60,687	$ 196,282	$ 175,282
Minimum
Leases
Original non-cancelable lease term	3 years		3 years
Maximum
Leases
Original non-cancelable lease term	10 years		10 years

Notes payable (Details)	9 Months Ended
Notes payable (Details)	Nov. 03, 2018 USD ($)	Feb. 03, 2018 USD ($)	Oct. 28, 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

Fair value measurements (Details) - USD ($) $ in Thousands	Nov. 03, 2018	Feb. 03, 2018	Oct. 28, 2017
Level 2 \| Non-qualified deferred compensation plan
Fair value measurements
Fair value of financial liabilities	$ 22,128	$ 15,942	$ 16,143

Investments (Details) - USD ($) $ in Thousands	Feb. 03, 2018	Oct. 28, 2017
Investments
Short-term investments	$ 120,000	$ 60,000

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Nov. 03, 2018	Oct. 28, 2017	Nov. 03, 2018	Oct. 28, 2017
Income Taxes
Income tax expense	$ 39,365	$ 58,338	$ 132,771	$ 185,020
Effective tax rate (as a percent)	23.10%	35.80%	23.00%	34.80%

Net income per common share - Reconciliation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 03, 2018	Oct. 28, 2017	Nov. 03, 2018	Oct. 28, 2017
Net income per common share
Numerator for diluted net income per share - net income	$ 131,166	$ 104,645	$ 443,885	$ 347,061
Denominator for basic net income per share - weighted-average common shares	59,724	61,299	60,135	61,778
Dilutive effect of stock options and non-vested stock	338	331	297	420
Denominator for diluted net income per share	60,062	61,630	60,432	62,198
Net income per common share:
Basic	$ 2.20	$ 1.71	$ 7.38	$ 5.62
Diluted	$ 2.18	$ 1.70	$ 7.35	$ 5.58

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

Net income per common share - Anti-dilutive Shares (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Nov. 03, 2018	Oct. 28, 2017	Nov. 03, 2018	Oct. 28, 2017
Net income per common share
Employee stock options and restricted stock units excluded from the computation of net income per common share	106	259	298	172

Share repurchase program (Details) - USD ($) shares in Thousands	9 Months Ended
	Nov. 03, 2018	Oct. 28, 2017	Mar. 15, 2018	Mar. 09, 2017
Share repurchase program
Common stock repurchased and retired	$ 379,423,000
Common Stock
Share repurchase program
Shares repurchased and retired (in shares)	1,582
Common stock repurchased and retired	$ 16,000
2016 Share Repurchase Program
Share repurchase program
Remaining authorized amount from earlier share repurchase program				$ 79,863,000
2017 Share Repurchase Program
Share repurchase program
Remaining authorized amount from earlier share repurchase program			$ 41,317,000
2017 Share Repurchase Program \| Maximum
Share repurchase program
Authorized amount of share repurchase program				$ 425,000,000
Share Repurchase Programs
Share repurchase program
Common stock repurchased and retired	$ 379,423,000	$ 309,767,000
Share Repurchase Programs \| Common Stock
Share repurchase program
Shares repurchased and retired (in shares)	1,582	1,238
2018 Share Repurchase Program \| Maximum
Share repurchase program
Authorized amount of share repurchase program			$ 625,000,000