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1、82966_ ULTA UTAnnualReport2021 ALL.indd 14/1/22 9:56 AM82966_ ULTA UTAnnualReport2021 ALL.indd 24/1/22 9:56 AM82966_ ULTA UTAnnualReport2021 ALL.indd 34/1/22 9:56 AM82966_ ULTA UTAnnualReport2021 ALL.indd 44/1/22 9:56 AM82966_ ULTA UTAnnualReport2021 ALL.indd 54/1/22 9:56 AM82966_ ULTA UTAnnualRepor
2、t2021 ALL.indd 64/1/22 9:56 AM82966_ ULTA UTAnnualReport2021 ALL.indd 74/1/22 9:56 AM82966_ ULTA UTAnnualReport2021 ALL.indd 84/1/22 9:56 AMUNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington,DC 20549FORM 10-K Annual Report Pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934
3、 For the fiscal year ended January 29,2022or Transition Report Pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934 For the transition period from _ to _ Commission File Number:001-33764ULTA BEAUTY,INC.(Exact name of registrant as specified in its charter)Delaware(State or other jur
4、isdiction of incorporation or organization)38-4022268(I.R.S.Employer Identification No.)1000 Remington Blvd.,Suite 120Bolingbrook,Illinois(Address of principal executive offices)60440(Zip code)Registrants telephone number,including area code:(630)410-4800 Securities registered pursuant to Section 12
5、(b)of the Act:Title of each class Trading symbol Name of each exchange on which registeredCommon stock,par value$0.01 per share ULTA The NASDAQ Global Select Market Securities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,
6、as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of th
7、e Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically
8、 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accele
9、rated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or emerging growth company.See definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.:Large accelerated filer Accelerat
10、ed filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Sect
11、ion 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public
12、accounting firm that prepared or issued its audit report.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No The aggregate market value of the voting stock held by non-affiliates of the registrant,based upon the closing sale price of
13、the common stock on July 30,2021,as reported on the NASDAQ Global Select Market,was approximately$13,829,733,000.The number of shares of the registrants common stock,par value$0.01 per share,outstanding as of March 21,2022 was 52,327,263 shares.DOCUMENTS INCORPORATED BY REFERENCE Information require
14、d in response to Part III of Form 10-K is hereby incorporated by reference from portions of the registrants Proxy Statement for the 2022 Annual Meeting of Stockholders.Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrants fiscal year ended
15、January 29,2022.82966_ ULTA UTAnnualReport2021 ALL.indd 94/1/22 9:56 AMTABLE OF CONTENTS Forward Looking Statements 1Part I Item 1.Business.2 Item 1A.Risk Factors.14 Item 1B.Unresolved Staff Comments.25 Item 2.Properties.26 Item 3.Legal Proceedings.27 Item 4.Mine Safety Disclosures.27 Item 4A.Execut
16、ive Officers.27 Part II Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities.28 Item 6.Reserved.30 Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations.31 Item 7A.Quantitative and Qualitative Disclosu
17、res about Market Risk.43 Item 8.Financial Statements and Supplementary Data.43 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.43 Item 9A.Controls and Procedures.43 Item 9B.Other Information.44 Item 9C.Disclosure Regarding Foreign Jurisdictions that Preven
18、t Inspections.44 Part III Item 10.Directors,Executive Officers and Corporate Governance.44 Item 11.Executive Compensation.44 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.45 Item 13.Certain Relationships and Related Transactions,and Director I
19、ndependence.45 Item 14.Principal Accountant Fees and Services.45 Part IV Item 15.Exhibits and Financial Statement Schedules.46 Item 16.Form 10-K Summary .80 Signatures 8182966_ ULTA UTAnnualReport2021 ALL.indd 104/1/22 9:56 AM1 FORWARD-LOOKING STATEMENTS References in this Annual Report on Form 10-K
20、 to“we,”“us,”“our,”“Ulta Beauty,”the“Company”and similar references mean Ulta Beauty,Inc.and its consolidated subsidiaries,unless otherwise expressly stated or the context otherwise requires.This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the
21、Securities Exchange Act of 1934,as amended,and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995,which reflect our current views with respect to,among other things,future events and financial performance.You can identify these forward-looking statements by the use of
22、 forward-looking words such as“outlook,”“believes,”“expects,”“plans,”“estimates,”“targets,”“strategies”or other comparable words.Any forward-looking statements contained in this Form 10-K are based upon our historical performance and on current plans,estimates,and expectations.The inclusion of this
23、forward-looking information should not be regarded as a representation by us or any other person that the future plans,estimates,targets,strategies,or expectations contemplated by us will be achieved.Such forward-looking statements are subject to various risks and uncertainties,which include,without
24、 limitation:changes in the overall level of consumer spending and volatility in the economy,including as a result of the COVID-19 pandemic and geo-political events;the impact of current inflationary cost pressures on payroll,benefits and supply chain;our ability to sustain our growth plans and succe
25、ssfully implement our long-range strategic and financial plan;the ability to execute our operational excellence priorities,including continuous improvement,Project SOAR(our replacement enterprise resource planning platform),and supply chain optimization;the negative impacts the COVID-19 pandemic has
26、 had,and will continue to have on our business,financial condition,profitability,cash flows and supply chain,as well as consumer spending(including future uncertain impacts);epidemics,pandemics like COVID-19 or natural disasters that have and could continue to negatively impact sales;our ability to
27、gauge beauty trends and react to changing consumer preferences in a timely manner;the possibility that we may be unable to compete effectively in our highly competitive markets;the possibility that cybersecurity or information security breaches and other disruptions could compromise our information
28、or result in the unauthorized disclosure of confidential information;the possibility of material disruptions to our information systems;the failure to maintain satisfactory compliance with applicable privacy and data protection laws and regulations;the possibility that the capacity of our distributi
29、on and order fulfillment infrastructure and the performance of our distribution centers and fast fulfillment centers may not be adequate to support our expected future growth plans;changes in the wholesale cost of our products;a decline in operating results that has and may continue to lead to asset
30、 impairment and store closure charges;the possibility that new store openings and existing locations may be impacted by developer or co-tenant issues;our ability to attract and retain key executive personnel;the impact of climate change on our business operations and/or supply chain;our ability to s
31、uccessfully execute our common stock repurchase program or implement future common stock repurchase programs;and other risk factors detailed in our public filings with the Securities and Exchange Commission(the SEC),including risk factors contained in Item 1A,“Risk Factors”of this Annual Report on F
32、orm 10-K for the year ended January 29,2022,as such may be amended or supplemented in our subsequently filed Quarterly Reports on Form 10-Q.Except to the extent required by the federal securities laws,we undertake no obligation to publicly update or revise any forward-looking statements,whether as a
33、 result of new information,future events or otherwise.82966_ ULTA UTAnnualReport2021 ALL.indd 114/1/22 9:56 AM2 Part I Item 1.Business Overview Ulta Beauty is the largest beauty retailer in the United States and the premier beauty destination for cosmetics,fragrance,skin care products,hair care prod
34、ucts,and salon services.Key aspects of our business include:One-of-a-kind Assortment.We offer guests a differentiated assortment of more than 25,000 products from more than 600 well-established and emerging beauty brands across a variety of categories and price points.We believe we offer the widest
35、selection of beauty categories,including prestige and mass cosmetics,fragrance,haircare,prestige and mass skincare,bath and body products,professional hair products,and salon styling tools.Store Footprint.We operate more than 1,300 stores predominantly located in convenient,high-traffic locations.Wi
36、th a bright and open store environment,we make it easy for guests to discover new products and services.Our store design,fixtures,and open layout provide the flexibility to respond to consumer trends and changes in our merchandising strategy.We also offer a full-service salon in every store featurin
37、g hair,eyebrow and other beauty services.Leading Digital Experiences.Through our website,U,and our mobile applications,we offer guests convenient,interactive and personalized digital experiences.Our digital channels enable always-on shopping and discovery,and our diverse fulfillment options,includin
38、g buy online pick-up in store,buy online pick-up curbside,ship from store,ship to home,and same-day delivery,provide guests with value and convenience.In addition to e-commerce platforms,we offer guests a variety of unique digital experiences,including virtual try-on and skin analysis tools,which le
39、verage augmented reality capabilities and artificial intelligence tools to provide guests with personalized experiences.Best-in-Class Loyalty Program.Our best-in-class loyalty program,Ultamate Rewards,enables members to earn points for every dollar spent on products and beauty services at Ulta Beaut
40、y,through purchases on our private label and co-branded credit cards,and purchases at Ulta Beauty at Target.In addition to unique membership benefits,members can redeem points for discounts on any product or service at Ulta Beauty.With more than 95%of total sales coming from members,we are uniquely
41、positioned with a deep understanding of our customers and their preferences which enables us to personalize experiences and target communications and promotions through our Customer Relationship Management(CRM)platform.Great Guest Experiences.We cultivate human connection with warm and welcoming gue
42、st experiences across all of our channels.Our knowledgeable and approachable store associates,our differentiated service offerings,and our efforts to create relevant,compelling digital content are competitive advantages and enable us to build strong engagement with guests.We were founded in 1990 as
43、a beauty retailer at a time when prestige,mass,and salon products were sold through distinct channels department stores for prestige products;drug stores and mass merchandisers for mass products;and salons and authorized retail outlets for professional hair care products.We developed a unique specia
44、lty retail concept that offers a broad range of brands and price points,select beauty services,and a convenient and welcoming shopping environment.We define our target consumer as a beauty enthusiast,a consumer who is passionate about the beauty category,uses beauty for self-expression,experimentati
45、on,and self-investment,and has high expectations for the shopping experience.We estimate that female beauty enthusiasts represent approximately 60%of shoppers and 75%of spend in the U.S.beauty category.82966_ ULTA UTAnnualReport2021 ALL.indd 124/1/22 9:56 AM3 The following description of our busines
46、s should be read in conjunction with the information contained in our Managements Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 and our Financial Statements and Supplementary Data included in Item 8 of this Annual Report on Form 10-K.Our strategy We targ
47、et beauty enthusiasts across multiple demographics and shopping behaviors.Beauty enthusiasts have a deep emotional connection with beauty,and historically,this connection has not diminished in softer economic environments.Our proprietary consumer research confirms engagement with the beauty category
48、 remains strong,but the unprecedented disruption resulting from the COVID-19 pandemic has had sustained effects on the category.Consumers are approaching their desire for normalcy with caution,reengaging in retail shopping visits while also holding to some of their new online shopping behaviors.In a
49、ddition,the operational and competitive landscape remains dynamic,and many costs are increasing,including supply chain and labor costs.Reflecting our understanding about how the consumer and beauty category are evolving,we have refreshed our strategic framework to position Ulta Beauty for continued
50、success.We are focused on six key strategic pillars designed to expand our market leadership and drive longer-term profitable growth.Drive breakthrough and disruptive growth through an expanded definition of All Things Beauty.Beauty enthusiasts enjoy the experience of discovering and trying new prod
51、ucts and increasingly include beauty as part of their self-care and wellness journey.Reflecting these insights,our objective is to engage and continuously delight beauty enthusiasts with a curated,differentiated,inclusive assortment focused on leading beauty and self-care trends.We are focused on fo
52、ur key areas:maximizing growth in core categories,including makeup,skincare,haircare,and fragrance;driving growth of cross-category strategic platforms,including Conscious Beauty at Ulta Beauty,Black-owned and Black,Indigenous,and People of Color(BIPOC)-founded Brands,and the Wellness Shop;different
53、iating our assortment through exclusive brands and products,including our private label,Ulta Beauty Collection;and increasing profitability through assortment management,inventory productivity,and promotional optimization.Evolve the omnichannel experience through connected physical and digital ecosy
54、stems,All In Your World.Our guest insights and member data confirm that beauty enthusiasts prefer to transact in physical stores,where they can discover and interact with products and other beauty enthusiasts.At the same time,digital channels offer convenience,product reviews,and price transparency.
