Table of Contents
As filed with the Securities and Exchange Commission on
July 6, 2007
Registration
No. 333-
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, DC 20549
Form S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
ULTA SALON,
COSMETICS & FRAGRANCE, INC.
(Exact name of Registrant as
specified in its charter)
|
Delaware
|
5999f | 36-3685240 | ||
|
(State or other jurisdiction
of
incorporation or organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification No.) |
1135 Arbor Drive
Romeoville, Illinois 60446
(630) 226-0020
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Romeoville, Illinois 60446
(630) 226-0020
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Lynelle P. Kirby
President, Chief Executive Officer and Director
Ulta Salon, Cosmetics & Fragrance, Inc.
1135 Arbor Drive
Romeoville, Illinois 60446
(630) 226-0020
(Name, address, including zip code, and telephone number, including area code, of agent for service)
President, Chief Executive Officer and Director
Ulta Salon, Cosmetics & Fragrance, Inc.
1135 Arbor Drive
Romeoville, Illinois 60446
(630) 226-0020
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
| Christopher D. Lueking, Esq. | Leland Hutchinson, Esq. | |
| Latham & Watkins LLP | Winston & Strawn LLP | |
| 233 S. Wacker Drive, Suite 5800 | 35 W. Wacker Drive | |
| Chicago, Illinois 60606 | Chicago, Illinois 60601 | |
| (312) 876-7700 | (312) 558-5600 |
Approximate date of commencement of proposed sale to the
public:
As soon as practicable after this
Registration Statement becomes effective.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, as amended (the
“Securities Act”), check the following
box.
o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering.
o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.
o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.
o
CALCULATION OF
REGISTRATION FEE
|
|
||||
|
Proposed
Maximum
|
Amount of
|
|||
|
Title of Each
Class of Securities
|
Aggregate
|
Registration
|
||
| to be Registered | Offering Price(1) | Fee | ||
|
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||||
|
Common Stock, par value $.01 per
share
|
$115,000,000 | $3,531 | ||
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| (1) | Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933. Includes shares of common stock subject to the underwriters’ option. |
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act or until the Registration Statement shall
become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may
determine.
Table of Contents
|
The
information in this preliminary prospectus is not complete and
may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell
these securities and we are not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
|
Subject to
completion,
dated ,
2007
Prospectus
shares
Common stock
This is an initial public offering of shares of common stock of
Ulta Salon, Cosmetics & Fragrance, Inc. We are
selling shares
of common stock. Prior to this offering, there has been no
public market for our common stock. The estimated initial public
offering price is between $ and
$ per share.
We are applying to have our common stock listed on The NASDAQ
Global Select Market under the symbol “ULTA.”
|
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||||||
| Per share | Total | |||||
|
|
||||||
|
Public offering price
|
$ | $ | ||||
|
Underwriting discounts and
commissions
|
$ | $ | ||||
|
Proceeds to ULTA, before expenses
|
$ | $ | ||||
We have granted the underwriters an option for a period of
30 days to purchase up
to
additional shares of our common stock to cover over-allotments,
if any.
Investing in our common stock involves a high degree of risk.
See “Risk factors” beginning on page 8.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed on the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
The underwriters expect to deliver the shares of common stock to
purchasers
on ,
2007.
| JPMorgan | Wachovia Securities |
|
Thomas
Weisel Partners LLC
|
|
Cowen
and Company
|
| Piper Jaffray |
, 2007
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| F-1 | ||||||||
| Consent of Ernst & Young LLP | ||||||||
You should rely only on the information contained in this
prospectus. We have not authorized anyone to provide you with
information that is different. We are offering to sell and
seeking offers to buy shares of our common stock only in
jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery
of this prospectus or of any sale of our common stock.
