Ulta Beauty Inc. (NASDAQ:ULTA)

Inventory Turnover

The inventory turnover ratio fluctuates moderately over the analyzed periods. Starting at 3.45 in early 2018, it generally oscillates between approximately 2.6 and 3.84. Notable decreases in turnover occurred around early 2019 and early 2022, suggesting slower inventory movement during these times, while peaks in mid-2020 and early 2023 indicate periods of improved inventory efficiency.

Receivables Turnover

Receivables turnover exhibits variability with a high degree of fluctuation. Values generally range between the mid-40s and high 60s, with an outlier peak of nearly 77 in mid-2020. Lower turnover ratios appear around early to mid-2021 and early 2022, implying slower collection periods and potential challenges in receivables management during these intervals.

Payables Turnover

The payables turnover ratio follows a decreasing trend from early 2018 to early 2022, dropping from around 11.6 to levels near 6.7, indicating longer periods before payments are made. However, from early 2022 onward, there is a noticeable recovery, with payables turnover rising above 12 by mid-2023, signaling a return to faster payment cycles.

Working Capital Turnover

Working capital turnover shows an overall increasing trend with some volatility. Starting near 5.6 in early 2018, the ratio rises to a peak of nearly 12 in early 2022. This suggests improved efficiency in using working capital to generate sales, despite a dip around early 2020 likely linked to external disruptions. The trend from early 2022 to mid-2023 indicates sustained higher efficiency levels.

Average Inventory Processing Period

The average inventory processing period varies between approximately 95 and 140 days, with cyclical increases and decreases. Periods around early 2019 and early 2022 reflect the longest processing times, corresponding inversely to lower inventory turnover rates. The shortest periods occur in mid to late 2023, indicating quicker inventory movement during the most recent time frame.

Average Receivable Collection Period

Receivable collection periods remain relatively stable but show slight increases during certain intervals. Typically around 6-7 days, it peaks near 11 days in early 2021 and 10 days in early 2022. These elevated collection periods correspond with decreases in receivables turnover, indicating slower accounts receivable collections during these times.

Operating Cycle

The operating cycle displays fluctuations influenced mainly by changes in inventory processing and receivable collection periods. It ranges between approximately 102 and 148 days, with peaks during early 2019 and early 2022, aligned with extended inventory and receivable periods. Lower cycle durations are found toward the later periods in 2023, reflecting improved operational efficiency.

Average Payables Payment Period

The average payables payment period generally lengthens from early 2018, moving from low 30s to as high as 55 days in early 2022. This suggests an increasing trend in the time taken to settle payables, possibly as a working capital management strategy. However, a reduction to around 29 days by mid-2023 indicates a return to faster payment schedules.

Cash Conversion Cycle

The cash conversion cycle varies between roughly 69 and 100 days, showing periods of both improvement and deterioration. The shortest cycles appear mid-2023, reflecting effective cash flow management, whereas peaks in early 2019 and early 2022 correspond to longer durations in inventory turnover, receivable collection, and payables payment, collectively slowing cash flow conversion during those times.

The data reveals several key trends in cost of sales, merchandise inventories, and inventory turnover ratios over the periods analyzed.

Cost of Sales

This metric exhibits a cyclical pattern with generally increasing values over time. Starting from a lower base of approximately 839 million US dollars in early 2017, costs rise and fall in alignment with seasonality, peaking notably in the first quarters of each year. The highest costs are observed in the quarters ending in January and February, exceeding 2 billion US dollars in some later years, notably early 2023. These fluctuations suggest seasonal demand impacts on cost structure, with a clear upward trend reflecting possible growth in sales volume or price inflation over the years examined.

Merchandise Inventories, Net

Inventories display an upward trend over the entire period, increasing from about 1.05 billion US dollars in early 2017 to over 1.8 billion US dollars by mid-2023. However, inventories do not increase steadily; there are visible seasonal fluctuations where inventory levels surge in the third or fourth quarters and then decline in subsequent quarters. This pattern indicates inventory build-up in preparation for peak sales seasons followed by drawdowns as products are sold. Despite these fluctuations, the overall trend points to consistent scaling of inventory levels, in alignment with the growth in cost of sales.

