Ulta Beauty ULTA · USD

19. Segment reporting​The Company operates specialty beauty retail stores selling cosmetics, fragrance, skincare products, haircare products, wellness products, and services. Nearly every store features a full-service salon. The Company has one operating segment and one reportable segment, both of which include retail stores, salon services, and e-commerce. The Company’s President and Chief Executive Officer operates as the chief operating decision maker (“CODM”) and evaluates performance based on net income that is reported on the consolidated statements of income. The measure of segment assets is reported on the consolidated balance sheets as total assets. The Company’s net sales are primarily generated within the United States and its long-lived assets are located primarily in the United States.​The CODM considers both budget-to-actual and forecast-to-actual variances on a monthly basis for profit measures when assessing performance and making decisions about allocating capital and resources. The CODM also uses net income in competitive analysis by benchmarking to competitors. The competitive analysis along with the monitoring of the financial results are used in assessing performance of the reportable segment and in establishing compensation.​​Within the reportable segment, there are significant expense categories regularly provided to the CODM and included in the measure of the segment’s net income as shown below:​​​​​​​​​​​​​Fiscal Year Ended​​January 31,​February 1,​February 3,(In thousands)​2026 ​ ​ ​2025 ​ ​ ​2024Net sales​$ 12,392,820​$ 11,295,654​$ 11,207,303Less:​​​​​​​​​Cost of sales (1)​​ 7,547,596​​ 6,908,401​​ 6,826,203Associate expenses (2)​​ 1,714,677​​ 1,459,231​​ 1,391,175Advertising expense, net (3)​​ 490,980​​ 431,455​​ 422,779Pre-opening expenses​​ 15,821​​ 13,689​​ 8,510Other segment expenses (1) (4)​​ 1,090,754​​ 917,906​​ 880,607Interest expense (income), net​​ 1,787​​ (15,094)​​ (17,622)Income tax expense​​ 373,869​​ 378,948​​ 404,646Equity net loss of affiliate​​ 3,857​​ —​​ —Net income​$ 1,153,479​$ 1,201,118​$ 1,291,005​(1)Included within cost of sales and other segment expenses is depreciation and amortization expense of $300,772, $267,042, and $243,840 is fiscal years 2025, 2024, and 2023, respectively, as described in Note 2, “Summary of significant accounting policies.

4. RevenueNet sales include retail stores and e-commerce merchandise sales as well as salon services and other revenue. Other revenue primarily includes other revenue sources such as the private label and co-branded credit card programs, deferred revenue related to the loyalty program and gift card breakage, and royalties.​Disaggregated revenue​The following table sets forth the approximate percentage of net sales by primary category:​​​​​​​​​Fiscal Year Ended​​January 31,​February 1,​February 3,(Percentage of net sales)​2026​2025​2024Cosmetics​38% ​39% ​41%Skincare and wellness​24%​23%​22%Haircare​19%​19%​20%Fragrance​13%​13%​11%Services​4%​4%​4%Other​2%​2%​2%​​100%​100%​100%​Deferred revenue​Deferred revenue primarily represents contract liabilities for the obligation to transfer additional goods or services to a guest for which the Company has received consideration, such as unredeemed loyalty points and unredeemed gift cards. In addition, breakage on gift cards is recognized proportionately as redemption occurs.The following table provides a summary of the changes included in deferred revenue during fiscal 2025 and 2024:​​​​​​​​​Fiscal Year Ended​​January 31,​February 1,(In thousands)​2026 ​ ​ ​2025Beginning balance​$ 492,907​$ 428,788Additions to contract liabilities (1)​​ 414,137​​ 362,563Deductions to contract liabilities (2)​​ (333,009)​​ (298,444)Ending balance​$ 574,035​$ 492,907(1)Loyalty points and gift cards issued in the current period but not redeemed or expired. (2)Revenue recognized in the current period related to the beginning liability.Other amounts included in deferred revenue were $8,343 and $7,678 at January 31, 2026 and February 1, 2025, respectively.