Unless the context requires otherwise, the words
“ULTA,” “we,” “company,”
“us” and “our” refer to Ulta Salon,
Cosmetics & Fragrance, Inc. For purposes of this
prospectus, the term “stockholder” shall refer to the
holders of our common stock.
i
Table of Contents
Prospectus
summary
This summary highlights information contained elsewhere in
this prospectus. This summary does not contain all of the
information you should consider before buying shares of our
common stock. You should read the entire prospectus carefully,
including the “Risk factors” section and our
consolidated financial statements and the related notes included
in this prospectus before making an investment in our common
stock. In this prospectus, our fiscal years ended
January 29, 2000, February 3, 2001, February 2,
2002, February 1, 2003, January 31, 2004,
January 29, 2005, January 28, 2006, February 3,
2007 and February 2, 2008 are referred to as fiscal 1999,
2000, 2001, 2002, 2003, 2004, 2005, 2006 and 2007,
respectively.
Our
company
We are the largest beauty retailer that provides one-stop
shopping for prestige, mass and salon products and salon
services in the United States. We provide affordable indulgence
to our customers by combining the product breadth, value and
convenience of a beauty superstore with the distinctive
environment and experience of a specialty retailer. Key aspects
of our business include:
One-Stop Shopping
. We offer a unique
combination of over 21,000 prestige and mass beauty products
across the categories of cosmetics, fragrance, haircare,
skincare, bath and body products and salon styling tools, as
well as salon haircare products. We also offer a full-service
salon in all of our stores.
Our Value Proposition
. We believe our focus
on delivering a compelling value proposition to our customers
across all of our product categories is fundamental to our
customer loyalty. For example, we run frequent promotions and
gift certificates for our mass brands, gift-with-purchase offers
and multi-product gift sets for our prestige brands, and a
comprehensive loyalty program.
An Off-Mall Location
. We are conveniently
located in high-traffic, off-mall locations such as power
centers and lifestyle centers with other destination retailers.
Our typical store is approximately 10,000 square feet,
including approximately 950 square feet dedicated to our
full-service salon. As of May 31, 2007, we operated 207
stores across 26 states.
In addition to these fundamental elements of a beauty
superstore, we strive to offer an uplifting shopping experience
through what we refer to as “The Four E’s”:
Escape
,
Education
,
Entertainment
and
Esthetics
.
Escape
. Our customer can immerse herself in
our extensive product selection, indulge herself in our hair or
skin treatments, or discover new and exciting products in an
interactive setting. We offer her a timely escape without the
intimidating, commission-oriented and brand-dedicated sales
approach found in most department stores and with a level of
service typically unavailable in drug stores and mass
merchandisers.
Education
. We reinforce our authority as a
beauty resource by staffing our stores with a team of
well-trained beauty consultants and professionally licensed
estheticians and stylists whose mission is to educate, inform
and advise our customers regarding their beauty needs. Our
beauty consultants are trained to service customers across all
prestige
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lines and within our prestige “boutiques”, where
customers can receive a makeover or skin analysis.
Entertainment
. Our catalogs are designed to
introduce our customers to our newest products and promotions
and to be invitations to come to ULTA to play, touch, test,
learn and explore. We further enhance the shopping experience
through live demonstrations from our licensed salon
professionals and beauty consultants, and through customer
makeovers and in-store videos.
Esthetics
. Our store and salon design
features sleek, modern lines that reinforce our status as a
fashion authority, together with wide aisles that make the store
easy to navigate and pleasant lighting to create a luxurious and
welcoming environment.
We were founded in 1990 as a discount 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. When Lyn Kirby, our current President and Chief
Executive Officer, joined us in December 1999, we embarked on a
multi-year strategy to understand and embrace what women want in
a beauty retailer and transform ULTA into the shopping
experience that it is today. We pioneered this unique
combination of beauty superstore and specialty store attributes
that focuses on all aspects of how women prefer to shop for
beauty. In October 2005, Ms. Kirby was recognized by
Cosmetics Executive Women (CEW) with a
2005 Achiever Award
for achievement in the beauty industry. In May 2007, we
received a
2007 Hot Retailer Award
from the International
Council of Shopping Centers (ICSC) for being an innovative
retail concept.
We believe our strategy provides us with competitive advantages
that have contributed to our strong financial performance. Our
net sales have increased from $206.5 million in fiscal 1999
to $755.1 million in fiscal 2006, representing a 20.3%
compounded annual growth rate. In that same period, we grew our
store base from 75 to 196 stores while growing our net income
from $1.2 million in fiscal 1999 to $22.5 million in
fiscal 2006, representing a 51.6% compounded annual growth rate.