Inventory Turnover Ratio

The inventory turnover ratio, available from February 2018 onward, typically ranges between approximately 2.6 and 3.8 times per period. This ratio shows seasonal variation, dipping in the first quarters of most years and rising in the middle quarters. Higher turnover values in mid-year quarters suggest more rapid inventory movement during these periods, likely reflecting stronger sales activity. Conversely, lower turnover ratios in early quarters may correspond to higher inventory levels relative to sales volume post-holiday season. Despite these cyclical shifts, turnover ratios maintain a relatively stable range, indicating consistent operational efficiency in managing inventory relative to cost of sales despite the overall growth in scale.

In summary, the quarterly data reflects growing cost of sales and inventories consistent with company expansion, with clear seasonal patterns manifesting as cyclical peaks and troughs. Inventory turnover remains stable within a bounded range, showing effective inventory management despite increasing absolute quantities. The seasonality and upward trends suggest strategic inventory scaling aligned with anticipated sales cycles and overall business growth.

The net sales figures exhibit considerable fluctuations over the observed quarterly periods. Initially, net sales range between approximately 1.29 billion to 1.56 billion US dollars from April 2017 through November 2018, showing moderate stability with minor variations. Beginning in early 2018, a notable surge appears, with quarterly sales peaking above 2.3 billion USD in February 2020, followed by a sharp decline to roughly 1.17 billion USD in May 2020, coinciding potentially with external disruptions. Subsequently, sales exhibit a recovery trend climbing back to exceeding 2.7 billion USD by January 2022. The periods following early 2022 reveal mild volatility but generally maintain elevated sales levels above 2.3 billion USD, suggesting strengthened revenue performance relative to earlier years.

Regarding net receivables, the amounts generally increase in tandem with net sales over the longer term but demonstrate some irregularity. From April 2017 through February 2020, net receivables rise progressively from near 63 million USD to above 139 million USD, reflecting growth consistent with sales expansion. A sharp decrease appears in May 2020 to around 88 million USD, concurrent with the dip in net sales, followed by another rise peaking at over 193 million USD by January 2021. In subsequent quarters, net receivables moderately fluctuate yet remain substantially higher than initial years, illustrating expanded credit extended or collections period potentially influenced by sales volume and customer payment behaviors.

The receivables turnover ratio, which indicates the frequency of collection of receivables during a period, shows wide variability across quarters. Early values around late 2017 into 2018 range approximately from 59 to 64, indicating a relatively high turnover and efficient collection cycles at that time. However, from 2019 onward, the ratio oscillates significantly, at times falling to as low as about 32 in January 2021 and rising again towards 61 by mid-2023. Such variation could suggest fluctuating credit policies, changes in customer payment patterns, or altered collections efficiency due to market conditions. The notable low turnovers around early 2021 coincide with the periods of peak receivables and sales rebound, possibly reflecting delayed payments or extended credit terms during rapid business growth phases.

In summary, the financial data delineate a pattern of strong revenue growth interrupted by a pronounced downturn around early 2020, followed by recovery and higher operational scale in subsequent years. Receivables trends broadly align with sales performance but include increased volatility, especially during periods of market disruption and recovery. The varied receivables turnover ratios further emphasize dynamic management of credit and collections in response to shifting business environments and possibly changing consumer behaviors over the observed timeframe.

The cost of sales demonstrates a pattern of significant seasonal fluctuations, with peaks generally observed in the first quarter of each fiscal year. Over the full period from April 2017 to July 2023, there is an observable upward trajectory in the absolute values, indicating overall growth in the cost structure. Notably, the cost of sales surged dramatically in the early months of 2020 and again reaching new highs in early 2023, reflecting possible increased business activity or inflationary pressures during these intervals.

Accounts payable figures also fluctuate over the quarters, showing some synchronization with the cost of sales trends though with less pronounced spikes. Over time, accounts payable amounts have generally increased, indicative of rising short-term liabilities or delayed payments to suppliers. Peaks in payables often follow or coincide with the cost of sales peaks, suggesting that the company manages a considerable portion of its operational costs through trade credit during high activity periods.