10. Commitments and contingencies​Contractual obligations – As of January 31, 2026, the Company had various non-cancelable obligations of $12,000 primarily due to commitments made to a third party for products and services for our strategic investments related to supply chain optimization and information technology systems. A majority of these agreements are due within three years and are recorded as liabilities when the goods are received or the services are rendered. Payments under these agreements were $49,000 in fiscal 2025. General litigation – The Company is involved in various legal proceedings that are incidental to the conduct of the business including both class action and single plaintiff litigation. 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.

13. DebtOn August 27, 2025, the Company entered into Amendment No. 4 to the Second Amended and Restated Loan Agreement (as so amended, 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; and the other lenders party thereto. The Loan Agreement matures on March 13, 2029, provides maximum revolving loans equal to the lesser of $1,000,000 or a percentage of eligible owned inventory and eligible owned receivables (which borrowing base may, at the election of the Company and satisfaction of certain conditions, include a percentage of qualified cash), and contains a $50,000 subfacility for letters of credit. The Loan Agreement requires the Company to maintain a fixed charge coverage ratio of 1.0 to 1.0 whenever availability under the Loan Agreement falls below the specified threshold. Substantially all of the Company’s assets are pledged as collateral for outstanding borrowings under the Loan Agreement. Outstanding borrowings bear interest, at the Company’s election, at either a base rate plus a margin of 0.5% to 1.0% or the Term Secured Overnight Financing Rate plus a margin of 1.5% to 2.0%, and a credit spread adjustment of 0.10%, with such margins based on the Company’s borrowing availability. The unused line fee is 0.25% to 0.375% per annum. As of January 31, 2026 and February 1, 2025, there were no borrowings outstanding under the Loan Agreement. Ulta Beauty’s wholly owned subsidiary, Space NK, maintains a multi-currency revolving credit facility (the “Facility Agreement”) with National Westminster Bank plc, providing up to £40,000 for working capital requirements. The Facility Agreement, maturing on April 17, 2028, allows Space NK to increase the revolving facility by an additional £10,000 with lender consent. The facility is secured by the assets of Space NK and contains a requirement to maintain an interest coverage ratio not less than 4.0 to 1.0 and a leverage ratio not to exceed 2.0 to 1.0 for any relevant period. Borrowings bear interest at either the compound or term Sterling Overnight Index Average plus a margin of 1.75%, and this facility includes an unused line fee of 0.60% per annum. As of January 31, 2026, there was $62,287 outstanding under the Facility Agreement.