In addition, we have achieved 29 consecutive quarters of
positive comparable store sales growth since fiscal 2000.
Our competitive
strengths
We believe the following competitive strengths differentiate us
from our competitors and are critical to our continuing success:
Differentiated merchandising strategy with broad
appeal
. Our broad selection of merchandise across
categories, price points and brands offers a unique shopping
experience for our customers. While the products we sell can be
found in department stores, specialty stores, salons, drug
stores and mass merchandisers, we offer all of these products in
one retail format so that our customer can find everything she
needs in one shopping trip. We appeal to a wide range of
customers by offering over 500 brands, such as
Bare
Escentuals
cosmetics
, Chanel
and
Estée Lauder
fragrances
, L’Oréal
haircare and cosmetics
and
Paul Mitchell
haircare.
Our unique customer experience.
We combine
the value and convenience of a beauty superstore with the
distinctive environment and experience of a specialty retailer.
We cater to the woman who loves to indulge in shopping for
beauty products as well as the woman who is time constrained.
Our unique retail shopping experience reinforces our emotional
connection
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with our customers, thereby creating loyalty and increasing both
the frequency and length of their visits.
Retail format poised to benefit from shifting channel
dynamics.
Over the past several years, the
approximately $75 billion beauty products and salon
services industry has experienced significant changes, including
a shift in how manufacturers distribute and customers purchase
beauty products. We are capitalizing on these trends by being
the only retailer to offer an off-mall, service-oriented
specialty retail concept with a comprehensive product mix across
categories and price points.
Loyal and active customer base.
We have
approximately six million loyalty program members, the majority
of whom have shopped at one of our stores within the past
12 months. We utilize this valuable proprietary database to
drive traffic, better understand our customers’ purchasing
patterns and support new store site selection.
Strong vendor relationships across product
categories.
We have strong, active relationships
with over 300 vendors. We believe the scope and extent of these
relationships, which span the three distinct beauty categories
of prestige, mass and salon and have taken years to develop,
create a significant impediment for other retailers to replicate
our model.
Experienced management team.
Our senior
management team averages over 25 years of combined beauty
and retail experience and brings a creative merchandising
approach and a disciplined operating philosophy to our business.
Growth
strategy
We intend to expand our presence as a leading retailer of beauty
products and salon services by:
| • | Growing our store base to our long-term potential of over 1,000 stores. |
| • | Increasing our sales and profitability by expanding our prestige brand offerings. |
| • | Improving our profitability by leveraging our fixed costs. |
| • | Continuing to enhance our brand awareness to generate sales growth. |
| • | Driving increased customer traffic to our salons. |
| • | Expanding our online business. |
Risks relating to
our company
Investing in our common stock involves a high degree of risk. In
particular, we may not be able to successfully implement our
growth strategy or capitalize on our competitive strengths.
Additionally:
| • | We may be unable to compete effectively in our highly competitive markets. |
| • | If we are unable to gauge beauty trends and react to changing consumer preferences in a timely manner, our sales will decrease. |
| • | Our failure to retain our existing senior management team and to continue to attract qualified new personnel could adversely affect our business. |
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| • | We intend to continue to open new stores, which could strain our resources and have a material adverse effect on our business and financial performance. |
| • | The capacity of our distribution and order fulfillment infrastructure may not be adequate to support our recent growth and expected future growth plans, which could prevent the successful implementation of these plans or cause us to incur costs to expand this infrastructure. |
| • | Any material disruption of our information systems could negatively impact financial results and materially adversely affect our business operations. |
If any of the foregoing events or circumstances occur, an
investment in our common stock may be impaired. You should read
“Risk factors” beginning on page 8 for a more
complete discussion of certain factors you should consider
together with all other information included in this prospectus
before making an investment decision.
Company
information
We were incorporated in Delaware on January 9, 1990 under
the name “R.G. Trends Corporation.” On June 7,
1990, we changed our name to “Ulta3, Inc.,” on
February 7, 1992, we changed our name to
“Ulta
3
The Cosmetic Savings Store, Inc.,” on July 12, 1995,
we changed our name to
“Ulta
3
Cosmetics & Salon, Inc.,” and on July 29,
1999, we changed our name to “Ulta Salon,
Cosmetics & Fragrance, Inc.” Our principal
executive offices are located at 1135 Arbor Drive, Romeoville,
Illinois 60446 and our telephone number is
(630) 226-0020.
