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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Ulta Beauty Inc., economic profit calculation

US$ in thousands

12 months ended:	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
Net operating profit after taxes (NOPAT)¹	1,347,343)	1,087,749)	242,025)	813,424)	777,837)	527,431)
Cost of capital²	15.10%	14.93%	14.71%	13.92%	14.41%	13.58%
Invested capital³	4,117,969)	3,684,509)	4,184,136)	3,966,351)	4,338,625)	3,940,229)

Economic profit⁴	725,523)	537,761)	(373,310)	261,308)	152,445)	(7,586)

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,347,343 – 15.10% × 4,117,969 = 725,523

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Ulta Beauty Inc. economic profit increased from 2021 to 2022 and from 2022 to 2023.

Ulta Beauty Inc., NOPAT calculation

US$ in thousands

12 months ended:	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
Net income	1,242,408)	985,837)	175,835)	705,945)	658,559)	555,234)
Deferred income tax expense (benefit)¹	15,654)	(25,666)	(24,008)	5,503)	34,080)	(27,095)
Increase (decrease) in allowance for doubtful accounts²	71)	237)	(595)	712)	(720)	(708)
Increase (decrease) in deferred revenue³	41,098)	79,196)	36,848)	38,481)	85,918)	—)
Increase (decrease) in equity equivalents⁴	56,823)	53,767)	12,245)	44,696)	119,278)	(27,803)
Interest expense	—)	—)	—)	—)	—)	—)
Interest expense, operating lease liability⁵	60,902)	60,943)	68,285)	79,472)	—)	—)
Adjusted interest expense	60,902)	60,943)	68,285)	79,472)	—)	—)
Tax benefit of interest expense⁶	(12,789)	(12,798)	(14,340)	(16,689)	—)	—)
Adjusted interest expense, after taxes⁷	48,112)	48,145)	53,945)	62,783)	—)	—)
Net operating profit after taxes (NOPAT)	1,347,343)	1,087,749)	242,025)	813,424)	777,837)	527,431)

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for doubtful accounts.

³ Addition of increase (decrease) in deferred revenue.

⁴ Addition of increase (decrease) in equity equivalents to net income.

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,903,176 × 3.20% = 60,902

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 60,902 × 21.00% = 12,789

⁷ Addition of after taxes interest expense to net income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Ulta Beauty Inc. NOPAT increased from 2021 to 2022 and from 2022 to 2023.

Ulta Beauty Inc., cash operating taxes calculation

US$ in thousands

12 months ended:	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
Provision for income taxes	401,136)	309,992)	55,250)	200,205)	200,582)	231,625)
Less: Deferred income tax expense (benefit)	15,654)	(25,666)	(24,008)	5,503)	34,080)	(27,095)
Add: Tax savings from interest expense	12,789)	12,798)	14,340)	16,689)	—)	—)
Cash operating taxes	398,271)	348,456)	93,598)	211,391)	166,502)	258,720)

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Ulta Beauty Inc. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

Ulta Beauty Inc., invested capital calculation (financing approach)

US$ in thousands

	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
Operating lease liability¹	1,903,176)	1,846,756)	1,896,801)	1,938,347)	2,285,412)	2,234,521)
Total reported debt & leases	1,903,176)	1,846,756)	1,896,801)	1,938,347)	2,285,412)	2,234,521)
Stockholders’ equity	1,959,811)	1,535,373)	1,999,549)	1,902,094)	1,820,218)	1,774,217)
Net deferred tax (assets) liabilities²	55,346)	39,693)	65,359)	89,367)	83,864)	59,403)
Allowance for doubtful accounts³	1,076)	1,005)	768)	1,363)	651)	1,371)
Deferred revenue⁴	394,677)	353,579)	274,383)	237,535)	199,054)	113,136)
Equity equivalents⁵	451,099)	394,277)	340,510)	328,265)	283,569)	173,910)
Accumulated other comprehensive (income) loss, net of tax⁶	—)	—)	(56)	—)	—)	—)
Adjusted stockholders’ equity	2,410,910)	1,929,650)	2,340,003)	2,230,359)	2,103,787)	1,948,127)
Construction-in-progress⁷	(196,117)	(91,897)	(52,668)	(92,355)	(50,574)	(122,419)
Short-term investments⁸	—)	—)	—)	(110,000)	—)	(120,000)
Invested capital	4,117,969)	3,684,509)	4,184,136)	3,966,351)	4,338,625)	3,940,229)

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of deferred revenue.

⁵ Addition of equity equivalents to stockholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction-in-progress.