55、As a result,the guest journey is increasingly blurring across physical and digital channels.To drive greater guest engagement across all channels,we intend to expand our physical footprint,continue to differentiate our service offerings,and grow our buy anywhere,fill anywhere capabilities while furt
56、her enhancing our digital and mobile experiences and driving competitive advantage through digital innovation.Our objective is to deliver a cohesive,industry-leading omnichannel experience that drives breakthrough engagement with our guests and unlocks the combined potential of our physical and digi
57、tal channels.Expand and deepen our presence across the beauty journey,solidifying Ulta Beauty at the Heart of the Beauty Community.To understand longer-term shifts in consumer values,perceptions,and behaviors,as well as of-the-moment insights,we have developed a robust consumer research capability.I
58、n addition,with more than 95%of total sales coming from members of our Ultamate Rewards loyalty program,we have unique insights about customer preferences and behavior.Based on our proprietary insights,we know beauty enthusiasts have an emotional,personal,and deep connection with beauty.Social media
59、 contributes to this connection,and we expect the influence and reach of beauty will continue to grow as engagement with social platforms increases.To expand Ulta Beautys reach,relevancy,and guest engagement,we intend to amplify our brand purpose;build a creator and content ecosystem to deliver comp
60、elling,relevant beauty-tainment;leverage the power of live streaming and social selling;drive further innovation in our Ultamate Rewards program;and use our member data to increase personalization and drive conversion.Our vision is to expand and deepen our presence across the beauty journey to incre
61、ase consumer acquisition and drive guest engagement,loyalty,and share of wallet.Drive operational excellence and optimization.Similar to other retailers,we are experiencing cost pressures from macroeconomic trends,including rising wage rates and higher transportation and shipping costs.In addition,w
62、e are managing ongoing headwinds from channel and category mix shifts.To mitigate the impact of these pressures and 82966_ ULTA UTAnnualReport2021 ALL.indd 134/1/22 9:56 AM4 support our future growth,we have developed a continuous improvement capability to identify and activate meaningful,cross-func
63、tional process optimization opportunities;we are upgrading our enterprise resource planning platform to increase efficiency and support future growth;and we are enhancing our supply chain network to increase agility,speed and cost-efficiency.Our vision is to deliver profitable growth and competitive
64、 advantage by optimizing our cost structure to enable scale,developing agile operating processes that enable real-time visibility and decision-making,and building new capabilities tailored to win in a rapidly evolving omnichannel world.Protect and cultivate our world-class culture and talent.We have
65、 developed and nurtured a guest and associate-centric,values-based and high-performance culture.These tenets are core to how we lead,how we engage with our guests and partners,and how we make decisions.We value and encourage collaboration and enterprise thinking,and we respect and listen to our asso
66、ciates to continually improve as a company.We have an experienced leadership team and committed,passionate associates committed to living our values while caring for our guests and for each other.To support our growth and enhance the guest experience,we will continue to attract,develop and retain ta
67、lent at all levels and in all functional areas,and we will continue to work to create an environment where every associate feels they can fully contribute and have an opportunity to grow.Expand our environmental and social impact.As a leader in the beauty industry,we have an opportunity to drive pos
68、itive impact.We believe that beauty is for everyone,regardless of age,size,ability,skin tone,culture,or gender,and we strive to provide an environment where every associate feels they can realize their full potential and every guest is optimally served,regardless of differences.We empower and inspir
69、e guests to make informed and sustainable product choices through our unique Conscious Beauty at Ulta Beauty program,and we strive to protect the beauty of our natural environment and minimize our impact on the world around us by managing our stores energy,water,and waste footprints.We are committed
70、 to making the world a better place,and we are focused on driving sustainable change in areas where we can make the biggest impact and committed to collaborating with others to address shared challenges.Our market We operate within the large and growing U.S.beauty products and salon services industr
71、y.In 2021,this market represented approximately$140 billion in sales,according to forecasted Euromonitor International and IBIS World Inc.In 2021,the beauty products industry totaled approximately$91 billion and included cosmetics,haircare,fragrance,bath and body,skincare,salon styling tools,and oth
72、er toiletries.We estimate that Ulta Beauty had only a 9%share of the$91 billion beauty product industry.Within this market,we compete across all major categories as well as a range of price points by offering prestige,mass,and salon products.In 2021,the salon services industry totaled approximately$
73、49 billion and included hair,skin,and nail services.We estimate that Ulta Beauty had less than 1%share of this industry.We have full-service hair salons and skin services in substantially every store and operate brow bars in most of our stores,as well as makeup services through our salons.Due to rem
74、aining COVID-19 related restrictions,our services offering was limited in our fiscal year ended January 29,2022(fiscal 2021),but we have plans to resume these services as soon as it is safe to do so.While both the industry and our business was impacted by ongoing COVID-19 restrictions,particularly i
75、n salon services,our research indicates that Ulta Beauty continues to increase market share across most prestige beauty categories in the overall U.S.market.We expect the beauty category will continue its recovery as consumers recover from the impacts of COVID-19,and we remain confident that our dif
76、ferentiated and diverse business model,our commitment to strategic investments,and our highly engaged associates will continue to drive market share gains for Ulta Beauty.Competition Our major competitors for prestige and mass products include traditional department stores,specialty stores,grocery s
77、tores,drug stores,mass merchandisers,and the online capabilities of national retailers and brands,as well as pure-play e-commerce companies.The market for salon services and products is highly fragmented.Our competitors for salon services and products include chain and independent salons.82966_ ULTA
78、 UTAnnualReport2021 ALL.indd 144/1/22 9:56 AM5 Our retail channels We are committed to meeting guests where and how they want to shop and strive to offer guests a compelling,personalized shopping experience through our stores,website,mobile applications,and partnerships.Stores.Our member data sugges
79、ts our guests prefer to transact in physical stores,where they can discover and interact with products and other beauty enthusiasts.In fiscal 2021,75%of our loyalty members only shopped in Ulta Beauty stores.Our retail stores are predominantly located in convenient,high-traffic locations such as pow
80、er strip centers.Our typical store is approximately 10,000 square feet,including approximately 950 square feet dedicated to our full-service salon.Our retail store concept,including physical layout,displays,lighting,and quality of finishes,has changed over time to reflect the rising expectations of
81、our guests and our evolving merchandising and operating strategies.We offer a full range of beauty services in all of our stores,focusing on hair,skin,makeup,and brow services.Our current Ulta Beauty store format includes an open and modern salon area and a skin treatment room or dedicated skin trea
82、tment area on the sales floor.In addition,most of our stores offer brow services on the sales floor.The salon features a concierge desk,approximately five to ten stations,and a shampoo and hair color processing area.We employ highly skilled,licensed professional stylists and estheticians who offer s
83、ervices as well as educational experiences,including consultations,styling lessons,makeup applications,skincare regimens,and at-home care recommendations.Due to ongoing COVID-19 restrictions,we operated at less-than-full capacity for salon and brow services for most of fiscal 2021.While we lifted ca
84、pacity constraints for most salon and brow services in fiscal 2021,we were unable to offer makeup services in all stores and skin services in most stores due to remaining COVID-19 related restrictions.We have plans to resume these services as soon as it is safe to do so.During fiscal 2021,71%of new
85、stores opened in existing shopping centers and 29%opened in new shopping centers.All new stores were opened in existing markets.As of January 29,2022,we operated 1,308 stores across 50 states.In addition to opening new stores,we also remodeled,relocated,or refreshed(in-store fixtures and merchandisi
86、ng upgrades)certain stores,as shown in the following table:Fiscal year ended January 29,January 30,February 1,2022 2021 2020 Total stores beginning of period.1,264 1,254 1,174 Stores opened.48 30 86 Stores closed.(4)(20)(6)Total stores end of period.1,308 1,264 1,254 Total square footage.13,770,438
87、13,291,838 13,193,076 Average square footage per store.10,528 10,516 10,521 Stores remodeled.9 12 Stores relocated.7 5 8 Stores refreshed.240 Our real estate vision is to make Ulta Beauty accessible and convenient to more consumers across a variety of markets,a key driver of how we plan to expand ou
88、r market share over time.We believe that over the long term,we have the potential to grow our store footprint to between 1,500 to 1,700 freestanding Ulta Beauty stores in the United States.In addition,over the long term we expect to open up to 800 Ulta Beauty at Target shops.We leverage a variety of
89、 insights to identify the best new store locations and optimize our current store locations,including beauty market share information and insights from our loyalty members.This insight-led,analytical approach to site selection has resulted in a high performing real estate portfolio.The average inves
90、tment required to open a new Ulta Beauty store is approximately$1.4 million,which includes capital investments,net of landlord contributions,pre-82966_ ULTA UTAnnualReport2021 ALL.indd 154/1/22 9:56 AM6 opening expenses,and initial inventory,net of payables.Our net investment required to open new st
91、ores and the net sales generated by new stores may vary depending on a number of factors,including geographic location.Digital platform.In addition to store expansion,we continue to expand our digital capabilities as more of our guests choose to engage with us across physical and digital platforms.I