Our primary website is www.ulta.com. The information contained
in, or that can be accessed through, our website is not
incorporated by reference into this prospectus, and you should
not consider information contained on our website as part of
this prospectus.
ULTA
tm
,
our logo, Basically
U
tm
,
Formativ
tm
,
Ulta
3
tm
,
Ulta 3 and
design
tm
,
Ulta 3 Beauty
Club
tm
,
Ulta 3 Cosmetics Savings
Store
tm
,
Ulta 3 Salon Cosmetics Fragrance
design
tm
,
Ulta 3 The Ultimate Beauty
Store
tm
,
Ulta
Beauty
tm
,
Ulta
Salon-Cosmetics-Fragrance
tm
,
Ulta Salon-Cosmetics-Fragrance and
design
tm
,
Ulta.com
tm
and What a Woman
Wants
tm
are our trademarks. All service marks, trademarks and trade
names referred to in this prospectus are the property of their
respective owners. We do not intend our use or display of other
parties’ service marks, trademarks or trade names or to
imply, and such use or display should not be construed to imply,
a relationship with, or endorsement or sponsorship of us by
these other parties.
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The
offering
| Common stock offered by us | shares | |
| Common stock to be outstanding after the offering | shares | |
| Use of proceeds | We intend to use the net proceeds of approximately $91.9 million from this offering to pay approximately $91.9 million of accumulated dividends in arrears on our preferred stock. | |
| If the underwriters exercise their over-allotment option, we intend to use the net proceeds thereof to reduce our borrowings under our third amended and restated loan and security agreement. | ||
| Dividends | We have never paid any dividends on our common stock and do not anticipate paying any dividends on our common stock in the foreseeable future. See “Dividend policy.” | |
| Proposed NASDAQ Global Select Market symbol | “ULTA” | |
| Risk factors | See “Risk factors” and other information included in this prospectus for a discussion of some of the factors you should consider before deciding to purchase our common stock. |
The number of shares of common stock to be outstanding after
this offering is based on 77,411,747 shares outstanding as
of May 5, 2007 and excludes:
| • | 861,011 shares of common stock issuable upon exercise of outstanding options under our Second Amended and Restated Restricted Stock Option Plan, as amended, or the Old Plan, at a weighted average exercise price of $0.48 per share. No further awards will be made under the Old Plan; and |
| • | 5,189,390 shares of common stock issuable upon exercise of outstanding options under our 2002 Equity Incentive Plan, or the 2002 Plan, at a weighted average exercise price of $2.65. |
Except as otherwise indicated, information in this prospectus
reflects or assumes the following:
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Table of Contents
Summary
consolidated financial information
The following table sets forth our summary consolidated
financial data for the periods indicated. You should read this
information in conjunction with our consolidated financial
statements, including the related notes, and
“Management’s discussion and analysis of financial
condition and results of operations” included elsewhere in
this prospectus. The following summary consolidated balance
sheet data as of January 28, 2006 and February 3, 2007
and the summary consolidated income statement data for each of
the three fiscal years ended January 29, 2005,
January 28, 2006 and February 3, 2007 have been
derived from our audited consolidated financial statements
included elsewhere in this prospectus. The summary consolidated
balance sheet data as of May 5, 2007 and the summary
consolidated statement of operations data for the three months
ended April 29, 2006 and May 5, 2007 have been derived
from our unaudited consolidated financial statements included
elsewhere in this prospectus. The summary consolidated balance
sheet data as of January 29, 2005 has been derived from our
audited consolidated financial statements not included in this
prospectus. The selected balance sheet data as of April 29,
2006 has been derived from our unaudited consolidated financial
statements that are not included in this prospectus. Our
unaudited summary consolidated financial data as of
April 29, 2006 and May 5, 2007 and for the three
months then ended, has been prepared on the same basis as the
annual audited consolidated financial statements and includes
all adjustments, consisting of only normal recurring adjustments
necessary for the fair presentation of this data in all material
respects. The results for any interim period are not necessarily
indicative of the results of operations to be expected for a
full fiscal year.