⁸ Subtraction of short-term investments.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Ulta Beauty Inc. invested capital decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Ulta Beauty Inc., cost of capital calculations

Jan 28, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	25,799,272)	25,799,272)	÷	27,702,448)	=	0.93	0.93	×	16.03%	=	14.93%
Operating lease liability³	1,903,176)	1,903,176)	÷	27,702,448)	=	0.07	0.07	×	3.20% × (1 – 21.00%)	=	0.17%
Total:	27,702,448)					1.00					15.10%

Based on: 10-K (reporting date: 2023-01-28).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Jan 29, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	20,672,932)	20,672,932)	÷	22,519,688)	=	0.92	0.92	×	16.03%	=	14.71%
Operating lease liability³	1,846,756)	1,846,756)	÷	22,519,688)	=	0.08	0.08	×	3.30% × (1 – 21.00%)	=	0.21%
Total:	22,519,688)					1.00					14.93%

Based on: 10-K (reporting date: 2022-01-29).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Jan 30, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	17,030,294)	17,030,294)	÷	18,927,095)	=	0.90	0.90	×	16.03%	=	14.42%
Operating lease liability³	1,896,801)	1,896,801)	÷	18,927,095)	=	0.10	0.10	×	3.60% × (1 – 21.00%)	=	0.29%
Total:	18,927,095)					1.00					14.71%

Based on: 10-K (reporting date: 2021-01-30).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Feb 1, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	9,823,188)	9,823,188)	÷	11,761,535)	=	0.84	0.84	×	16.03%	=	13.39%
Operating lease liability³	1,938,347)	1,938,347)	÷	11,761,535)	=	0.16	0.16	×	4.10% × (1 – 21.00%)	=	0.53%
Total:	11,761,535)					1.00					13.92%

Based on: 10-K (reporting date: 2020-02-01).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Feb 2, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	20,422,540)	20,422,540)	÷	22,707,952)	=	0.90	0.90	×	16.03%	=	14.41%
Operating lease liability³	2,285,412)	2,285,412)	÷	22,707,952)	=	0.10	0.10	×	0.00% × (1 – 21.00%)	=	0.00%
Total:	22,707,952)					1.00					14.41%

Based on: 10-K (reporting date: 2019-02-02).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Feb 3, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	12,387,744)	12,387,744)	÷	14,622,265)	=	0.85	0.85	×	16.03%	=	13.58%
Operating lease liability³	2,234,521)	2,234,521)	÷	14,622,265)	=	0.15	0.15	×	0.00% × (1 – 33.70%)	=	0.00%
Total:	14,622,265)					1.00					13.58%

Based on: 10-K (reporting date: 2018-02-03).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Ulta Beauty Inc., economic spread ratio calculation, comparison to benchmarks

	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
Selected Financial Data (US$ in thousands)
Economic profit¹	725,523)	537,761)	(373,310)	261,308)	152,445)	(7,586)
Invested capital²	4,117,969)	3,684,509)	4,184,136)	3,966,351)	4,338,625)	3,940,229)
Performance Ratio
Economic spread ratio³	17.62%	14.60%	-8.92%	6.59%	3.51%	-0.19%
Benchmarks
Economic Spread Ratio, Competitors⁴
Amazon.com Inc.	-4.08%	-15.36%	4.73%	2.10%	-1.25%	—
Home Depot Inc.	21.10%	25.60%	16.42%	23.51%	23.94%	—
Lowe’s Cos. Inc.	16.63%	24.86%	12.36%	8.43%	-1.05%	—
TJX Cos. Inc.	7.54%	7.47%	-9.46%	8.25%	7.52%	—

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 725,523 ÷ 4,117,969 = 17.62%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Ulta Beauty Inc. economic spread ratio improved from 2021 to 2022 and from 2022 to 2023.

Ulta Beauty Inc., economic profit margin calculation, comparison to benchmarks

	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
Selected Financial Data (US$ in thousands)
Economic profit¹	725,523)	537,761)	(373,310)	261,308)	152,445)	(7,586)

Net sales	10,208,580)	8,630,889)	6,151,953)	7,398,068)	6,716,615)	5,884,506)
Add: Increase (decrease) in deferred revenue	41,098)	79,196)	36,848)	38,481)	85,918)	—)
Adjusted net sales	10,249,678)	8,710,085)	6,188,801)	7,436,549)	6,802,533)	5,884,506)
Performance Ratio
Economic profit margin²	7.08%	6.17%	-6.03%	3.51%	2.24%	-0.13%
Benchmarks
Economic Profit Margin, Competitors³
Amazon.com Inc.	-2.30%	-8.01%	2.03%	0.81%	-0.57%	—
Home Depot Inc.	7.41%	8.14%	6.18%	7.80%	7.56%	—
Lowe’s Cos. Inc.	4.24%	6.76%	3.91%	3.12%	-0.36%	—
TJX Cos. Inc.	3.08%	3.03%	-6.58%	3.70%	3.36%	—

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 725,523 ÷ 10,249,678 = 7.08%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Ulta Beauty Inc. economic profit margin improved from 2021 to 2022 and from 2022 to 2023.

Ulta Beauty Inc. (NASDAQ:ULTA)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin