Ulta Beauty opened 33 new stores in fiscal year 2023, increasing the total store count to 1,385 across 50 states. The company believes it has the potential to grow to between 1,500 and 1,700 stores in the United States.

The company continues to expand its digital capabilities, with 18% of loyalty members shopping both in Ulta Beauty stores and through digital platforms. The company is upgrading its e-commerce platform to enable a more seamless guest experience.

Ulta Beauty at Target shop-in-shops are available in over 500 Target locations as of February 3, 2024, and are expected to be in up to 800 Target locations over time. This partnership introduces Ulta Beauty to new guests and expands loyalty member engagement.

Ulta Beauty is focused on driving operational excellence and optimization to mitigate cost pressures from macroeconomic trends. This includes upgrading the enterprise resource planning platform and building a modern ecosystem for future analytics and data-driven decisioning capabilities.

The company emphasizes the importance of its values-based and high-performance culture and is committed to attracting, developing, and retaining talent at all levels. Diversity, equity, and inclusion are also key priorities.

Similar to other retailers, Ulta Beauty is experiencing persistent cost pressures from macroeconomic trends, including higher wage rates and transportation and shipping costs. The company is actively working to mitigate the impact of these pressures through operational efficiencies.

The 10K identifies macroeconomic conditions, including inflation, elevated interest rates, and recessionary concerns, as potential risks that could negatively impact the business, financial condition, profitability, and cash flows.

The company acknowledges the risk of cybersecurity or information security breaches and the potential for unauthorized disclosure of confidential information, which could damage the company's reputation and expose it to liability.

The 10K identifies the potential for significant interruptions in the operations of distribution centers, fast fulfillment centers, and market fulfillment centers, which could disrupt the ability to deliver merchandise to stores and guests in a timely manner.

The company acknowledges that the markets for beauty products and salon services are highly competitive with few barriers to entry. Competitors include a diverse group of retailers, both small and large, including regional and national department stores, specialty retailers, drug stores, mass merchandisers, and online retailers.

The company relies on good relationships with brand partners to purchase prestige, mass, and salon beauty products on reasonable terms, and to offer certain brands or products that are permanently or temporarily exclusive to us. If these relationships were to be impaired, the company may not be able to obtain a sufficient selection or volume of merchandise on reasonable terms.

Ulta Beauty's success depends in substantial part on its ability to recognize and define product and beauty trends, anticipate, gauge, and react to changing consumer preferences in a timely manner, and translate market trends into appropriate, saleable product and service offerings in its stores and salons in advance of its competitors.

SG&A expenses increased 50 basis points to 24.0% of net sales in fiscal 2023 compared to 23.5% in fiscal 2022. The deleverage of SG&A expenses was primarily due to strategic investments and wage investments.

The company continues to experience elevated levels of inventory shrink relative to historical levels, which have adversely affected, and could continue to adversely affect, results of operations and financial condition.

Any significant interruption in the operations of our distribution, fast fulfillment, and market fulfillment centers could disrupt the ability to deliver merchandise to stores and guests in a timely manner, which could have a material adverse effect on our business, financial condition, profitability, and cash flows.

As part of the digital store transformation, during fiscal 2023 Ulta Beauty substantially completed a large-scale upgrade of its end-to-end e-commerce platform and migrated to a new modernized platform to enable a more seamless guest experience.

The company is committed to using technology to enhance its competitive position and intends to leverage its technology infrastructure and systems to gain operational efficiencies through more effective use of its systems, people, and processes.

The Company seeks to address cybersecurity risks through a comprehensive, proactive cross-functional approach that is focused on preserving the confidentiality, security, and availability of the information that the Company collects and stores.

The Board of Directors authorized a new share repurchase program in March 2024, allowing the company to repurchase up to $2.0 billion of its common stock. This demonstrates a commitment to returning value to shareholders.

Capital expenditures were $435.3 million during fiscal 2023, primarily focused on new, remodeled, and relocated stores and investments in information technology systems and supply chain improvements. This indicates a focus on growth and operational efficiency.

The company has not declared any dividends. Capital is being allocated to store growth and share repurchases.

As a leader in the beauty industry, Ulta Beauty has an opportunity to drive positive impact. The company believes that beauty is for everyone, and strives to provide an environment where every associate feels they can realize their full potential and every guest is optimally served.

The company has made a commitment that 50% of packaging from products sold at its stores will be recyclable, refillable, or made from recycled or bio-sourced materials by 2025.

The company aims to ensure that all in-store experiences are equitable, fair, and unbiased. Action is taken to support this goal by conducting quarterly trainings for in-store associates and providing weekly learning opportunities.

The overall beauty market expanded in 2022 and in 2023, supported by healthy consumer engagement with the beauty category. Ulta Beauty has captured meaningful market share across all categories over the last several years.

The company acknowledges that continued pressure from inflation or other evolving macroeconomic conditions could have an adverse impact on consumer spending and could lead to a recession.

Although Ulta Beauty does not have any operations outside the United States, geopolitical events, including the ongoing conflicts in Ukraine and the Middle East, have caused greater uncertainty in the global economy and exacerbated the inflation situation.