|
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| Fiscal year ended(1) | Three months ended | |||||||||||||||
|
January 29,
|
January 28,
|
February 3,
|
April 29,
|
May 5,
|
||||||||||||
| (Dollars in thousands, except per share and per square foot data) | 2005 | 2006 | 2007 | 2006 | 2007 | |||||||||||
|
Consolidated income statement
data:
|
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|
Net sales(2)
|
$ | 491,152 | $ | 579,075 | $ | 755,113 | $ | 159,468 | $ | 194,113 | ||||||
|
Cost of sales
|
346,585 | 404,794 | 519,929 | 108,813 | 134,600 | |||||||||||
|
Gross profit
|
144,567 | 174,281 | 235,184 | 50,655 | 59,513 | |||||||||||
|
Selling, general, and
administrative expenses
|
121,999 | 140,145 | 188,000 | 41,316 | 47,982 | |||||||||||
|
Pre-opening expenses
|
4,072 | 4,712 | 7,096 | 826 | 1,656 | |||||||||||
|
Operating income
|
18,496 | 29,424 | 40,088 | 8,513 | 9,875 | |||||||||||
|
Interest expense
|
2,835 | 2,951 | 3,314 | 742 | 996 | |||||||||||
|
Income before income taxes
|
15,661 | 26,473 | 36,774 | 7,771 | 8,879 | |||||||||||
|
Income tax expense
|
6,201 | 10,504 | 14,231 | 3,071 | 3,560 | |||||||||||
|
Net income
|
$ | 9,460 | $ | 15,969 | $ | 22,543 | $ | 4,700 | $ | 5,319 | ||||||
|
Net income (loss) per share:
|
||||||||||||||||
|
Basic
|
$ | (0.44 | ) | $ | 0.47 | $ | 0.87 | $ | 0.18 | $ | 0.14 | |||||
|
Diluted
|
$ | (0.44 | ) | $ | 0.21 | $ | 0.29 | $ | 0.06 | $ | 0.07 | |||||
|
Weighted average number of shares:
|
||||||||||||||||
|
Basic
|
5,032,612 | 6,478,217 | 9,130,697 | 6,960,640 | 11,368,805 | |||||||||||
|
Diluted
|
5,032,612 | 76,297,969 | 79,026,350 | 76,617,578 | 80,652,941 | |||||||||||
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| Fiscal year ended(1) | Three months ended | ||||||||||||||
|
January 29,
|
January 28,
|
February 3,
|
April 29,
|
May 5,
|
|||||||||||
| (Dollars in thousands, except per share and per square foot data) | 2005 | 2006 | 2007 | 2006 | 2007 | ||||||||||
|
Other operating data:
|
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|
Comparable store sales increase(3)
|
8.0% | 8.3% | 14.5% | 12.8% | 9.2% | ||||||||||
|
Number of stores end of period
|
142 | 167 | 196 | 170 | 203 | ||||||||||
|
Total square footage end of period
|
1,464,330 | 1,726,563 | 2,023,305 | 1,755,280 | 2,096,275 | ||||||||||
|
Total square footage per store(4)
|
10,312 | 10,339 | 10,323 | 10,325 | 10,326 | ||||||||||
|
Average total square footage(5)
|
1,374,005 | 1,582,935 | 1,857,885 | 1,650,697 | 1,934,871 | ||||||||||
|
Net sales per average total square
foot(6)
|
$ | 357 | $ | 366 | $ | 398 | $ | 370 | $ | 400 | |||||
|
Capital expenditures
|
34,807 | 41,607 | 62,331 | 5,304 | 17,757 | ||||||||||
|
Depreciation and amortization
|
18,304 | 22,285 | 29,736 | 6,048 | 9,840 | ||||||||||
|
Consolidated balance sheet
data:
|
|||||||||||||||
|
Cash and cash equivalents
|
$ | 3,004 | $ | 2,839 | $ | 3,645 | $ | 2,926 | $ | 3,161 | |||||
|
Working capital
|
69,955 | 76,473 | 88,105 | 75,733 | 85,870 | ||||||||||
|
Property and equipment, net
|
114,912 | 133,003 | 162,080 | 131, | |||||||||||