92、n fiscal 2021,17%of our loyalty members shopped in Ulta Beauty stores and through our digital platforms.Our e-commerce platform has two key roles:generating direct channel sales and profits by communicating with our guests in an interactive,enjoyable way that reinforces the Ulta Beauty brand;and dri
93、ving traffic to our stores,website,and native applications.Our omnichannel guests are extremely valuable,historically spending nearly three times as much as retail-only guests.We continue to develop and add new website and mobile features and functionality,marketing programs,new products and brands,
94、and omnichannel integration points.We intend to establish ourselves as a leading online beauty resource by providing our guests with a rich online experience,with information on key trends and products,editorial content,expanded assortments,interactive experiences,including virtual try-on capabiliti
95、es,and social media content.We continue to improve our order fulfillment capabilities with increased speed of delivery through existing distribution centers,fast fulfillment centers(e-commerce only),and select retail stores,and through more efficient processes designed for e-commerce order fulfillme
96、nt.In addition to ship to home order fulfillment,we offer guests“Buy Online,Pick-up in Store,”“Curbside Pickup,”and“Store 2 Door,”which provides the ability for customers to order in-store and have products delivered to their homes.In fiscal 2021,we launched same-day delivery for e-commerce orders i
97、n select markets.Partnerships To expand our reach and introduce new guests to Ulta Beauty,we have formed a long-term partnership with Target Corporation to create Ulta Beauty at Target,a“shop-in-shop”concept that offers a curated assortment of more than 50 established and emerging prestige brands ac
98、ross a variety of categories.Co-designed by Ulta Beauty and Target,the Ulta Beauty at Target shop is intended to mirror the Ulta Beauty experience with a unique and elevated presentation in 1,000 square feet of dedicated space separate but adjacent to Targets core beauty department.The shop is staff
99、ed by Target team members who are trained by Ulta Beauty to provide recommendations and answer product questions.Members in our loyalty program,Ultamate Rewards,can accumulate points(but not redeem)for purchases made in the Ulta Beauty at Target shop.Loyalty points can only be redeemed in Ulta Beaut
100、y stores,on U or through our mobile applications.As of January 29,2022,Ulta Beauty at Target was available in approximately 100 Target locations and on .Over time,we believe Ulta Beauty at Target can be in up to 800 Target locations.Merchandising Strategy We offer one of the most extensive product a
101、nd brand selections in our industry,including a broad assortment of branded and private label beauty products in cosmetics,fragrance,haircare,skincare,bath and body products,and salon styling tools.Across our stores,U and our mobile applications,we offer more than 25,000 products from more than 600
102、well-established and emerging beauty brands across all categories and price points,including Ulta Beautys own private label,the Ulta Beauty Collection.Our merchandising team continually monitors beauty and fashion trends,historical sales trends,and new product launches to keep Ulta Beautys product a
103、ssortment fresh and relevant and to ensure that our assortment reflects the diversity of our guests.We believe our broad selection of merchandise,from moderate-priced brands to higher-end prestige brands,creates a unique shopping experience for our guests.Certain beauty enthusiasts are growing more
104、interested in choosing products that support their own personal well-being and the well-being of workers,animals,communities,and the environment,and they are increasingly supporting brands whose products and actions align with their own values.Reflecting this growing importance of these trends,in fi
105、scal 2020 we launched Conscious Beauty at Ulta Beauty in all stores,on U,and on our mobile applications.This holistic initiative provides transparency for guests to help them choose brands and products that reflect their personal values and individual needs.Through this initiative,we certify brands
106、and products across four key pillars,Clean Ingredients,Cruelty Free,Vegan,and Sustainable Packaging,and recognize brands for their Positive Impact on our 82966_ ULTA UTAnnualReport2021 ALL.indd 164/1/22 9:56 AM7 community.Displayed in stores on an endcap constructed of recycled and recyclable materi
107、als,the program launched with 187 brands.As of January 29,2022,more than 270 brands participated in the program,with more than half certified in more than one pillar.As part of the launch,we published our“Made Without List,”an evolving ingredient standard for clean beauty products,and established th
108、e Conscious Beauty Advisory Council,a coalition of experts at the forefront of clean beauty,product development,and packaging sustainability.With the help of our Advisory Council,we will ensure that Conscious Beauty at Ulta Beauty will continue to evolve and grow as expectations and standards for cl
109、ean beauty continue to change.During the past few years there has been a growing focus for consumers on self-care.Based on internal proprietary research,65%of consumers see the beauty category as being significantly connected to wellness.In response to this trend,we launched The Wellness Shop in sel
110、ect stores and online that offers an assortment of products across five platforms:everyday care,supplements and ingestibles,relax and renew,down there care,and spa at home.We have a long tradition of being a diversity-forward company.We aspire to be beauty at its most inclusive and have made several
111、 important commitments across our marketing,assortment and training efforts to ensure guests,associates,partners and communities feel connected to and reflected at Ulta Beauty and are able to discover beauty on their own terms.During fiscal 2021,we doubled the number of Black-owned brands in our ass
112、ortment and are committed to dedicate 15%of our total assortment to Black-owned,Black-founded and Black-led brands over time.We believe our private label,the Ulta Beauty Collection,is a strategically important opportunity for growth and profit contribution.Our objective is to provide quality,trend-r
113、ight private label products to continue to strengthen our guests perception of Ulta Beauty as a contemporary beauty destination.Ulta Beauty manages the full development cycle of these products from concept through production to deliver differentiated packaging and formulas that enhance our brand ima
114、ge.The Ulta Beauty Collection has been certified in the Clean Ingredients and Cruelty Free pillars within the Conscious Beauty at Ulta Beauty program.We also offer products such as Tarte Double Duty Beauty cosmetics,IT Brushes for Ulta Beauty,and CHI for Ulta Beauty hair care appliances that are per
115、manently exclusive to Ulta Beauty.Similarly,we offer a number of brands and products that are exclusive for a limited period of time or are offered in advance of our competitors,such as Morphe,Colourpop,Juvias Place,Chanel and Florence.The Ulta Beauty Collection and permanent Ulta Beauty exclusive p
116、roducts represented approximately 4.5%of our total net sales in fiscal 2021.Both permanent and temporary exclusive products represented approximately 11.0%of our total net sales in fiscal 2021.Categories We offer a balanced portfolio across six primary categories:(1)cosmetics;(2)haircare products an
117、d styling tools;(3)skincare;(4)fragrance and bath;(5)services;and(6)accessories and other,which includes other revenue sources such as the private label and co-branded credit card programs,royalties derived from the partnership with Target,and deferred revenue related to the loyalty program and gift
118、 card breakage.The following table sets forth the approximate percentage of net sales attributed to each category for the periods presented:Fiscal year ended January 29,January 30,February 1,(Percentage of net sales)2022 2021 2020 Cosmetics(1).43%45%51%Haircare products and styling tools(1).20%20%18
119、%Skincare(1).17%16%14%Fragrance and bath.14%12%9%Services.3%3%5%Accessories and other(1).3%4%3%100%100%100%(1)Certain sales departments were reclassified between categories in the prior year to conform to current year presentation.82966_ ULTA UTAnnualReport2021 ALL.indd 174/1/22 9:56 AM8 Organizatio
120、n Our merchandising team consists of a Chief Merchandising Officer who oversees the Senior Vice President of Cosmetics and category Vice Presidents who in turn oversee Divisional Merchandise Managers and their teams of buyers.Our Chief Merchandising Officer also oversees our centralized merchandise
121、planning and forecasting group to ensure consistent execution across our omnichannel platforms and our planogram team.In stores,we present products in an open-sell environment using centrally produced planograms(detailed schematics showing product placement in the store)and promotional merchandising
122、 planners.Our planogram team assists the merchants and inventory teams to keep new products flowing into stores on a timely basis.All major product categories undergo planogram revisions on a regular basis,and adjustments are made to assortment mix and product placement based on current sales trends
123、.Our visual team works with our merchandising team to develop strategic placement of promotional merchandise,functional and educational signage,and creative product presentation standards in all of our stores.All stores receive centrally produced promotional merchandising planners to ensure consiste
124、nt implementation of our marketing programs.Planning and allocation We have developed a disciplined approach to buying and a dynamic inventory planning and allocation process to support our merchandising strategy.We centrally manage product replenishment to our stores through our merchandise plannin
125、g group.This group serves as a strategic partner to,and provides financial oversight of,the merchandising team.The merchandising team creates a sales forecast by category for the year.Our merchandise planning group creates an open-to-buy plan,approved by senior executives,for each product category.T
126、he open-to-buy plan is updated weekly with point-of-sale(POS)data,receipts,and inventory levels and is used throughout the year to balance buying opportunities and inventory return on investment.We believe this structure maximizes our buying opportunities while maintaining organizational and financi
127、al control.POS data is used to calculate sales forecasts and to determine replenishment levels.We determine promotional product replenishment levels using sales history from similar or comparable events.To ensure our inventory remains productive,our planning and replenishment group,along with senior
128、 executives,monitor the levels of clearance and aged inventory in our stores on a weekly basis.Brand partnerships We have strong,active relationships with our brand partners.Our top ten brand partners,such as Este Lauder Companies and LOral among others,represented approximately 54%and 56%of our tot
129、al net sales in fiscal 2021 and January 30,2021(fiscal 2020),respectively.We believe our brand partners view us as a significant distribution channel for growth and brand enhancement,and we work closely with them to market both new and existing brands.All brand partners and respective subcontractors
