ULTA 10-Q: Smart Summary

• Store footprint: As of May 2, 2026, the Company operated 1,608 stores worldwide: 1,521 Ulta Beauty stores in the U.S. located in 50 states, 85 Space NK stores located in the United Kingdom (U.K.), and 2 Space NK stores located in Ireland.
• Seasonality: The business is subject to seasonal fluctuation, with significant portions of net sales and net income realized during the fourth quarter due to the holiday selling season; results for the 13 weeks ended May 2, 2026 are not necessarily indicative of results for the fiscal year ending January 30, 2027.
• Reporting scale: All amounts are stated in thousands, with the exception of per share amounts and the number of stores.

• Fiscal quarter definition: The Company's quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31 each year; Q1 fiscal 2026 ended May 2, 2026 and Q1 fiscal 2025 ended May 3, 2025.
• Key estimate areas: Management identifies inventory valuations, vendor allowances, impairment of long-lived tangible and right-of-use assets, impairment of goodwill and other intangible assets, loyalty program, income taxes, and business combinations as the most significant accounting policies involving estimates and judgments.
• Pending ASUs: Four ASUs are not yet adopted — ASU 2024-03 (expense disaggregation disclosures, effective for fiscal years beginning after December 15, 2026 and interim periods after December 15, 2027), ASU 2025-06 (internal-use software, effective fiscal years and interim periods beginning after December 15, 2027, early adoption permitted), ASU 2025-11 (interim reporting improvements, effective interim periods within fiscal years beginning after December 15, 2027, early adoption permitted), and ASU 2025-12 (codification improvements, effective interim and annual periods beginning after December 15, 2026, early adoption permitted); the Company is evaluating the impact of each on its consolidated financial statements.

Deferred revenue composition: Deferred revenue primarily represents contract liabilities for unredeemed loyalty points and unredeemed gift cards; gift card breakage is recognized proportionately as redemption occurs. Other amounts included in deferred revenue were $9.6M and $7.6M at May 2, 2026 and May 3, 2025, respectively.

• Deferred revenue rollforward: For the 13 weeks ended May 2, 2026, the beginning balance was $574M, additions to contract liabilities were $167.5M, deductions (revenue recognized related to the beginning liability) were ($210M, and the ending balance was $531.6M; for the 13 weeks ended May 3, 2025, the comparable figures were $492.9M beginning, $164.1M additions, ($201.7M deductions, and $455.3M ending balance.

• Goodwill rollforward: Goodwill declined from $226.4M to $224.6M during the 13 weeks ended May 2, 2026, entirely due to a ($1.8M) adverse effect of exchange rate changes; no acquisitions occurred in either the current or prior-year period. The prior-year balance was $10.9M (beginning and ending), reflecting the substantially larger goodwill base added between the two periods.
• Other intangibles rollforward: Other intangible assets fell from $203.3M to $201.6M in the 13 weeks ended May 2, 2026, driven solely by a ($1.7M) currency translation effect and no amortization in the period; in the prior-year period, the balance was fully amortized from $204,000 to $—, with no comparable large balance.

• Lease portfolio: The Company leases retail stores, distribution centers, fast fulfillment centers, market fulfillment centers, corporate offices, and certain equipment under non-cancelable operating leases with expiration dates through 2041; all leases are classified as operating leases with initial terms generally of 10 years and renewal options available under substantially the same terms.
• Operating lease cost: $104.4M for the 13 weeks ended May 2, 2026, up from $93.5M for the 13 weeks ended May 3, 2025; the majority relates to retail stores, distribution centers, fast fulfillment centers, and market fulfillment centers and is classified within cost of sales.
• Cash paid and non-cash activity: Cash paid for operating lease liabilities was $115.5M (13 weeks ended May 2, 2026) vs. $106M (13 weeks ended May 3, 2025), excluding tenant incentive cash receipts of $13.4M and $15.8M, respectively; operating lease assets obtained in exchange for lease liabilities (non-cash) were $129M vs. $140.1M.

