Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
Ulta Beauty Inc., long-term (investment) activity ratios
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).
The analysis of the financial ratios over the six-year period reveals several notable trends and variations across asset and equity utilization metrics.
- Net Fixed Asset Turnover
- The ratio shows a consistent upward trend from 4.95 in 2018 to 10.11 in 2023, indicating progressively more efficient use of fixed assets in generating sales. The increase is particularly pronounced from 2020 onwards, suggesting improvements in asset management or shifts in business strategy leading to higher productivity of fixed assets.
- Net Fixed Asset Turnover (including operating lease, right-of-use asset)
- This metric displays a contrasting pattern. While it matches the standard net fixed asset turnover figures in 2018 and 2019 (both at 4.95 and 5.48 respectively), there is a significant drop to 2.7 and 2.46 in 2020 and 2021. This decline could be related to the adoption of new accounting standards or increased recognition of operating lease assets, which temporarily reduced turnover ratios. There is some recovery noted in 2022 and 2023, reaching 3.6 and 3.97, but these levels remain substantially below the earlier periods, reflecting the ongoing impact of operating lease assets on reported fixed asset efficiency.
- Total Asset Turnover
- After a slight increase from 2.02 in 2018 to 2.10 in 2019, there is a marked decline to 1.52 in 2020 and further down to 1.21 in 2021. This reduction suggests a decrease in overall asset utilization efficiency during this period. The ratio then improves in 2022 and 2023 to 1.81 and 1.90, approaching earlier levels but not fully recovering the peak performance of 2019. This pattern could be indicative of investment in assets outpacing sales growth initially, with subsequent adjustments or sales growth helping to partially restore turnover efficiency.
- Equity Turnover
- Equity turnover showed an increase from 3.32 in 2018 to 3.89 in 2020, followed by a drop to 3.08 in 2021. Notably, there is a substantial increase to 5.62 in 2022, with a slight decline to 5.21 in 2023. The elevated values in the last two years imply that the company has been generating significantly higher sales relative to shareholder equity, possibly reflecting enhanced profitability, leveraged capital structure, or other operational improvements.
In summary, the data indicates improved efficiency in utilizing fixed assets when measured traditionally, but a reduction when considering operating leases, highlighting the accounting effects of lease capitalization. Total asset utilization declined notably after 2019 but showed signs of recovery by 2023. Equity turnover variability suggests fluctuating returns on equity investment, with a strong recovery in recent years. These trends collectively point toward dynamic asset management and capital structure changes affecting operational efficiency and financial performance.
Net Fixed Asset Turnover
Ulta Beauty Inc., net fixed asset turnover 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) | |||||||
| Net sales | 10,208,580) | 8,630,889) | 6,151,953) | 7,398,068) | 6,716,615) | 5,884,506) | |
| Property and equipment, net | 1,009,273) | 914,476) | 995,795) | 1,205,524) | 1,226,029) | 1,189,453) | |
| Long-term Activity Ratio | |||||||
| Net fixed asset turnover1 | 10.11 | 9.44 | 6.18 | 6.14 | 5.48 | 4.95 | |
| Benchmarks | |||||||
| Net Fixed Asset Turnover, Competitors2 | |||||||
| Amazon.com Inc. | 2.82 | 2.75 | 2.93 | 3.41 | — | — | |
| Home Depot Inc. | 6.14 | 6.00 | 5.35 | 4.84 | — | — | |
| Lowe’s Cos. Inc. | 5.53 | 5.05 | 4.68 | 3.86 | — | — | |
| TJX Cos. Inc. | 8.63 | 9.21 | 6.38 | 7.83 | — | — | |
| Net Fixed Asset Turnover, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 3.47 | 3.43 | 3.46 | 3.82 | — | — | |
| Net Fixed Asset Turnover, Industry | |||||||
| Consumer Discretionary | 3.51 | 3.48 | 3.32 | 3.38 | — | — | |
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 2023 Calculation
Net fixed asset turnover = Net sales ÷ Property and equipment, net
= 10,208,580 ÷ 1,009,273 = 10.11
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the examined six-year period. Net sales exhibited an overall upward trajectory with some fluctuations. From February 2018 to January 2023, net sales increased substantially from approximately $5.88 billion to just over $10.2 billion, more than doubling in value. However, there was a decline in net sales in the fiscal year ending January 30, 2021, which fell to about $6.15 billion from $7.40 billion the previous year, likely reflecting external market or economic challenges during that period. Following this dip, net sales rebounded strongly in the subsequent years, reaching their highest level in January 2023.
Property and equipment, reported as net values, showed a generally decreasing trend over the period analyzed. Starting at approximately $1.19 billion in early 2018, the value slightly increased in 2019 before gradually declining to around $914 million in January 2022. A modest recovery occurred in January 2023 where the net property and equipment value increased to just over $1 billion. This downward trend may suggest asset disposals, depreciation, or reduced capital expenditure relative to earlier years, with the slight upturn in the final year reflecting renewed investment or asset additions.