130、 and their facilities are subject to Ulta Vendor Standards,as applicable,which set forth the ethical,legal,social,and workplace standards to meet in order to do business with Ulta Beauty.In addition to complying with Ulta Vendor Standards,many brand partners have committed to help advance our missio
131、n to maintain the beauty of our environment and minimize our impact on the world around us by offering sustainable packaging.We have made a commitment that 50%of packaging from products sold at our stores will be recyclable,refillable,or made from recycled or bio-sourced materials by 2025.Marketing
132、and advertisingWe employ a multi-faceted marketing strategy to increase brand awareness,drive traffic to our stores,website,and mobile applications,acquire new loyalty program members,improve guest retention,increase frequency of shopping,and increase spend per member.We communicate with our guests
133、and prospective guests through multiple vehicles,including print advertising,digital and social media,and television and radio.These vehicles highlight the breadth of our selection of prestige,mass and salon beauty products,new products and services,and special offers,as well as build our emotional
134、connection with guests.Our comprehensive public relations strategy enhances Ulta Beautys reputation as a beauty destination,increases brand awareness,supports our charitable efforts related to the Ulta Beauty Charitable Foundation,and drives awareness of new products,in-store events,and new store op
135、enings.82966_ ULTA UTAnnualReport2021 ALL.indd 184/1/22 9:56 AM9 The Ultamate Rewards loyalty program is an important tool to increase retention of existing guests and to enhance their loyalty to the Ulta Beauty brand.Our CRM platform enables sophisticated analysis of the customer data in our loyalt
136、y member database as well as greater personalization of our marketing campaigns and day-to-day communications.Our data demonstrates that loyalty members spend more per visit as compared to non-members.The 37 million active loyalty program members generated more than 95%of total net sales in fiscal 2
137、021.Ultamate Rewards enables customers to earn points based on their purchases at Ulta Beauty stores,through our digital platforms,and at Ulta Beauty at Target.Points earned are valid for at least one year and may be redeemed on any product we sell or service we provide in Ulta Beauty stores or thro
138、ugh our digital platforms.To enhance our loyalty program,we offer co-branded and private label credit cards.The credit cards drive higher wallet share and greater loyalty from our rewards members,provide increased consumer insights,and offer attractive economics.Furthermore,we continue to expand our
139、 gift card program to increase distribution in our store and online channels and to retail locations in store and online through partnerships with third parties.We are directing a growing percentage of our marketing expense towards digital,social media,and streaming advertising.We believe these chan
140、nels are highly effective in communicating with existing guests,as well as driving consideration amongst those who have not yet shopped with us.Our marketing program has been effective in communicating with our existing online,mobile,and retail guests in a targeted and relevant way.Our digital marke
141、ting strategy includes search engine optimization,paid search,mobile advertising,social media,display advertising,and other digital marketing channels.Digital marketing,coupled with our national TV and radio advertising,has helped us increase brand awareness and consideration among those not familia
142、r with Ulta Beauty,which we believe has resulted in new guests.Staffing and operations Retail stores Our current Ulta Beauty store format is typically staffed with a general manager,a services manager,and three associate managers,along with approximately twenty-eight full-and part-time associates,in
143、cluding approximately four to eight prestige consultants and five to ten licensed salon professionals.The management team in each store reports to the general manager.The general manager oversees all store activities including salon management,inventory management,merchandising,cash management,sched
144、uling,hiring,and guest services.Members of store management receive bonuses depending on their position and based upon various performance metrics.Each general manager reports to a District Manager,who in turn reports to a Regional Vice President of Operations,who in turn reports to a Senior Vice Pr
145、esident of Stores,who in turn reports to the Chief Operating Officer,who in turn reports to the Chief Executive Officer.Each store team receives additional support from time to time from recruiting specialists for the retail and salon operations,regionally based talent development managers,a field l
146、oss prevention team,service district educators and service district leaders,and brand partners.Ulta Beauty stores are open seven days a week,typically eleven hours a day,Monday through Saturday,and seven hours on Sunday.Our stores have extended hours during the holiday season.Salon services A typica
147、l salon is staffed with five to ten licensed salon professionals,including six or more stylists and one or two estheticians.Our most productive salons have a guest coordinator and an assistant manager.Our services district educators and brand partner education classes create a comprehensive educatio
148、nal program for approximately 5,400 Ulta Beauty salon professionals.Supply chain Our vision is to build and operate a dynamic and agile end-to-end supply chain that improves operational efficiency,performance,and guest experience to fuel organizational growth in an effective way.This includes enhanc
149、ed systems and processes as well as a modernized distribution center network to support our new store and e-commerce growth.We operate four distribution centers that support both stores and e-commerce demand,and two fast fulfillment centers that 82966_ ULTA UTAnnualReport2021 ALL.indd 194/1/22 9:56
150、AM10 support e-commerce orders only.In addition,115 stores fulfill e-commerce orders as part of our ship-from-store program.In the future,we expect to introduce a fourth type of facility,a market fulfillment center,which will focus on our most productive products and support fulfilling ecommerce ord
151、ers and stores,enabling us to improve service and responsiveness,especially in markets with high store and population density.Inventory is shipped from our suppliers to our distribution centers and fast fulfillment centers.We replenish our stores with such products primarily in eaches(i.e.,less-than
152、-case quantities),which allows us to ship less than an entire case when only one or two of a particular product is required.Our distribution centers and fast fulfillment centers use warehouse management software systems to manage inventory to support product purchase decisions.Product is delivered t
153、o stores using a broad network of contract and local pool(final mile)carriers.Human capital managementWe believe our associates,with their combined skills,knowledge,experiences,and commitment to serving our guests,are among our most important resources and are critical to our continued success.We st
154、rive to make Ulta Beauty a great place to work by leading with our hearts,caring for each other in everything we do,and demonstrating integrity,authenticity and inclusivity in our daily actions.The following table sets forth the approximate number of associates employed as of:January 29,2022 Full-ti
155、me.16,500 Part-time.24,000 Total associates.40,500 We have no collective bargaining agreements and have not experienced any work stoppages.We believe we have good relationships with our associates.Diversity,equity,and inclusionOur goal is to create an inclusive environment where every associate feel
156、s he or she can be his or her authentic self and every guest is optimally served,regardless of differences.A critical way we achieve this is by educating all associates on the lived experiences of their peers and key moments in time that have cultural or heritage significance,as well as the unconsci
157、ous beliefs and biases that shape our behavior today.We embed diversity,equity and inclusion(DEI)efforts through a cross-functional approach,led by our Chief Executive Officer,to ensure teams remain energized and motivated to lead in this critical space and integrate DEI in all that we do.We accompl
158、ish this through inclusive recruitment strategies,dedicating time to celebrate intersectionality and types of diversity that are not otherwise formally recognized,encouraging associates to build personal habits through everyday inclusive actions,and managing a diverse leaders program to empower,insp
159、ire and educate high-potential diverse associates.In addition,we aim to ensure that all in-store experiences are equitable,fair,and unbiased.We take action to support this goal by conducting quarterly mandatory trainings for in-store associates and providing weekly learning opportunities to focus on
160、 guest perspectives and reinforce key takeaways.We offer similar training across the organization to help key decision-makers and associates in their own learning journeys and support our Champion Diversity value and inclusion competency.The following table sets forth key metrics as of January 29,20
161、22:Board of All Other Directors Leadership Associates Women.55%65%91%Men.45%35%9%People of color.18%25%49%82966_ ULTA UTAnnualReport2021 ALL.indd 204/1/22 9:56 AM11 Oversight and managementWe strive to make sure that our associates are at the heart of every decision we make.The Chief Human Resources
162、 Officer,along with the entire executive team,is responsible for developing and executing the Companys human capital strategy.This includes the attraction,acquisition,development,and engagement of talent and the design of associate compensation and benefits programs.Our human capital objectives and
163、initiatives,including the risks related to compensation policies and practices,management development and leadership succession,diversity,equity,and inclusion policies and practices,and implementation and compliance monitoring of our Code of Business Conduct,are also overseen by individual Board com
164、mittees as described in our Corporate Governance Guidelines.We believe open and honest two-way communication is critical to maintaining strong associate engagement.We regularly conduct an associate engagement survey to take the pulse of associates satisfaction with their roles,their leaders,and comp
165、any as a whole.Our executive team reviews associate engagement and satisfaction surveys to monitor associate engagement and satisfaction with their role,their leader,and the Company as a whole.Our leadership team also hosts roundtable sessions to dive deeper on specific topics as well as additional
166、forums,including department town halls,store and distribution center visits,and other small group gatherings.Training and developmentOur success is dependent,in part,on our ability to attract,train,retain,and motivate qualified associates at all levels ofthe organization.We are committed to continua