The payables turnover ratio, available from the fourth quarter of 2017 onward, shows a declining trend over time, with intermittent rises. The ratio is highest at the beginning of the data in late 2017, then sees a downward trend through subsequent quarters, reaching lows particularly in early 2022. This declining ratio signals a lengthening period in settling payables, which may infer increasing payment terms or slower payment practices. Occasional increases in the ratio suggest periods when payables were settled more rapidly, though these are not sustained.

Combined, these trends suggest that the company’s operational scale has grown, as reflected in increasing costs and payable balances. However, the declining payables turnover ratio may point to changes in working capital management, potentially reflecting strategic decisions to extend payment terms to suppliers. Seasonal patterns remain consistent, highlighting the cyclical nature of the company’s business activities.

Cost of Sales

Exhibits significant quarterly fluctuations with recurring first-quarter peaks and a general upward trend over time. Notable sharp increases occurred in early 2020 and early 2023.

Accounts Payable

Displays correlated but less volatile seasonal fluctuations compared to cost of sales, with a gradual increase in overall values, suggesting growth in short-term liabilities or extended supplier credit.

Payables Turnover Ratio

Shows a general decline from late 2017 through 2023, indicating a longer average duration to settle payables, though some temporary improvements are noted intermittently.

Working Capital

The working capital values show considerable fluctuations over the observed periods. Initially, there is a gradual decline from approximately 1,088,720 thousand USD in April 2017 to a low near 840,548 thousand USD by November 2019. Subsequently, a notable increase occurs, peaking at around 1,737,859 thousand USD in August 2020, likely indicating a period of improved short-term liquidity. After this peak, working capital trends back downward with some variability, reaching as low as 723,173 thousand USD in January 2022, before leveling off near the one million USD mark in the latest period (July 2023). These fluctuations suggest dynamic management of current assets and liabilities in response to changing operational conditions.

Net Sales

Net sales demonstrate a generally upward trajectory with several seasonal or cyclical peaks. Starting at approximately 1,314,879 thousand USD in April 2017, net sales increase significantly through early 2018, reaching over 2,300,000 thousand USD by February 2020, despite some quarter-to-quarter variability. A sharp drop to about 1,173,210 thousand USD in May 2020 is observed, likely reflecting external disruptions during that period. Following this, sales recover robustly, peaking at the highest recorded value of approximately 3,226,773 thousand USD in January 2023. This upward trend, despite intermittent dips, indicates strong revenue growth and market demand over time.

Working Capital Turnover Ratio

The working capital turnover ratio, absent in the earlier periods, appears from February 2018 onward and shows a variable pattern consistent with changes in both working capital and net sales. Initial values hover between 5.6 and 8.59, indicating moderately efficient use of working capital to generate sales. A sharp decline to a ratio of 4.18 in March 2020 coincides with the lowest net sales in May 2020, reflecting decreased efficiency. Thereafter, the ratio rebounds, reaching a peak of 11.93 in January 2022, demonstrating a marked improvement in turnover efficiency. Although the ratio decreases slightly afterward, it remains elevated in the range of approximately 9.27 to 10.44 toward the latest periods, signaling continued efficient utilization of working capital.

Overall Analysis

The data reveal a cyclical yet generally positive trend in key financial indicators. Working capital shows periodic volatility but maintains a level supportive of operational needs. Net sales display significant growth with resilience to downturns, likely tied to external market factors or company initiatives. The working capital turnover ratio reinforces the narrative of improving operational efficiency in utilizing short-term assets to generate revenue, especially notable after early 2020 disruptions. Together, these patterns point to a company adapting effectively to changing conditions while progressively enhancing financial performance and resource utilization.

Inventory Turnover

Inventory turnover ratios are available starting from the period ending May 5, 2018, through July 29, 2023. The ratio fluctuates over the observed quarters but generally oscillates between approximately 2.6 and 3.8. Notably, there is a pattern of decline followed by recovery within each year, with lower values usually recorded in the early parts of the calendar year and higher values in mid to late year quarters.

For instance, the turnover declined to lows such as 2.83 (February 2, 2019), 2.85 (February 1, 2020), and 2.6 (October 30, 2021). Each of these troughs was followed by an increase to above 3.3 in subsequent quarters, reflecting a cyclic inventory management pattern. The peak ratio in this series is 3.84 (October 29, 2022), indicating relatively efficient inventory use during that period.