The net fixed asset turnover ratio, which measures the efficiency of the company in generating sales from its net fixed assets, demonstrated a clear and consistent increase throughout the period. Starting at 4.95 in early 2018, this ratio rose steadily each year, reaching 10.11 by January 2023. The increase in this ratio indicates improving asset utilization, where the company is generating more sales per dollar of net fixed assets. This enhancement in operational efficiency coincides with increasing net sales and a generally declining or stable asset base, suggesting effective management of fixed assets and potentially higher productivity.
In summary, the company has experienced strong sales growth overall, despite a temporary contraction in the 2021 fiscal year. Concurrently, there's been a gradual reduction in net property and equipment values, while asset use efficiency, as measured by net fixed asset turnover, has significantly improved, indicating better conversion of assets into revenue over time.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Ulta Beauty Inc., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net sales | 10,208,580) | 8,630,889) | 6,151,953) | 7,398,068) | 6,716,615) | 5,884,506) | |
| Property and equipment, net | 1,009,273) | 914,476) | 995,795) | 1,205,524) | 1,226,029) | 1,189,453) | |
| Operating lease right-of-use assets | 1,561,263) | 1,482,256) | 1,504,614) | 1,537,565) | —) | —) | |
| Property and equipment, net (including operating lease, right-of-use asset) | 2,570,536) | 2,396,732) | 2,500,409) | 2,743,089) | 1,226,029) | 1,189,453) | |
| Long-term Activity Ratio | |||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 3.97 | 3.60 | 2.46 | 2.70 | 5.48 | 4.95 | |
| Benchmarks | |||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | |||||||
| Amazon.com Inc. | 2.08 | 2.03 | 2.17 | 2.56 | — | — | |
| Home Depot Inc. | 4.83 | 4.85 | 4.31 | 3.89 | — | — | |
| Lowe’s Cos. Inc. | 4.60 | 4.15 | 3.90 | 3.20 | — | — | |
| TJX Cos. Inc. | 3.36 | 3.44 | 2.29 | 2.90 | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | |||||||
| Consumer Discretionary Distribution & Retail | 2.55 | 2.52 | 2.55 | 2.83 | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | |||||||
| Consumer Discretionary | 2.69 | 2.66 | 2.52 | 2.58 | — | — | |
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 2023 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Net sales ÷ Property and equipment, net (including operating lease, right-of-use asset)
= 10,208,580 ÷ 2,570,536 = 3.97
2 Click competitor name to see calculations.
- Net Sales
- Net sales demonstrated an overall upward trend during the period under review. Starting at approximately 5.88 billion USD in early 2018, sales increased steadily to reach around 7.40 billion USD by early 2020. Despite a decline to about 6.15 billion USD in early 2021, net sales rebounded significantly, peaking at over 10.2 billion USD in early 2023. This indicates robust sales growth following a temporary dip likely influenced by external factors in 2021.
- Property and Equipment, Net
- The net value of property and equipment, including operating lease rights, showed notable fluctuations. It remained relatively stable between 1.19 billion and 1.23 billion USD during 2018 and 2019. A sharp increase occurred in 2020, reaching approximately 2.74 billion USD, followed by a slight decline to roughly 2.40 billion USD in 2022. The figure increased again to about 2.57 billion USD by early 2023. These variations suggest significant investment or reclassification of leased assets particularly around 2020, with some normalization afterward.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- The net fixed asset turnover ratio exhibited a declining trend from 4.95 in 2018 to a low of 2.46 by early 2021. This indicates a reduced efficiency in generating sales from fixed assets over that period. However, a recovery was observed after 2021, with the ratio improving to 3.60 in early 2022 and further to 3.97 in early 2023. This partial rebound suggests enhanced utilization of fixed assets or improved operational efficiency in recent years, though the ratio remains below earlier peak levels.
Total Asset Turnover
Ulta Beauty Inc., total asset turnover 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) | |||||||
| Net sales | 10,208,580) | 8,630,889) | 6,151,953) | 7,398,068) | 6,716,615) | 5,884,506) | |
| Total assets | 5,370,411) | 4,764,379) | 5,089,969) | 4,863,872) | 3,191,172) | 2,908,687) | |
| Long-term Activity Ratio | |||||||
| Total asset turnover1 | 1.90 | 1.81 | 1.21 | 1.52 | 2.10 | 2.02 | |
| Benchmarks | |||||||
| Total Asset Turnover, Competitors2 | |||||||
| Amazon.com Inc. | 1.09 | 1.11 | 1.12 | 1.20 | — | — | |
| Home Depot Inc. | 2.06 | 2.10 | 1.87 | 2.15 | — | — | |
| Lowe’s Cos. Inc. | 2.22 | 2.16 | 1.92 | 1.83 | — | — | |
| TJX Cos. Inc. | 1.76 | 1.71 | 1.04 | 1.73 | — | — | |
| Total Asset Turnover, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 1.30 | 1.33 | 1.27 | 1.40 | — | — | |