167、lly developing our associates and providing career advancement opportunities.Our associates and management teams are essential to our store expansion strategy.We use a combination of existing managers,promoted associates,and outside hires to support our new stores.The majority of our promotions are
168、internal.As we continue to promote and develop from within,we are building a bench of associates and leaders who know our company inside and out.All of our associates participate in an interactive new-hire orientation through which each associate becomes acquainted with Ulta Beautys mission,vision,a
169、nd values.Through our learning management system and our digital workplace system,we provide continuing education to associates throughout their careers at Ulta Beauty.Additionally,our leadership development program prepares promising future leaders for new levels of responsibility.Compensation and
170、benefits Our commitment to our associates and their well-being is one of our highest priorities.We have assembled a suite of benefits that affirms and supports all that our associates contribute every day,including:Health care coverage is offered to those who work more than 30 hours a week in any po
171、sition.Coverage extends to eligible dependents,including spouses,domestic partners and children under the age of 26.We offer comprehensive medical plans that empower associates to choose the coverage that best suits them.401(k)plan with up to a 4%company match.Disability and life insurance.Company-p
172、aid short-term disability pay at 80%of pay.Additional insurance options,including legal,pet,home,and auto.Tuition reimbursement program.Paid time off,including an extended illness bank.Discounts on retail products and salon services.In addition,we believe wellness,like beauty,is more than skin deep,
173、so we offer mental health resources,such as counseling services and access to apps,financial wellness planning and guidance,and health apps and educational resources for soon-to-be parents.82966_ ULTA UTAnnualReport2021 ALL.indd 214/1/22 9:56 AM12 Since 2017,the Ulta Beauty Charitable Foundation(UBC
174、F)has supported the Associate Relief Program to assist associates facing unforeseen financial hardship.The Associate Relief Program provides short-term financial support to pay off medical bills or support temporary housing.Sustainability We strive to operate in an environmentally responsible manner
175、.Our retail stores are focused on energy reduction efforts by maintaining safe indoor air for all customers while products are being used in our salons,using adequate energy-efficient lighting,managing the in-store temperatures,and making efficient use of water needed for our salon services.In addit
176、ion,we will continue to look for ways to reduce our carbon footprint by investments in renewable energy credits and working with our brand partners to identify ways to work together to reduce Scope 3 emissions.Information technology We are committed to using technology to enhance our competitive pos
177、ition.We depend on a variety of information systems and technologies(including cloud technologies)to maintain and improve our competitive position and to manage the operations of our growing store base.We rely on computer systems to provide information for all areas of our business,including supply
178、chain,merchandising,POS,e-commerce,marketing,finance,accounting,and human resources.Our core business systems consist mostly of purchased software programs that integrate together and with our internally developed software solutions.Our technology also includes a company-wide network that connects a
179、ll corporate users,stores,and our distribution center infrastructure and provides communications for continual polling of sales and merchandise movement at the store level.We manage data security and privacy at the highest levels.Our Board of Directors is actively engaged in oversight of cybersecuri
180、ty,and it is part of the charter of our Audit Committee.Our Chief Executive Officer keeps the Board informed on cybersecurity and privacy matters throughout the year.Our Security Operations Center constantly and proactively monitors our network and application landscape for threats and anomalies.We
181、have established processes for sharing data and performing third-party risk assessment and regular disaster recovery planning and response readiness testing.Our security approach also includes multiple layers of defense and testing of controls.We have strengthened our data protection capabilities th
182、rough investments and training.All Ulta Beauty associates have a role as stewards of company data,and we educate them on how to keep data safe.As part of our annual Code of Business Conduct training,we train associates on how to keep devices and data safe in public places;how to avoid security threa
183、ts and phishing scams;how to maintain a secure workplace;and everyday practices that help maintain the security of corporate digital devices,data and systems.We intend to leverage our technology infrastructure and systems where appropriate to gain operational efficiencies through more effective use
184、of our systems,people,and processes.In fiscal 2021,we began a multi-year upgrade of our enterprise resource planning platform which will provide a flexible and scalable operating environment allowing for greater business efficiency.We will continue to make investments in our information systems to f
185、acilitate growth and enhance our competitive position.Intellectual property We have registered trademarks in the United States and other countries.The majority of our trademark registrations contain the ULTA mark,including Ulta Beauty and two related designs,U and Ulta Salon,Cosmetics&Fragrance(and
186、design).We maintain our marks and monitor filing deadlines for renewal and continued validity.All marks that are deemed material to our business have been applied for or registered in the United States and select foreign countries,including Canada,Mexico and other countries in Latin America,Europe,a
187、nd Asia.We believe our trademarks,especially those related to the Ulta Beauty brand,“All Things Beauty.All In One Place.”,“The Possibilities are Beautiful”,“21 Days of Beauty”,and“Conscious Beauty at Ulta Beauty”have significant value and are important to building brand recognition.82966_ ULTA UTAnn
188、ualReport2021 ALL.indd 224/1/22 9:56 AM13 Government regulation We are affected by extensive laws,governmental regulations,administrative determinations,court decisions,and similar constraints.Such laws,regulations,and other constraints exist at the federal,state,or local levels in the United States
189、.The products we sell in our stores,such as cosmetics(including cannabidiol products),dietary supplements,food,over-the-counter(OTC)drugs,medical devices,and styling tools,including our Ulta Beauty branded products,may be subject to regulation by the U.S.Food and Drug Administration(FDA),the U.S.Fed
190、eral Trade Commission(FTC),the Consumer Product Safety Commission(CPSC),the Environmental Protection Agency(EPA),state regulatory agencies,and State Attorneys General(State AGs).Such regulations principally relate to the safety,labeling,manufacturing,advertising,and distribution of the products.In a
191、ddition,the salon services provided in our stores may be subject to state and local regulations.Products classified as cosmetics(as defined in the Federal Food,Drug and Cosmetic Act)are not subject to pre-market approval by the FDA,but the products must generally be safe and must be properly manufac
192、tured and labeled.Certain products,such as sunscreens and acne treatments,are classified as OTC drugs,and certain ingestible products,such as vitamins and minerals,are classified as dietary supplements.Both OTC drugs and dietary supplements have specific regulatory requirements,including ingredient,
193、labeling,manufacturing,and holding requirements.Products such as wrinkle reducing lights may be classified as medical devices and,in addition to being subject to labeling and manufacturing requirements,may also be subject to premarketing review by the FDA.Finally,products such as styling tools(e.g.b
194、low dryers and curling irons)are regulated by the CPSC,which has strict requirements including the requirement to report certain product defects.The labeling and packaging of all of these products may also be subject to the requirements of the Fair Packaging and Labeling Act and state specific requi
195、rements.Further,statements we make in advertising,including statements about the safety or efficacy of products,pricing,and environmental claims,are subject to federal and state consumer protection laws,which generally prohibit unfair or deceptive practices.Federal,state,municipal and local labor an
196、d employment statutes,laws,ordinances,regulations,mandates,and taxation laws,to which most retailers are typically subject,also impact our day-to-day operations.We are also subject to typical governmental and real estate land use restrictions and typical advertising and consumer protection laws(both
197、 federal and state).Our services business is subject to state board regulations and state licensing requirements.In our store leases,we require our landlords to obtain all necessary governmental approvals and permits for the site to be used as a retail site,and we also ask them to obtain any governm
198、ental approvals and permits for our specific use(but at times the responsibility for obtaining governmental approvals and permits for our specific use falls to us).As applicable,we require our landlords to deliver a certificate of occupancy for any work they perform on our buildings or the shopping
199、centers in which our stores are located.If required by the municipality,we are responsible for delivering a certificate of occupancy for any remodeling or build-outs that we perform and are responsible for complying with all applicable laws in connection with such construction projects or build-outs
200、.Seasonality Our business is subject to seasonal fluctuation.Significant portions of our net sales and profits are realized during the fourth quarter of the fiscal year due to the holiday selling season.To a lesser extent,our business is also affected by Mothers Day and Valentines Day.Available info
201、rmation Our principal website address is .We make available at this address under investor relations(at https:/ of charge,our proxy statement,annual report to shareholders,annual report on Form 10-K,quarterly reports on Form 10-Q,current reports on Form 8-K,and all amendments to those reports as soo
202、n as reasonably practicable after such material is electronically filed with or furnished to the SEC.Information available on our website is not incorporated by reference in and is not deemed a part of this Form 10-K.In addition,our filings with the SEC may be accessed through the SECs website at ww
203、w.sec.gov.All statements made in any of our securities 82966_ ULTA UTAnnualReport2021 ALL.indd 234/1/22 9:56 AM14 filings,including all forward-looking statements or information,are made as of the date of the document in which the statement is included,and we do not assume or undertake any obligatio
204、n to update any of those statements or documents unless we are required to do so by law.Item 1A.Risk Factors The risks described below could materially and adversely affect our business,financial condition,results of operations,or future growth.We could also be affected by additional risks that appl