12. Income taxesThe provision for income taxes consists of the following: ​​​​​​​​​​​​​Fiscal Year Ended​​January 31,​February 1,​February 3,(In thousands) ​ ​ ​2026 ​ ​ ​2025 ​ ​ ​2024Current:​ ​​ ​​ ​Federal​$ 299,515​$ 348,450​$ 308,656Foreign​​ 3,901​​ —​​ —State​​ 72,089​​ 73,826​​ 65,415Total current​​ 375,505​​ 422,276​​ 374,071Deferred:​​ ​​​ ​​​ ​Federal​​ 2,137​​ (31,407)​​ 27,391Foreign​​ 508​​ —​​ —State​​ (4,281)​​ (11,921)​​ 3,184Total deferred​​ (1,636)​​ (43,328)​​ 30,575Provision for income taxes​$ 373,869​$ 378,948​$ 404,646​The Company adopted ASU 2023-09, Improvements to Income Tax Disclosures, prospectively for periods beginning after December 31, 2024. The following table presents a reconciliation of the U.S. federal statutory tax rate to the effective income tax rate for fiscal 2025 (after adoption of ASU 2023-09):​​​​​​​​ ​ ​ ​Fiscal Year Ended​​January 31,(In thousands) ​ ​ ​2026Federal statutory tax rate​$ 320,743​21.0%State and local income taxes, net of federal income tax effect (a) ​ 50,136​3.3%Foreign tax effects​​ 2,519​0.2%Effect of cross-border tax laws​​ —​0.0%Tax credits​​ (8,586)​(0.6%)Nontaxable or nondeductible items​​ 5,596​0.4%Changes in unrecognized tax benefits​​ 3,432​0.2%Other adjustments​​ 29​0.0%Effective tax rate $ 373,869​24.5%(a)State and local income taxes in California, Illinois, New York, and New Jersey made up the majority (greater than 50 percent) of the tax effect in this category.The following table provides the disclosures required before adopting ASU 2023-09 and reconciles the U.S. federal statutory tax rate to our effective income tax rate:​​​​​​​ ​ ​ ​Fiscal year ended​​February 1,​February 3,​ ​ ​ ​2025 ​ ​ ​2024Federal statutory rate ​21.0%​21.0%State effective rate, net of federal tax benefit 3.1%​3.2%Executive compensation limitation​0.3%​0.3%Excess deduction of stock compensation​(0.3%)​(0.4%)Other (0.1%)​(0.2%)Effective tax rate 24.0%​23.9%​On August 16, 2022, the Inflation Reduction Act of 2022 was enacted into law, which, among other things, introduced a 15% corporate alternative minimum tax on book income of certain large corporations and created a 1% excise tax on net share repurchases. The corporate alternative minimum tax was effective beginning in fiscal 2024 and did not have a material impact on the consolidated financial statements. The excise tax applies to share repurchases made after December 31, 2022. ​On July 4, 2025, the U.S.

15. Stock-based compensationThe Company’s equity incentive plan was adopted in order to attract and retain personnel for positions of substantial authority and to provide additional incentive to employees and directors to promote the success of the business. The Amended and Restated 2011 Incentive Award Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards, dividend equivalent rights, stock payments, deferred stock, and cash-based awards to employees, consultants, and directors. Unless provided otherwise by the administrator of the plan, options vest ratably over four years at the rate of 25% per year from the date of grant and must be exercised within ten years. Options are granted with the exercise price equal to the fair value of the underlying stock on the date of grant. As of January 31, 2026, the plan reserves for the issuance upon grant or exercise of awards up to 1,781 shares of common stock.​​The following table presents information related to stock-based compensation:​​​​​​​​​​​​​Fiscal Year Ended​​January 31,​February 1,​February 3,(In thousands) ​ ​ ​2026 ​ ​ ​2025 ​ ​ ​2024Stock options​$ 8,089​$ 9,188​$ 7,429Restricted stock units​​ 21,481​​ 19,863​​ 19,724Performance-based restricted stock units​​ 7,856​​ 13,736​​ 21,093Total stock-based compensation expense​$ 37,426​$ 42,787​$ 48,246​​​​​​​​​​Cash received from stock option exercises​$ 32,562​$ 12,339​$ 12,176Income tax benefit​$ 63​$ 4,891​$ 7,167​Stock optionsStock-based compensation expense is measured on the grant date based on the fair value of the award. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period for awards expected to vest. The estimated grant date fair value of stock options was determined using a Black-Scholes valuation model using the following weighted-average assumptions for the periods indicated:​​​​​​​​​​​ ​ ​ ​​​​​​​​​​​Fiscal Year Ended​​January 31,​February 1,​February 3,​ ​ ​ ​2026 ​ ​ ​2025 ​ ​ ​2024Volatility rate ​34.0%​​33.0%​​45.0%Average risk-free interest rate ​3.9%​​4.4%​​3.8%Average expected life (in years) ​3.4 ​3.5 ​3.4Dividend yield ​ — ​ — ​ —​The expected volatility is based on the historical volatility of the Company’s common stock.