Average Inventory Processing Period

The average inventory processing period, measured in number of days, shows values also from May 2018 onwards. There is an inverse pattern compared to inventory turnover, as expected. This metric ranges roughly from 95 days to around 140 days across the quarters.

There are notable increases in processing days during early 2019 and into early 2022, reaching peaks of 129 days (February 2, 2019) and 140 days (January 29, 2022), corresponding to the lowest turnover ratios in those periods. Conversely, the shortest inventory processing periods, close to 95-100 days, occur generally in mid-year quarters, consistent with higher turnover rates during those times.

Trend and Pattern Analysis

The data depicts a clear cyclical trend where inventory turnover decreases and the average processing period increases during certain quarters, suggesting periods of slower inventory movement or accumulation. These periods appear to be seasonal or operational, with inventory efficiency improving in subsequent quarters.

Throughout the years, there is no evident long-term upward or downward trend in inventory efficiency measures. The fluctuations suggest consistent seasonal or business cycle influences rather than a structural change in inventory management effectiveness.

Overall, the company maintains a relatively stable range in inventory turnover and average processing period over the observed quarters, with periodic declines and recoveries that hint at normal seasonal inventory dynamics rather than systemic issues.

The analysis of the receivables turnover ratio and the average receivable collection period reveals several notable trends over the reported quarters.

Receivables Turnover

The receivables turnover ratio demonstrates some fluctuation throughout the examined periods. Initial values recorded from early 2018 show figures mostly in the range of approximately 50 to 65 times. A peak occurs around February 2020, where the ratio reaches nearly 77 times, indicating an accelerated collection of receivables during that particular quarter.

Post this peak, the turnover ratio declines noticeably, dropping to a low of about 31.86 by October 2020, signaling a slower rate in converting receivables into cash. Subsequently, the ratio exhibits a gradual upward trend, recovering steadily towards the end of the examined timeframe, reaching over 61 times by July 2023. This pattern suggests an initial improvement in collection efficiency followed by a decline, with a recovery phase emerging thereafter.

Average Receivable Collection Period

The average number of days to collect receivables generally complements the turnover ratio observations. Early in the data series, the collection period remains stable at around 6 to 7 days, showing efficient credit management.

In the middle of the dataset, particularly around late 2020 to early 2021, the collection period lengthens to 8 to 11 days, indicating a delay in collecting receivables coinciding with the lowest turnover ratios. After this peak delay, the collection period decreases gradually toward 6 to 7 days again in the most recent quarters, reflecting an improvement consistent with the recovering turnover ratio.

Overall, the data suggest that the company experienced variations in its receivables management efficiency, with periods of faster collections followed by slower ones, possibly influenced by external factors or internal policies. The recovery in turnover ratios and reduction in collection days in the latter periods indicates a return towards more favorable collection dynamics.

The analysis of the financial timing metrics over the periods reveals several important patterns and trends.

Average Inventory Processing Period

The inventory processing period shows fluctuations with an overall slightly increasing trend from 106 days in mid-2018 to a high of 140 days around early 2022. Notably, the period peaks significantly in January 2022 at 140 days, indicating a slower turnover of inventory. Subsequent quarters show a decline, reaching 95 days by April 2023, the lowest point observed in the data. This suggests improved inventory management or faster processing toward the later periods.

Average Receivable Collection Period

The receivable collection period remains relatively stable, generally ranging between 5 and 11 days. There is a minor upward movement peaking at 11 days in January 2021, which could indicate a slight delay in collection during that period. However, the period quickly declines thereafter and stabilizes around 6 to 8 days, indicating consistent and efficient receivable collections over time.

Operating Cycle

The operating cycle, which combines inventory processing and receivable collection periods, parallels the inventory trend closely due to the relatively stable receivable period. It shows an overall increase from approximately 110 days in mid-2018 to a peak of 148 days in January 2022, marking a period of slower overall operations potentially due to inventory delays. Following this peak, the operating cycle shortens significantly to 102-108 days by mid-2023, reflecting improvements in operational efficiency.

