Ulta Beauty, Inc.

Good afternoon and welcome to Ulta Beauty's conference call to discuss results for the third quarter of fiscal 2021. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. We ask that you please limit yourself to one question and then re-enter queue for any additional questions. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ms. Kylie Rawlins, Vice President of Investor Relations. Ms. Rawlins, please proceed.

Thank you, Laura. Good afternoon, everyone. Hosting our call today are Dave Kimball, Chief Executive Officer, and Scott Settersten, Chief Financial Officer. Keisha Steelman, Chief Operating Officer, will join us for the Q&A. This afternoon, we released our financial results for the third quarter of fiscal 2021. A copy of the press release is available in the Investor Relations section of our website. Before we begin, I'd like to remind you of the company's safe harbor language. The statements contained in this conference call, which are not historical facts, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those projected in such statements, due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC. We caution you not to place undue reliance on these forward-looking statements, which speak only as of today, December 2, 2021. We have no obligation to update or revise our forward-looking statements, except as required by law, and you should not expect us to do so. In today's comments, we will discuss certain non-GAAP financial measures, included adjusted operating income and adjusted diluted EPS for the third quarter of fiscal 2020. A reconciliation of these measures to the corresponding GAAP measures can be found in our earnings release, which is available in the investor relations section of our website. We'll begin this afternoon with prepared remarks from Dave and Scott. Following our prepared comments, we will open up the call for questions. We respectfully request that you ask one question to allow us to have time to respond to as many of you as possible during the hour scheduled for this call. As always, Mary Kate and I will be available for any follow-up questions after the call. Now I'd like to turn the call over to Dave. Dave?

Thank you, Kylie. And good afternoon, everyone. The Ulta Beauty team delivered outstanding results again this quarter. For the third quarter, net sales increased 28.6% to a record $2 billion. Operating profit increased to 14.2% of sales and diluted EPS increased to $3.94 per share. In addition to producing these excellent financial results, we also delivered strong operational results. We continued to increase our market share in Prestige Beauty based on dollar sales for the 13 weeks ended October 30th, 2021, compared to the same period last year. We increased the number of members in our ultimate rewards loyalty program by 13% to a record 35.9 million members and returned to pre pandemic member penetration levels. And we navigated global supply chain challenges and tight labor markets and remained well positioned to meet guests needs and deliver a successful holiday season. This performance reflects the strength and resiliency of the beauty category. the power of Ulta Beauty's differentiated model, and the impact of our winning culture and outstanding team. I want to express my sincere appreciation to all of our Ulta Beauty associates for their incredible efforts to serve our guests and deliver these excellent results. I am inspired every day by our associates' passion for beauty and passion for our guests, and I am honored to lead such a great company of talented associates who who continue to care for each other while driving our business forward. At our Analyst Day in October, we introduced a new strategic framework which will shape our future and enable Ulta Beauty to deliver against longer-term financial targets. Today, I'll reiterate some of the information we discussed about our strategic imperatives and share an update on progress made in the third quarter. Then I'll share how we are positioning Ulta Beauty for holiday before I turn it over to Scott to discuss the financials. Starting with our focus on driving breakthrough and disruptive growth through an expanded definition of all things beauty. Our differentiated assortment is core to our success, and we continue to innovate, evolve, and expand our offering to excite the beauty enthusiast. In the third quarter, all major categories delivered robust double-digit comp growth compared to the third quarter of fiscal 2020, driven by cycling last year's disruption from COVID, product newness, and strong performance from our strategic promotional events, including 21 Days of Beauty, Ball Hall, and our Gorgeous Hair event. Compared to the third quarter of fiscal 2019, Fragrance, bath, hair care, and skin care all delivered strong double-digit comp growth. While makeup was slightly below 2019 levels, we are encouraged that the trend in prestige makeup improved from the second quarter and growth in mass cosmetics remained strong. Engagement with the category remains high, with consumers looking to refresh their beauty stash with new products and recent trends give us confidence the makeup category will return to growth compared to pre-pandemic levels. Compared to last year, eyes, face, and lip continue to deliver strong growth within the makeup category. Engagement with false lashes and lash growth serums, combined with innovation