• Loan Agreement: On August 27, 2025, the Company entered into Amendment No. 4 to its revolving credit facility (the 'Loan Agreement') with Wells Fargo Bank, National Association as Administrative Agent; the facility matures March 13, 2029, provides maximum revolving loans equal to the lesser of $1,000,000 or a percentage of eligible owned inventory and eligible owned receivables, and contains a $50,000 subfacility for letters of credit; as of May 2, 2026, $102,000 was outstanding at a weighted average interest rate of 7.25% for the 13 weeks ended May 2, 2026, versus no borrowings outstanding as of January 31, 2026 and May 3, 2025.
• Loan Agreement pricing and security: Borrowings bear interest at either a base rate plus a margin of 0.5% to 1.0% or Term SOFR plus a margin of 1.5% to 2.0% (with a credit spread adjustment of 0.10%), with an unused line fee of 0.25% to 0.375% per annum; substantially all of the Company's assets are pledged as collateral, and the facility requires a fixed charge coverage ratio of not less than 1.0 to 1.0 when availability falls below a specified threshold.
• Space NK Facility Agreement: Space NK Limited maintains a multi-currency revolving credit facility with National Westminster Bank plc providing up to £40,000 (extendable by an additional £10,000 with lender consent), maturing April 17, 2028, bearing interest at compound or term SONIA plus a margin of 1.75% with an unused line fee of 0.60% per annum; outstanding borrowings were $42,899 as of May 2, 2026 and $62,287 as of January 31, 2026, with the facility secured by Space NK's assets and subject to an interest coverage ratio of not less than 4.0 to 1.0 and a leverage ratio not to exceed 2.0 to 1.0.
• Covenant compliance: As of May 2, 2026, the Company was in compliance with all terms and covenants of both the Loan Agreement and the Facility Agreement.

• Fair value hierarchy: The company uses the standard three-level hierarchy; non-financial asset impairment analyses (goodwill, other intangibles, long-lived tangible assets) use Level 3 inputs on a nonrecurring basis.
• Intangible asset valuation: Other intangible assets, net are valued under the relief from royalty method — equal to the present value of after-tax royalty savings — using Level 3 (company-specific) inputs; key assumptions include projected revenues, discount rate, remaining useful life, and estimated royalty rate.
• Deferred compensation liabilities: Liabilities related to the non-qualified deferred compensation plan (classified as Level 2, based on third-party reported values derived primarily from quoted market prices of underlying fund assets) were $43.4M as of May 2, 2026, $42.5M as of January 31, 2026, and $44.7M as of May 3, 2025.

• Black-Scholes assumptions: For the 13 weeks ended May 2, 2026 and May 3, 2025, weighted-average assumptions were identical or near-identical: volatility rate 34.0% both periods, average risk-free interest rate 3.8% vs. 3.9%, average expected life 3.4 years both periods, and dividend yield nil both periods.
• Stock options: 108 options granted in the 13 weeks ended May 2, 2026 (vs. 129 in the prior-year period); stock-based compensation expense was $1.8M vs. $3M; weighted-average grant date fair value was $153.72 vs. $107.99; unrecognized expense at May 2, 2026 was approximately $28.6M.
• Restricted stock units: 77 RSUs issued in the 13 weeks ended May 2, 2026 (vs. 99); stock-based compensation expense was $6.6M vs. $5.3M; unrecognized expense at May 2, 2026 was approximately $71.9M.
• Performance awards: No performance-based restricted stock units (PRSUs) were issued in either period; PRSU expense was $1.9M vs. $3M, with approximately $3M unrecognized at May 2, 2026; 68 performance stock options were issued in the 13 weeks ended May 2, 2026 with expense of $235,000 and approximately $13.7M unrecognized.

• Effective tax rate: Income tax expense of $106.9M for the 13 weeks ended May 2, 2026 reflects an effective tax rate of 23.9%, down from 24.6% ($99.6M) for the 13 weeks ended May 3, 2025.
• Rate driver: The lower effective tax rate is primarily due to the purchase of transferable federal tax credits at a negotiated discount, resulting in an income tax benefit recorded during the quarter.

Anti-dilutive exclusions: The diluted denominator excludes 277 thousand employee stock options and restricted stock units for the 13 weeks ended May 2, 2026 and 354 thousand for the 13 weeks ended May 3, 2025, due to their anti-dilutive effects. Performance-based RSUs: Outstanding performance-based restricted stock units are included in diluted shares only to the extent the underlying performance conditions are satisfied prior to the end of the reporting period, or would be satisfied if period-end were the end of the contingency period and the results would be dilutive under the treasury stock method.

• Program authorization: In October 2024, the Board authorized the October 2024 Share Repurchase Program permitting repurchases of up to $3B of common stock; it has no expiration date, may be suspended or discontinued at any time, and revoked previously authorized but unused amounts from the March 2024 program.
• Repurchase activity: During the 13 weeks ended May 2, 2026, the Company repurchased 958 thousand shares at a total cost (including excise tax) of $560.3M, versus 987 thousand shares at $362.1M in the 13 weeks ended May 3, 2025.

• Single reportable segment: The Company operates as one reportable segment, which includes retail stores, salon services, and e-commerce.
• Depreciation and amortization: Included within cost of sales and other segment expenses is depreciation and amortization expense of $81.4M and $72M for the 13 weeks ended May 2, 2026 and May 3, 2025, respectively.
• Associate expenses definition: Associate expenses include salaries, wages, bonuses, and other forms of compensation related to associates.
• Advertising expense, net definition: Consists of print, digital and social media, and television and radio advertising, net of vendor income that is a reimbursement of specific, incremental, and identifiable costs.