In summary, while the receivable collection period remained stable, the inventory processing period experienced notable volatility, largely driving the fluctuations in the operating cycle. The peak values observed around late 2021 to early 2022 suggest operational challenges during that period, which appeared to be addressed in subsequent quarters leading to improved cycle times and operational efficiency by mid-2023.

The payables turnover ratio demonstrates noticeable fluctuations over the observed periods, with a general trend of variability rather than consistent growth or decline. Initially, ratios range from approximately 7.32 to 11.63, with some quarters showing sharp decreases followed by recoveries. More recent data points indicate an upward movement, peaking at 12.48 in the last recorded quarter, suggesting an increased efficiency in the company's ability to pay off its suppliers in that period.

Conversely, the average payables payment period, measured in days, exhibits a somewhat cyclical pattern with periods of increase and decrease. Early figures show payment periods around 31 to 50 days, with a notable spike to 55 days at one point, indicating delayed payments during that quarter. More recent quarters show a decreasing trend, culminating in a low of 29 days, which aligns inversely with the rising payables turnover ratio, reflecting a tendency toward quicker payment to suppliers.

Payables Turnover Ratio

Varies between roughly 7.3 and 12.5 over the periods.

Periods of decline are often followed by rebounds, indicating fluctuations in payment efficiency.

Recent quarters indicate an improving trend in turnover, suggesting faster settlement of payables.

Average Payables Payment Period

Fluctuates between 29 and 55 days across the reporting quarters.

Spikes correspond to slower payment cycles; respiratory pattern noted in the data.

Latest data points show reduction to below initial ranges, indicating acceleration in payables payments.

Overall, the inverse relationship between payables turnover and payment period is consistent throughout the dataset, as expected. The latest data suggests improved operational cash management, reflected by increased turnover and decreased payment duration. These trends may imply better liquidity management or stronger supplier relations leading to more efficient payables processing.

The analysis of the financial timing metrics over the observed periods reveals several notable trends and fluctuations in the company's operational efficiency and working capital management.

Average Inventory Processing Period

The inventory processing period shows variability with a general increasing trend over the years. Initial data points start around 106 days in 2018, extending to peaks above 130 days observed in early 2022 and late 2022. There are intermittent decreases, with the lowest recent points near 95–102 days in mid-2023, suggesting some improvement in inventory turnover efficiency by that time. Overall, the lengthening inventory processing periods in some intervals may indicate slower inventory movement or changes in inventory management strategies.

Average Receivable Collection Period

Receivables collection days remained relatively stable, predominantly oscillating between 6 and 8 days throughout the periods. However, there is a noticeable uptick around early 2021, reaching as high as 11 days, which might reflect some delays in collections during that timeframe. By mid-2023, the collection period normalizes towards the lower end of the range (6–7 days), indicating an improvement in credit and collection policies or customer payment behavior.

Average Payables Payment Period

The payables payment period demonstrates considerable volatility, with values ranging from the low 30s up to peaks of 55 days in early 2022. Noteworthy increases occur periodically, for instance, 50 days in early 2018 and 55 days in early 2022, which could represent strategic delays in supplier payments to manage cash flow. The payment period drops to as low as 29 days by mid-2023, suggesting a shift towards quicker payments to suppliers during the latest periods.

Cash Conversion Cycle

The cash conversion cycle (CCC), reflecting the net time between outlay of cash and collection from sales, presents fluctuations generally aligned with changes in inventory, receivables, and payables. CCC values largely hover between approximately 70 and 100 days, with spikes such as 100 days in late 2022 and 93 days in early 2022. The lowest CCC observed is 69 days in mid-2023, suggesting an enhancement in working capital efficiency at that time. The data implies that while there have been periods of extended cash conversion duration, especially during late 2021 and early 2022, recent periods show improved efficiency, possibly driven by shorter inventory and receivables periods combined with adjusted payment terms.

In summary, the financial timing metrics indicate that while the company has experienced challenges leading to longer inventory processing and payment cycles at certain intervals, recent trends point to improvements in managing inventory turnover, collections, and payments. These shifts contribute to a more favorable cash conversion cycle in the most recent quarters, reflecting enhanced working capital utilization and operational efficiency.