205、y to all companies operating in the United States,as well as other risks that are not presently known to us or that we currently consider to be immaterial.You should carefully consider the following risks and all of the other information contained in this Annual Report on Form 10-K before making an
206、investment in our common stock.Business,Operational and Strategic Risks We may not be able to sustain our growth plans and successfully implement our long-range strategic,operational and financial plans,which could have a material adverse effect on our business,financial condition,profitability,and
207、cash flows.Our continued and future growth largely depends on our ability to implement our long-range strategic,operational and financial plans and successfully open and operate new stores on a profitable basis.There can be no assurance that we will be successful in implementing our growth plans,lon
208、g-range strategic imperatives and/or operational excellence priorities,including continuous improvement,Project SOAR(our replacement enterprise resource planning platform)and supply chain optimization,and our failure to do so could have a material adverse effect on our business,financial condition,p
209、rofitability,and cash flows.If we are unable to gauge beauty trends and react to changing consumer preferences in a timely manner,our sales may decrease.We believe our success depends in substantial part on our ability to:recognize and define product and beauty trends;anticipate,gauge,and react to c
210、hanging consumer preferences(including relating to sustainability of product sources and packaging,ingredient transparency,and animal welfare)in a timely manner;translate market trends into appropriate,saleable product,and service offerings in our stores and salons in advance of our competitors;deve
211、lop and maintain vendor relationships that provide us access to the newest merchandise on reasonable terms;and distribute merchandise to our stores in an efficient and effective manner and maintain appropriate in-stock levels.If we are unable to anticipate and fulfill the merchandise needs of the co
212、nsumer,our net sales may decrease and we may be forced to increase markdowns of slow-moving merchandise,either of which could have a material adverse effect on our business,financial condition,profitability,and cash flows.Any significant interruption in the operations of our distribution centers cou
213、ld disrupt our ability to deliver merchandise to our stores in a timely manner,which could have a material adverse effect on our business,financial condition,profitability,and cash flows.We distribute products to our stores without supplementing such deliveries with direct-to-store arrangements from
214、 vendors or wholesalers.We are a retailer carrying over 25,000 beauty products that change on a regular basis in response to beauty trends,which makes the success of our operations particularly vulnerable to disruptions in our distribution infrastructure.Any significant interruption in the operation
215、 of our supply chain infrastructure,such as disruptions in our information systems,disruptions in operations due to fire,natural disasters,or other catastrophic events,labor disagreements,inventory availability,or shipping and transportation problems,could drastically reduce our ability to 82966_ UL
216、TA UTAnnualReport2021 ALL.indd 244/1/22 9:56 AM15 receive and process orders and provide products and services to our stores and guests,which could have a material adverse effect on our business,financial condition,profitability,and cash flows.In addition,shipping and transportation costs represent
217、a component of our cost structure and an increase in shipping and transportation costs,including as a result of inflationary pressures,could have a material adverse effect on our business,financial condition,profitability,and cash flows.Our e-commerce platform exposes us to certain additional risks
218、which could adversely affect our results of operations.We offer most of our beauty products for sale through our U website and through our mobile applications.As a result,we encounter risks and difficulties frequently experienced by internet-based businesses,including risks related to our ability to
219、 attract and retain customers on a cost-effective basis and our ability to operate,support,expand,and develop our internet operations,website,mobile applications and software,and other related operational systems.Although we believe that our omnichannel participation is a distinct advantage for us d
220、ue to synergies and the potential for new customers,supporting product offerings through these channels can create issues that have the potential to adversely affect our results of operations.For example,if our e-commerce platform successfully grows,it may do so in part by attracting existing guests
221、,rather than new guests,who choose to purchase products from us online or through our mobile applications rather than from our physical stores,thereby reducing the financial performance of our stores.In addition,offering different products through each channel could cause conflicts and cause some of
222、 our current or potential internet or mobile customers to consider competing distributors of beauty products.Offering products through our internet channel or through our mobile applications could also cause some of our current or potential vendors to consider competing internet or mobile offerings
223、of their products either on their own or through competing distributors.Additionally,omnichannel retailing is rapidly evolving,and we must keep pace with changing guest expectations and new developments by our competitors.As we continue to grow our e-commerce platform,the impact of attracting existi
224、ng rather than new guests,conflicts between product offerings online or through our mobile applications and through our stores,and opening up our channels to increased competition from pure-play e-commerce companies could have a material adverse effect on our business,financial condition,profitabili
225、ty,and cash flows.In addition,if we are unable to make,improve,or develop relevant guest-facing technology in a timely manner,our ability to compete and our results of operations could be adversely affected.Increased costs or interruption in our third-party vendors overseas sourcing operations could
226、 disrupt production,shipment,or receipt of some of our merchandise,which could result in lost sales and could increase our costs.We directly source the majority of our Ulta Beauty branded product components and gifts with purchase and other promotional products through third-party vendors using fore
227、ign factories.In addition,many of our vendors use overseas sourcing to varying degrees to manufacture some or all of their products.Any event causing a sudden disruption of manufacturing or imports from such foreign countries,including the imposition of additional import restrictions,geo-political e
228、vents,unanticipated political changes,increased customs duties,and legal or economic restrictions on overseas suppliers ability to produce and deliver products,could result in substantial disruptions in our supply chain(including inventory availability)and materially harm our operations.We have no l
229、ong-term supply contracts with respect to such foreign-sourced items,many of which are subject to existing or potential duties,tariffs,or quotas that may limit the quantity of certain types of goods that may be imported into the United States from such countries.Our business is also subject to a var
230、iety of other risks generally associated with sourcing goods from abroad,such as political instability,disruption of imports by labor disputes,and local business practices.Our sourcing operations may also be hurt by health concerns regarding infectious diseases in countries in which our merchandise
231、is produced(such as COVID-19),adverse weather conditions or natural disasters that may occur overseas,or acts of war or terrorism in the United States or worldwide,to the extent these acts affect the production,shipment,or receipt of merchandise.Our future operations and performance will be subject
232、to these factors,and these factors could have a material adverse effect on our business,financial condition,profitability,and cash flows or may require us to modify our current business practices and incur increased costs.82966_ ULTA UTAnnualReport2021 ALL.indd 254/1/22 9:56 AM16 Diversion of exclus
233、ive salon products,or a decision by manufacturers of exclusive salon products to utilize other distribution channels,could negatively impact our revenue from the sale of such products,which could have a material adverse effect on our business,financial condition,profitability,and cash flows.The reta
234、il products that we sell in our salons are meant to be sold exclusively by professional salons and authorized professional retail outlets.However,incidents of product diversion occur,which involve the selling of salon exclusive haircare products to unauthorized channels such as drug stores,grocery s
235、tores,or mass merchandisers.Diversion could result in adverse publicity that harms the commercial prospects of our products(if diverted products are old,tainted,or damaged),as well as lower product revenues should consumers choose to purchase diverted product from these channels rather than purchasi
236、ng from one of our salons.Additionally,the various product manufacturers could,in the future,decide to utilize other distribution channels for such products,therefore widening the availability of these products in other retail channels,which could negatively impact the revenue we earn from the sale
237、of such products.The capacity of our distribution and order fulfillment infrastructure and the performance of our distribution centers and fast fulfillment centers may not be adequate to support our expected future growth plans,which could prevent the successful implementation of these plans or caus
238、e us to incur excess costs to expand this infrastructure,which could have a material adverse effect on our business,financial condition,profitability,and cash flows.We currently operate four distribution centers,which house the distribution operations for Ulta Beauty retail stores together with the
239、order fulfillment operations of our e-commerce platform,and two fast fulfillment centers(e-commerce only).In 2014,we began a multi-year supply chain project,which focused on,among other things,adding capacity and system improvements to support expanded omnichannel capabilities.To support our expecte
240、d future growth and to maintain the efficient operation of our business,it is likely additional distribution facilities will be added in the future.Our failure to effectively upgrade and expand our distribution capacity on a timely basis to keep pace with our anticipated growth in stores and the per
241、formance of our distribution centers could have a material adverse effect on our business,financial condition,profitability,and cash flows.Our comparable sales and quarterly financial performance may fluctuate for a variety of reasons,which could result in a decline in the price of our common stock.