9. LeasesThe Company leases retail stores, distribution centers, fast fulfillment center, market fulfillment centers, corporate offices, and certain equipment under non-cancelable operating leases with various expiration dates through 2041. All leases are classified as operating leases and generally have initial lease terms of 10 years and, when determined applicable, include renewal options under substantially the same terms and conditions as the original leases. Leases do not contain any material residual value guarantees or material restrictive covenants.​​The following table presents supplemental balance sheet information, the weighted-average remaining lease term, and discount rate for operating leases:​​​​​​​​​​​​​​​​​​​​​​January 31,​February 1,(In thousands)​Classification on the Balance Sheet ​ ​ ​2026​2025Right-of-use assets​Operating lease assets​$ 1,813,074​$ 1,609,870​​​​​​​​​Current lease liabilities​Current operating lease liabilities​$ 306,671​$ 288,114Non-current lease liabilities​Non-current operating lease liabilities​​ 1,813,103​​ 1,635,120Total lease liabilities​​​$ 2,119,774​$ 1,923,234​​​​​​​​​Weighted-average remaining lease term​​ ​ ​ ​​6.9 years​​6.7 yearsWeighted-average discount rate​​​​4.6%​​4.2%​Lease cost​The following table presents the components of lease cost for operating leases:​​​​​​​​​​​​​​​​​Fiscal Year Ended​​​​January 31, ​ ​ ​February 1, ​ ​ ​February 3,(In thousands) ​ ​ ​Classification on the Statement of Income ​ ​ ​2026 ​ ​ ​2025 ​ ​ ​2024Operating lease cost​Cost of sales (1)​$ 387,016​$ 355,241​$ 344,600Variable lease cost​Cost of sales​​ 102,544​​ 90,095​​ 88,381Short-term lease cost​SG&A expenses​​ 1,491​​ 1,415​​ 1,451Sublease income​Net sales​​ (974)​​ (975)​​ (1,672)Total lease cost​​​$ 490,077​$ 445,776​$ 432,760(1)The majority of operating lease cost relates to retail stores, distribution centers, fast fulfillment center, and market fulfillment centers and is classified within cost of sales. Operating lease cost for corporate offices is classified within the SG&A expenses. Operating lease cost from the control date through store opening date is classified within pre-opening expenses.

3. AcquisitionsOn July 10, 2025, the Company acquired 100% ownership in Space NK Limited (“Space NK”), a luxury beauty retailer operating in the U.K. and Ireland. The acquisition was funded with cash on hand and borrowings under the Company’s existing credit facility. The acquisition is not material to the Company’s consolidated financial statements. Purchase Price AllocationThe Company recorded the assets acquired and liabilities assumed in the acquisition at their estimated fair value on July 10, 2025 of $17,416, along with goodwill of $381,736, in accordance with ASC Topic 805, “Business Combinations.” Since the acquisition date, the Company recorded adjustments to the purchase price allocation to recognize an increase in total assets of $319,657 and an increase in total liabilities of $151,719, with a corresponding net decrease in goodwill of $167,938. The purchase price allocation was finalized as of January 31, 2026.The allocation of the purchase price consideration to the estimated fair value of the assets acquired and liabilities assumed on July 10, 2025 is as follows:​​​​(In thousands)​​Cash and cash equivalents$ 12,339Merchandise inventories, net​ 75,575Property and equipment, net​ 58,705Operating lease assets​ 107,014Other intangible assets, net​ 201,635Other assets (1)​ 16,178Accounts payable​ (40,605)Accrued liabilities​ (45,697)Operating lease liabilities​ (101,995)Deferred income taxes​ (58,928)Other liabilities (2)​ (38,867)Estimated fair value excluding goodwill​ 185,354Goodwill​ 213,798Net assets acquired$ 399,152(1)Includes amounts primarily related to receivables and prepaid expenses and other currents assets on the consolidated balance sheets.​(2)Includes amounts primarily related to deferred revenue, short-term debt, and other long-term liabilities on the consolidated balance sheets.Transaction costs related to the acquisition of Space NK were expensed as incurred and are included in selling, general and administrative expenses in the consolidated statements of income.The results of operations of Space NK are included in the consolidated financial statements since the date of the acquisition.