| Total Asset Turnover, Industry | |||||||
| Consumer Discretionary | 0.97 | 0.96 | 0.88 | 0.84 | — | — | |
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 2023 Calculation
Total asset turnover = Net sales ÷ Total assets
= 10,208,580 ÷ 5,370,411 = 1.90
2 Click competitor name to see calculations.
- Net Sales
- The net sales demonstrate a general increasing trend over the six-year period, rising from approximately $5.88 billion in 2018 to over $10.2 billion by 2023. A notable decline occurred between 2020 and 2021, where sales dropped from around $7.4 billion to $6.15 billion, suggesting a possible impact from external factors during that time. However, following this dip, net sales rebounded strongly, reaching the highest level in 2023.
- Total Assets
- Total assets experienced significant growth from 2018 through 2021, increasing from approximately $2.9 billion to just over $5 billion. In 2022, assets decreased slightly to around $4.76 billion but then increased again in 2023 to approximately $5.37 billion. This fluctuation indicates some asset management activity or changes in investment strategy during the later years.
- Total Asset Turnover
- The total asset turnover ratio shows a declining trend from 2018 (2.02) through 2021 (1.21), indicating decreased efficiency in using assets to generate sales during this period. However, the ratio improved significantly in 2022 and 2023, reaching 1.81 and 1.9 respectively. This improvement suggests better utilization of assets or increased sales relative to asset base in the most recent years.
- Overall Insights
- The data reveals increasing net sales over the long term despite a temporary setback around 2021. Total assets grew substantially until 2021, followed by a minor correction and subsequent growth. The initial drop in asset turnover could be attributed to the rising asset base outpacing sales growth in early years, but the recent improvement in turnover indicates a return to more efficient asset use. This suggests that the company has adapted its operations and asset deployment to sustain sales growth and improve operational efficiency in recent periods.
Equity Turnover
Ulta Beauty Inc., equity turnover calculation, comparison to benchmarks
| Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net sales | 10,208,580) | 8,630,889) | 6,151,953) | 7,398,068) | 6,716,615) | 5,884,506) | |
| Stockholders’ equity | 1,959,811) | 1,535,373) | 1,999,549) | 1,902,094) | 1,820,218) | 1,774,217) | |
| Long-term Activity Ratio | |||||||
| Equity turnover1 | 5.21 | 5.62 | 3.08 | 3.89 | 3.69 | 3.32 | |
| Benchmarks | |||||||
| Equity Turnover, Competitors2 | |||||||
| Amazon.com Inc. | 2.85 | 3.52 | 3.40 | 4.13 | — | — | |
| Home Depot Inc. | 100.77 | — | 40.05 | — | — | — | |
| Lowe’s Cos. Inc. | — | — | 62.35 | 36.59 | — | — | |
| TJX Cos. Inc. | 7.85 | 8.09 | 5.51 | 7.01 | — | — | |
| Equity Turnover, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 4.50 | 5.57 | 4.86 | 6.21 | — | — | |
| Equity Turnover, Industry | |||||||
| Consumer Discretionary | 3.82 | 4.14 | 3.70 | 4.73 | — | — | |
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 2023 Calculation
Equity turnover = Net sales ÷ Stockholders’ equity
= 10,208,580 ÷ 1,959,811 = 5.21
2 Click competitor name to see calculations.
- Net Sales
- Net sales exhibited a general upward trend over the observed periods, increasing from $5,884,506 thousand in 2018 to $10,208,580 thousand in 2023. There was a notable decline in 2021, with sales dropping to $6,151,953 thousand from $7,398,068 thousand in 2020. However, subsequent periods showed a strong recovery and growth, reaching the highest recorded value in 2023.
- Stockholders’ Equity
- Stockholders' equity demonstrated a steady increase from 2018 to 2021, rising from $1,774,217 thousand to $1,999,549 thousand. This trend was interrupted in 2022 when equity declined significantly to $1,535,373 thousand. In 2023, equity recovered, increasing again to $1,959,811 thousand but remaining below the 2021 peak.
- Equity Turnover
- Equity turnover showed variability throughout the periods. It increased steadily from 3.32 in 2018 to 3.89 in 2020, followed by a decline to 3.08 in 2021. The ratio then surged to 5.62 in 2022, indicating improved efficiency in utilizing equity to generate sales. In 2023, it slightly decreased to 5.21 but remained significantly higher than earlier years.
- Overall Analysis
- The company’s financial performance indicates growth in net sales over the long term despite temporary setbacks in 2021. Stockholders’ equity has shown resilience with a temporary dip in 2022, possibly linked to broader economic or operational factors. The sharp increase in equity turnover in 2022 suggests improved management of equity resources, enhancing the company’s sales-generation efficiency during that period. The fluctuations observed in both equity and equity turnover point to active financial management and adjustments in response to varying market or internal conditions.