like creamy eyeshadow sticks, are driving continued growth within eye. Increased interest in tinted moisturizers and blush are driving growth within face, and lip color, lip gloss, and lip balm continue to drive growth within lip. Newness continues to excite and engage guests. New brands like Bobby Brown and Ella Luz, combined with new product launches from a wide range of brands, including ColourPop, Urban Decay, Tarte, and NYX, drove nice growth in the quarter. In addition, this quarter we expanded MAC into 200 additional stores. Haircare delivered another quarter of double-digit growth, driven by strong guest engagement with our strategic events, newness, and our back bar takeover events. In early October, we kicked off our Fall Gorgeous Hair event, a semi-annual event strategically focused on acquiring members who do not shop the hair care category or engage with our salon services. Building on the success of our spring event, we continued to streamline offers, focus our marketing events, and create relevant storytelling around hair goals, service enhancements, and holiday kits. We saw good growth from our core assortment and engagement with new brands like Kristen S, Briogeo, and Verb, and product newness from brands like Dyson, Living Proof, Redken, and Curlsmith continued to resonate with guests. We continue to expand our assortment of prestige hair care brands, and I'm excited to share we will launch Olaplex, the number one prestige hair brand in the market, in all Ulta Beauty stores and on Ulta.com in January. Our back bar takeovers give our stylists a unique opportunity to introduce new brands and products to guests. And this quarter, salon takeovers by Bondi Boost, IGK, Verb, and Kristen S. all drove nice sales growth during their respective takeovers. Skincare delivered another quarter of strong double-digit sales growth as guests continue to invest in self-care and maintain their skincare regimens. Similar to last quarter, skin care routines, including moisturizers, serums, and cleansers, drove category growth. New brands, including Drunk Elephant, Fresh, Good Molecules, which is exclusive to Ulta Beauty, and Peach Slices, as well as new products from Tula, Clinique, and The Ordinary, drove solid guest engagement. Finally, our fragrance and bath category continued to deliver exceptional growth. Ariana Grande's latest fragrance, God is a Woman, which is exclusive to Ulta Beauty, as well as newness from Carolina Herrera, Coach, YSL, and Dior, drove strong growth during the quarter. Events, including our back-to-school gift with purchase and our monthly fragrance crush program, also drove strong engagement. Beyond fragrance, the bath and body category continues to drive robust growth, as moisturizers and scrubs remain on trend. In addition to delivering growth from our core categories, we are focused on driving growth from key cross-functional platforms. Starting with Conscious Beauty, our cross-category initiative intended to help guests discover and engage with brands and products which reflect their personal values. Through this program, we identify brands across five key pillars. Clean ingredients, cruelty-free, vegan, sustainable packaging, and positive impact. During the quarter, we certified 19 new brands, including Lameek, Wildcat, and Better Not Younger, bringing the total number of certified conscious beauty brands to 275 at the end of Q3. During the third quarter, we expanded our certification to the SKU level for clean ingredients and vegan and added in-store badging at the shelf for certified brands, as well as new search filters online to help guests easily identify products which reflect what is most important to them. Moving now to our efforts to expand our assortment of Black-owned and BIPOC brands. During the third quarter, we added two new Black-owned brands, Sunday to Sunday and Nude Sugar, and we are on track to double the number of Black-owned brands in our assortment this year. In addition, I am excited to share that we have welcomed our first South Asian-owned makeup brand to the Ulta Beauty family, Live Tinted. Founded by Asian influencer, Deepika Mutyala, Live Tinted is a cosmetic brand that celebrates multicultural beauty. Hello, everyone. I think we're having, we had a, we were disconnected. I think we're having some phone network issues, but hopefully you can hear me and I'm going to pick up, I think, where we got cut off. So if I repeat a little bit, I apologize, but we'll dive right back in. So moving now to our efforts to expand our assortment of Black-owned and BIPOC brands. During the third quarter, we added two new Black-owned brands, Sunday to Sunday and Nude Sugar, and we are on track to double the number of Black-owned brands in our assortment this year. In addition, I am excited to share we have welcomed our first a South Asian-owned makeup brand to the Ulta Beauty family, Live Tinted. Founded by Asian influencer Deepika Mutyala, Live Tinted is a cosmetic brand that celebrates multicultural beauty. The brand is also part of our Conscious Beauty platform, certified as clean, vegan, and cruelty-free. Based on our proprietary research, we know 65% of beauty enthusiasts believe beauty is significantly connected to wellness. Reflecting this consumer insight, in the second quarter, we launched the Wellness Shop online and in 450 stores. This cross-category platform offers self-care products for the