242、Our comparable sales and quarterly results of operations have fluctuated in the past,and we expect them to continue to fluctuate in the future.A variety of factors affect our comparable sales and quarterly financial performance,including:general U.S.economic conditions and,in particular,the retail s
243、ales environment;changes in our merchandising strategy or mix;performance of our new and remodeled stores;the effectiveness of our inventory management;timing and concentration of new store openings,including additional human resource requirements and related pre-opening and other start-up costs;can
244、nibalization of existing store sales by new store openings;timing and effectiveness of our marketing activities;seasonal fluctuations due to weather conditions;actions by our existing or new competitors;and hurricanes,tornadoes,wildfires,earthquakes,mudslides,other natural disasters,epidemics or pan
245、demics,and geo-political events.Accordingly,our results for any one fiscal quarter are not necessarily indicative of the results to be expected for any other quarter,and comparable sales for any particular future period may decrease.In that event,the price of our common stock may decline.82966_ ULTA
246、 UTAnnualReport2021 ALL.indd 264/1/22 9:56 AM17 We rely on our good relationships with brand partners to purchase prestige,mass,and salon beauty products on reasonable terms.If these relationships were to be impaired,or if certain brand partners were to change their distribution model,or are unable
247、to supply sufficient merchandise to keep pace with our growth plans,we may not be able to obtain a sufficient selection or volume of merchandise on reasonable terms,and we may not be able to respond promptly to changing trends in beauty products,either of which could have a material adverse effect o
248、n our competitive position,business,financial condition,profitability,and cash flows.We have no long-term supply agreements with brand partners and,therefore,our success depends on maintaining good relationships with our brand partners.Our business depends to a significant extent on the willingness
249、and ability of our brand partners to supply us with a sufficient selection and volume of products to stock our stores.Some of our prestige brand partners may not have the capacity to supply us with sufficient merchandise to keep pace with our growth plans.We also have strategic partnerships with cer
250、tain core brands,which have allowed us to benefit from the growing popularity of such brands.Any of our other core brands could in the future decide to scale back or end its partnership with us and strengthen its relationship with our competitors,which could negatively impact the revenue we earn fro
251、m the sale of such products.If we fail to maintain strong relationships with our existing brand partners,or if we fail to continue acquiring and strengthening relationships with additional brand partners of beauty products,our ability to obtain a sufficient amount and variety of merchandise on reaso
252、nable terms may be limited,which could have a negative impact on our competitive position.During fiscal 2021 and fiscal 2020,merchandise supplied to Ulta Beauty by our top ten brand partners accounted for approximately 54%and 56%of our net sales,respectively.There continues to be vendor consolidatio
253、n within the beauty products industry.The loss of or a reduction in the amount of merchandise made available to us by any one of these key vendors,or by any of our other brand partners,could have a material adverse effect on our business,financial condition,profitability,and cash flows.Use of social
254、 media may adversely impact our reputation.There has been a substantial increase in the use of social media platforms,including blogs,social media websites,and other forms of internet-based and mobile communications,which allow individuals access to a broad audience of consumers and other interested
255、 persons.Negative commentary regarding us or the products we sell may be posted on social media platforms and similar devices at any time and may be adverse to our reputation or business.Customers value readily available information and often act on such information without further investigation and
256、 without regard to its accuracy or source.The harm may be immediate without affording us an opportunity for redress or correction.We also use social media platforms as marketing tools.For example,we maintain Facebook,Twitter,Instagram,TikTok,and Pinterest accounts.As laws and regulations rapidly evo
257、lve to govern the use of these platforms and devices,the failure by us,our employees,or third parties acting at our direction to abide by applicable laws and regulations in the use of these platforms and devices could adversely impact our business,financial condition,profitability,and cash flows.If
258、we fail to retain our existing senior management team or attract qualified new personnel at all levels,such failure could have a material adverse effect on our business,financial condition,profitability,and cash flows.Our business requires disciplined execution at all levels of our organization.This
259、 execution requires an experienced and talented management team.If we were to lose the benefit of the experience,efforts,and abilities of key executive personnel,it could have a material adverse effect on our business,financial condition,profitability,and cash flows.Furthermore,our ability to manage
260、 our retail expansion will require us to continue to train,motivate,and manage our associates.We will need to attract,motivate,and retain additional qualified executive,managerial,and merchandising personnel and store and distribution center associates.Competition for this type of personnel is inten
261、se,especially in light of the labor pressures resulting from the COVID-19 pandemic,and we may not be successful in attracting,assimilating,and retaining the personnel required to grow and operate our business profitably.In addition,fluctuations in the cost of labor,including as a result of inflation
262、ary pressures on wages,could negatively impact our profitability and cash flows.82966_ ULTA UTAnnualReport2021 ALL.indd 274/1/22 9:56 AM18 Our secured revolving credit facility contains certain restrictive covenants that could limit our operational flexibility,including our ability to open stores.We
263、 have a$1.0 billion secured revolving credit facility with a term expiring in March 2025.Substantially all of our assets are pledged as collateral for outstanding borrowings under the agreement.Outstanding borrowings bear interest at either a base rate plus a margin of 0%to 0.125%or the London Inter
264、bank Offered Rate plus a margin of 1.125%to 1.25%and the unused line fee is 0.20%per annum.The credit facility agreement contains usual and customary restrictive covenants relating to our management and the operation of our business.These covenants,among other things,limit our ability to grant liens
265、 on our assets,incur additional indebtedness,pay cash dividends and redeem our stock,enter into transactions with affiliates,and merge or consolidate with another entity.These covenants could restrict our operational flexibility and any failure to comply with these covenants or our payment obligatio
266、ns would limit our ability to borrow under the credit facility and,in certain circumstances,may allow the lenders thereunder to require repayment.Economic,Market and Other External Risks The health of the economy may affect consumer purchases of discretionary items such as beauty products and salon
267、services,which could have a material adverse effect on our business,financial condition,profitability,and cash flows.Our results of operations may be materially affected by conditions in the capital markets and the economy generally.We appeal to a wide demographic consumer profile and offer an exten
268、sive selection of beauty products sold directly to retail consumers and premium salon services.Uncertainty in the economy could adversely impact consumer purchases of discretionary items across all of our product categories,including prestige beauty products and premium salon services.Factors that c
269、ould affect consumers willingness to make such discretionary purchases include:general business conditions,inflationary pressures,levels of employment,interest rates,tax rates,the availability of consumer credit,consumer confidence in future economic conditions,and risks related to epidemics or pand
270、emics like COVID-19 and geo-political events.In the event of a prolonged period of inflation,a prolonged economic downturn or an acute recession,consumer spending habits could be adversely affected,and we could experience lower than expected net sales.In addition,a general deterioration in economic
271、conditions could adversely affect our commercial partners including our brand partners as well as the real estate developers and landlords who we rely on to construct and operate centers in which our stores are located.A bankruptcy or financial failure of a significant vendor or a number of signific
272、ant real estate developers or shopping center landlords could have a material adverse effect on our business,financial condition,profitability,and cash flows.Additionally,volatility and disruption to the capital and credit markets may have a significant,adverse impact on global economic conditions,r
273、esulting in inflationary or recessionary pressures and declines in consumer confidence and economic growth,which,in turn,may lead to declines in consumer spending.Reduced consumer spending could cause changes in customer order patterns and changes in the level of merchandise purchased by our custome
274、rs,and may signify a reset of consumer spending habits,all of which may adversely affect our business,financial condition,profitability,and cash flows.The COVID-19 pandemic has had,and will continue to have,a negative impact on our business,financial condition,profitability,cash flows and supply cha
275、in,as well as consumer spending.The COVID-19 pandemic resulted in federal,state,and local governments implementing numerous measures to try to contain the virus,such as travel restrictions,border closings,restrictions on public gatherings,quarantining of people who may have been exposed to the virus
276、,shelter-in-place restrictions,and limitations or shutdowns of business operations.In response to government recommendations and for the health and safety of our associates(i.e.,employees)and guests,on March 19,2020 we temporarily closed all stores across the U.S.As a result of this decision,we expe
277、rienced a significant reduction in customer traffic and demand which resulted in our sales and results of operations being negatively impacted in fiscal 2020.While we have reopened all stores and resumed most of our in-store services,the potential temporary reclosing of certain stores in the future
278、is possible.COVID-19 could also negatively impact our future results of operations by weakening demand for our products and services and/or by disrupting our supply chain.The pandemic and its various impacts have also changed consumer behavior and consumption of beauty products due to the closures o
279、f offices,retail stores and other businesses and the significant decline in social gatherings.82966_ ULTA UTAnnualReport2021 ALL.indd 284/1/22 9:56 AM19 The COVID-19 pandemic has had,and could continue to have,a negative impact on our business,financial condition,profitability,cash flows and supply
280、chain,although the full extent is still uncertain.As the pandemic continues to evolve and new variants continue to emerge,the extent of the impact on our business,financial condition,profitability,cash flows and supply chain will depend on future developments,including,but not limited to,the potenti
281、al temporary reclosing of certain of our stores,the potential temporary restrictions on certain of our stores operating hours and/or in store capacity,the duration of potential future quarantines,shelter-in-place and other travel restrictions within U.S.and other affected countries,the continued dur
282、ation of the pandemic,government actions to contain the virus and/or treat its impact,the duration,timing and severity of the impact on consumer spending,and how quickly and to what extent normal economic and operating conditions can resume,all of which are still uncertain and cannot be predicted.Ep
283、idemics,pandemics like COVID-19,natural disasters,or other catastrophes or crises that have and could continue to have a material adverse effect on our business,financial condition,profitability,and cash flows.Epidemics,pandemics,or other public health crises,natural disasters,such as hurricanes,tor
284、nados,wildfires,earthquakes,and mudslides,as well as acts of violence or terrorism,have resulted in the temporary closure of our stores and,in the future,could also result in physical damage to our properties,the temporary reclosing of our stores,the temporary closing of our distribution centers and
285、 fast fulfillment centers,the temporary lack of an adequate work force,the temporary or long-term disruption in the supply of products(or a substantial increase in the cost of those products)from domestic or foreign suppliers,the temporary disruption in the delivery of goods both to and from our dis
286、tribution centers and fast fulfillment centers(or a substantial increase in the cost of those deliveries),the temporary reduction in the availability of products in our stores and/or the temporary reduction in visits to stores by customers.Accordingly,if one or more epidemics,pandemics,natural disas
287、ters,and/or acts of violence or terrorism were to occur(as it is with the continuing COVID-19 pandemic),it has and could continue to have a material adverse effect on our business,financial condition,profitability,and cash flows or may require us to incur increased costs.We may be unable to compete