• Operating cash drivers: The increase in net cash provided by operating activities in the first quarter of fiscal 2026 versus the first quarter of fiscal 2025 was mainly due to higher net income and favorable timing of accounts payable, accounts receivable, and prepaid expenses and other current assets, partially offset by a larger increase in merchandise inventories in the first quarter of fiscal 2026.
• Merchandise inventories: Merchandise inventories, net were $2.4B at May 2, 2026, compared to $2.1B at May 3, 2025, an increase of $264.9M or 12.5%, driven primarily by new brand launches, the acquisition of Space NK, and the addition of new Ulta Beauty stores in the U.S.

• Capital expenditures: Investing activities for capital expenditures were $58.3M during the 13 weeks ended May 2, 2026, down from $79M during the 13 weeks ended May 3, 2025, with the decline primarily driven by lower capital expenditures for supply chain and merchandising fixtures and proceeds from short-term investments.
• Store activity: 19 stores were opened and 2 relocated in the 13 weeks ended May 2, 2026, compared to 6 opened, 4 remodeled, and 2 relocated in the 13 weeks ended May 3, 2025.
• Liquidity outlook: Management states that future investments will depend primarily on the number of new, remodeled, and relocated stores, information technology systems investments, and supply chain investments, and believes existing sources of liquidity will be sufficient to fund future capital expenditures.

• Financing activities composition: Financing activities include share repurchases, borrowing and repayment of revolving credit facilities, and capital stock transactions; purchases of treasury shares represent the fair value of common shares repurchased from plan participants in connection with shares withheld to satisfy minimum statutory tax obligations upon vesting of restricted stock.
• Year-over-year change: The increase in net cash used in financing activities in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 was primarily due to an increase in share repurchases.
• Credit facility balances: Outstanding borrowings under credit facilities were $144.9M as of May 2, 2026 and $62.3M as of January 31, 2026; no amounts were outstanding as of May 3, 2025.

• Repurchase authorization: In October 2024, the Board of Directors authorized the October 2024 Share Repurchase Program, permitting repurchases of up to $3B of the Company's common stock; this authorization revoked previously authorized but unused amounts from the March 2024 share repurchase program.
• Program terms: The October 2024 Share Repurchase Program has no expiration date and may be suspended or discontinued at any time.

• Loan Agreement terms: Entered into Amendment No. 4 to the Second Amended and Restated Loan Agreement on August 27, 2025 with Wells Fargo Bank, National Association as Administrative Agent; the facility matures March 13, 2029, provides maximum revolving loans equal to the lesser of $1B or a percentage of eligible owned inventory and eligible owned receivables, includes a $50M subfacility for letters of credit, and bears interest at either a base rate plus a margin of 0.5% to 1.0% or the Term Secured Overnight Financing Rate plus a margin of 1.5% to 2.0% (plus a credit spread adjustment of 0.10%), with an unused line fee of 0.25% to 0.375% per annum; substantially all of the Company's assets are pledged as collateral.
• Loan Agreement utilization: As of May 2, 2026, $102M was outstanding under the Loan Agreement; as of January 31, 2026 and May 3, 2025, there were no borrowings outstanding.
• Space NK Facility Agreement: Ulta Beauty's wholly owned subsidiary Space NK maintains a multi-currency revolving credit facility with National Westminster Bank plc providing up to £40.0 million (expandable by an additional £10.0 million with lender consent), maturing April 17, 2028, bearing interest at the compound or term Sterling Overnight Index Average plus a margin of 1.75% with an unused line fee of 0.60% per annum; as of May 2, 2026 and January 31, 2026, $42.9M and $62.3M, respectively, were outstanding.
• Covenant compliance: As of May 2, 2026, the Company was in compliance with all terms and covenants of both the Loan Agreement and the Facility Agreement; the Loan Agreement requires a fixed charge coverage ratio of not less than 1.0 to 1.0 when availability falls below a specified threshold, while the Facility Agreement requires an interest coverage ratio of not less than 4.0 to 1.0 and a leverage ratio not to exceed 2.0 to 1.0.

• Seasonal concentration: A significant portion of net sales and profits are realized in the fourth quarter of the fiscal year due to the holiday selling season, with Mother's Day and Valentine's Day representing secondary seasonal drivers.
• Risk of shortfall: Any decrease in sales during these higher-volume periods could have an adverse effect on the business, financial condition, or operating results for the entire fiscal year.
• Period comparability: Management states that period-to-period comparisons of results of operations should not be relied upon as an indication of future performance, given historical and expected ongoing quarterly variability.