288、effectively in our highly competitive markets.The markets for beauty products and salon services are highly competitive with few barriers to entry.We compete against a diverse group of retailers,both small and large,including regional and national department stores,specialty retailers,drug stores,ma
289、ss merchandisers,high-end and discount salon chains,locally owned beauty retailers and salons,online capabilities of national retailers,pure-play e-commerce companies,catalog retailers,and direct response television,including television home shopping retailers and infomercials.We believe the princip
290、al bases upon which we compete are the breadth of merchandise,our value proposition,the quality of our guests shopping experience,and the convenience of our stores as one-stop destinations for beauty products and salon services.Many of our competitors are,and many of our potential competitors may be
291、,larger and have greater financial,marketing,and other resources and therefore,may be able to adapt to changes in customer requirements more quickly,devote greater resources to the marketing and sale of their products,generate greater national brand recognition,or adopt more aggressive pricing polic
292、ies than we can.As a result,we may lose market share,which could have a material adverse effect on our business,financial condition,profitability,and cash flows.A reduction in traffic to,or the closing of,the other destination retailers in the shopping areas where our stores are located could signif
293、icantly reduce our sales and leave us with excess inventory,which could have a material adverse effect on our business,financial condition,profitability,and cash flows.As a result of our real estate strategy,most of our stores are located in off-mall shopping areas known as power centers.Power cente
294、rs typically contain three to five big-box anchor stores along with a variety of smaller specialty tenants.As a consequence of most of our stores being located in such shopping areas,our sales are derived,in part,from the volume of traffic generated by the other destination retailers and the anchor
295、stores in power centers where our stores are located.Customer traffic to these shopping areas may be adversely affected by the closing of such destination retailers or anchor stores,or by a reduction in traffic to such stores resulting from a regional or global economic downturn,an outbreak of flu o
296、r other viruses(such as COVID-19),a general downturn in the local area where our store is located,or a decline in the desirability of the shopping environment of a particular power center.Such a reduction in customer traffic would reduce our sales and leave us with excess inventory,which could have
297、a material adverse effect on our business,financial condition,profitability,and cash flows.We may respond by increasing markdowns,initiating marketing 82966_ ULTA UTAnnualReport2021 ALL.indd 294/1/22 9:56 AM20 promotions,or transferring product to other stores to reduce excess inventory,which would
298、further decrease our gross profits and net income.Increases in the demand for,or the price of,raw materials used to build and remodel our stores could hurt our profitability.The raw materials used to build and remodel our stores are subject to availability constraints and price volatility caused by
299、weather,supply conditions,government regulations,general economic conditions,inflationary pressures and other unpredictable factors.As a retailer engaged in an active building and remodeling program,we are particularly vulnerable to increases in construction and remodeling costs.As a result,increase
300、s in the demand for,or the price of,raw materials could have a material adverse effect on our business,financial condition,profitability,and cash flows.Our stock repurchase programs could affect the price of our common stock and increase volatility and may be suspended or terminated at any time,whic
301、h may result in a decrease in the trading price of our common stock.We may have in place from time to time,a stock repurchase program.Any such stock repurchase program adopted will not obligate the Company to repurchase any dollar amount or number of shares of common stock and may be suspended or di
302、scontinued at any time,which could cause the market price of our common stock to decline.The timing and actual number of shares repurchased under any such stock repurchase program depends on a variety of factors including the timing of open trading windows,price,corporate and regulatory requirements
303、,and other market conditions.We may affect repurchases under any stock repurchase program from time to time in the open market,in privately negotiated transactions or otherwise,including accelerated stock repurchase arrangements.Repurchases pursuant to any such stock repurchase program could affect
304、our stock price and increase its volatility.The existence of a stock repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock.There can be no assurance that any stock repurchases
305、 will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased shares of common stock.Although our stock repurchase program is intended to enhance stockholder value,short-term stock price fluctuations could reduce the programs effect
306、iveness.Climate change might adversely impact our business operations and/or our supply chain.Scientific consensus shows that carbon dioxide and other greenhouse gases in the atmosphere have caused and will in the future cause changes in weather patterns around the globe.Climatologists predict these
307、 changes will result in the increased frequency of extreme weather events and natural disasters which could disrupt our business operations or those of our suppliers.These weather events could also lead to an increased rate of temporary store closures and reduced customer traffic at our stores.In ad
308、dition,concern about climate change and greenhouse gases may result in new or additional legal,legislative,and/or regulatory requirements to reduce or mitigate the effects of climate change on the environment.Any such new requirements could increase our operating costs for things like energy or pack
309、aging,as well as our product supply chain and distribution costs.There is also increased focus,including by investors,guests,and other stakeholders,on climate change and other environmental,social,governance(ESG)and sustainability matters,including single use plastic,energy,waste and worker safety.C
310、oncern about climate change might cause consumer preferences to change,including moving away from products or ingredients considered to have high climate change impact and towards products that are more sustainably made,and we expect to incur additional costs in connection with our ESG and sustainab
311、ility initiatives.Our reputation could be damaged if we do not(or are perceived not to)act responsibly with respect to these matters and,taken together,these matters could materially and adversely affect our business,financial condition,profitability and cash flows,as well as our ability to meet the
312、 needs of our customers.82966_ ULTA UTAnnualReport2021 ALL.indd 304/1/22 9:56 AM21 Information Security,Cybersecurity,Data Privacy,Regulatory and Legal Risks Cybersecurity or information security breaches and other disruptions could compromise our information,result in the unauthorized disclosure of
313、 confidential guest,employee,Company and/or business partners information,damage our reputation,and expose us to liability,which could negatively impact our business.In the ordinary course of our business,we collect,process,and store sensitive and confidential data,including our proprietary business
314、 information and that of our guests,suppliers and business partners,and personally identifiable information of our guests and employees,in our data centers and on our networks.The secure processing,maintenance,and transmission of this information is critical to our operations.We rely on commercially
315、 available systems,software,tools,and monitoring to provide security for processing,transmission,and storage of confidential information.Despite the security measures we have in place and continual vigilance in regard to the protection of sensitive information,our systems and those of our third-part
316、y service providers may be vulnerable to security breaches,denial-of-service attacks,break-ins,phishing attacks,social engineering,acts of vandalism,computer viruses,misplaced or lost data,human errors,or other similar events.Furthermore,we allow certain of our employees to work remotely,as certain
317、of our third-party service providers also allow,and this remote working environment may increase cybersecurity related risks.Any such breach could compromise our networks and the information stored there could be accessed,publicly disclosed,lost,or stolen.Any such access,disclosure,or other loss of
318、information could result in legal claims or proceedings,liability under laws that protect the privacy of personal information,disrupt our operations,damage our reputation,and cause a loss of confidence in our business,products,and services,which could adversely affect our business,financial conditio
319、n,profitability,and cash flows.We are subject to risks relating to our information technology systems,and any failure to adequately protect our critical information technology systems,successfully upgrade our information technology systems or any material disruption of our information systems could
320、negatively impact financial results and materially adversely affect our business operations,particularly during the holiday season.We are dependent on a variety of information systems,including management,supply chain and financial information,and various other processes and transactions,to effectiv
321、ely manage our business.We also plan to expand and upgrade our information systems(including replacing our enterprise resource planning platform through Project SOAR)to support historical and expected future growth.The failure of these projects,the failure of our information systems to perform as de
322、signed or breaches of security could have an adverse effect on our business and results of our operations.Any material disruption of our systems could disrupt our ability to track,record,and analyze the merchandise that we sell and could cause delays or cancellation of customer orders or impede the
323、manufacture or shipment of products,the processing of transactions,our ability to receive and process e-commerce orders,and/or the reporting of financial results.Our e-commerce operations are increasingly important to our business.The U website and our mobile applications serve as an effective exten
324、sion of Ulta Beautys marketing and prospecting strategies by exposing potential new customers to the Ulta Beauty brand,product offerings,and enhanced content.As the importance of our website,mobile applications,and e-commerce operations to our business continues to grow,we are increasingly vulnerabl
325、e to downtime and other technical failures.Our failure to successfully respond to these risks could reduce e-commerce sales and damage our brands reputation.Failure to maintain satisfactory compliance with applicable privacy and data protection laws and regulations may subject us to negative financi
326、al consequences,including civil or criminal penalties,and harm our brand and reputation.Complex local,state and national laws and regulations apply to the collection,use,retention,protection,disclosure,transfer and other processing of personal data.These privacy and data protection laws and regulati
327、ons are quickly evolving,with new or modified laws and regulations proposed and implemented frequently(such as those enacted by California and certain other states)and existing laws and regulations subject to new or different interpretations and enforcement.Complying with these laws and regulations
328、may cause us to incur substantial costs,require changes to our business practices and limit our ability to obtain data used to provide a differentiated guest experience.In addition,our failure to comply with applicable laws and regulations or other obligations to which we may be subject relating to
329、82966_ ULTA UTAnnualReport2021 ALL.indd 314/1/22 9:56 AM22 personal data,or to protect personal data from unauthorized access,use or other processing,could result in enforcement actions and regulatory investigations against us,claims for damages by guests and other affected individuals,fines and/or
330、damage to our brand and reputation,any of which could adversely affect our business,financial condition,profitability,and cash flows.Litigation and other legal or regulatory proceedings or claims and the outcome of such litigation,proceedings or claims,including possible fines and penalties,could ha
331、ve a material adverse effect on our business and any loss contingency accruals may not be adequate to cover actual losses.From time to time,we are subject to litigation,including potential class action and single-plaintiff litigation and other legal or regulatory proceedings or claims in the ordinar
332、y course of our business operations regarding,but not limited to,employment matters,consumer claims,security of consumer and employee personal information,contractual relations with suppliers,marketing and infringement of trademarks,and other intellectual property rights.Litigation to defend ourselv
333、es against claims by third parties,or to enforce any rights that we may have against third parties,may be necessary,which could absorb significant management time,result in substantial costs and diversion of our resources,causing a material adverse effect on our business,financial condition,profitability,and cash flows.We establish accruals for potential liability arising from litigation and other