mind, body, and spirit in an accessible, easy-to-navigate way. In the third quarter, we refreshed the Wellness Shop assortment, shifting from summer solutions to total body care and hydration, which is especially relevant during colder months, and introduced new items from Herdeman, Ellume, Osea, and Josie Moran. Turning now to our efforts to evolve the guest experience through our personalized and connected omnichannel ecosystem, all in your world. We know the guest journey is increasingly blurring across physical and digital channels, and we aim to deliver a cohesive omnichannel strategy to serve our guests. During Q3, we enhanced our omnichannel strategy in four ways. First, We launched Beauty to Go, our promise that buy online, pick up in store orders will be picked up and ready to go within two hours or less, giving our guests fast, convenient access to the beauty they want most. We also continued to test incentive strategies to encourage guest utilization. During the third quarter, BOPUS orders increased 28% compared to last year, totaling 20% of the e-commerce sales in the quarter. compared to 16% last year. Second, partnering with DoorDash, we launched same-day delivery in Atlanta, Boston, Chicago, Los Angeles, Houston, and Boise, and we're excited about the value and convenience it will provide guests this holiday season. Third, in October, we launched two exclusive salon services in all stores and relaunched skin services in select stores. Starting with salons, We have partnered with Olaplex to offer guests a professional bond repair service which reverses damage caused by hair color, chemical treatments, heat and styling, and the environment. And we have partnered with Redken to introduce a new express root touch-up service that offers guests 100% gray coverage color in only 10 minutes. These new exclusive services are bringing new guests into our salons. We also relaunched skin services in 100 locations, featuring a revamped menu with new services to address specific guest concerns such as hydration, anti-aging, and acne. While it's still early, we are pleased with how guests are engaging with these new offerings. Finally, we launched Ulta Beauty at Target in 92 stores and online during the third quarter, and I am pleased to share we have reached our fiscal year goal of opening more than 100 shops. We are excited about this innovative partnership and how, together with Target, we will change the way guests experience beauty. While it will take time for us to understand what role this new distribution point will play for our guests, we are incredibly pleased with the ongoing customer excitement and encouraged to see Ultimate Reward members linking their accounts with Target Circle, as well as new members signing up through the shop. Moving on to our efforts to expand and deepen our presence across the guest beauty journey as the heart of the beauty community. We are focused on how to best elevate consumer connection, supercharge member acquisition, and drive guest loyalty, love, and share of wallet. In the third quarter, we continue to elevate our storytelling with relevant content across channels to launch Ulta Beauty at Target and to support our strategic events. In addition, as students returned to classrooms after more than a year of virtual learning, we saw an opportunity to deepen our engagement with Gen Z audiences across channels with insight driven campaigns during key back to school moments. We ended the third quarter with 35.9 million active members, 13% above last year and 6% above 2019. While we continue to add new members, member growth this quarter was largely driven by reactivation of lapsed members and active member retention. After experiencing headwinds last year due to the disruption from the pandemic, we have accelerated personalization to create stronger lifecycle strategies, build baskets, and maximize business returns. And we are very pleased with the results. We are driving strong conversion of new members in stores and online. We are successfully re-engaging members who lapsed during the pandemic, and we are driving stronger engagement from our existing members. Importantly, our member retention rates have recovered to pre-pandemic levels and spend per member is at an all time high. Shifting now to our plans and expectations for holiday. Based on our consumer insights, we expected many guests would start their holiday shopping earlier this year, And we proactively took steps to ensure we were ready with holiday sets, stocking stuffers, and unique collaborations to help guests get a head start on their gifting needs. If holiday 2020 was about less, holiday 2021 is about more. More fun, more in-real-life gatherings, more gifting, and more glamming. All of our teams at Ulta Beauty are ready and excited to help our guests celebrate more this year. Like last year, we kicked off the holiday season in early November with our Hello Holidays campaign, early Black Friday deals, and new loyalty offers. With authentic stories of connection and joy across video, digital, social, and print platforms to encourage and motivate beauty enthusiasts to shop Ulta Beauty, we'll be everywhere our guests are this holiday season. Our merchant teams have built an outstanding holiday assortment. with giftable fun items across categories and price points. With new brands like Bobbi Brown, Drunk Elephant, and Briogeo, expanded assortments from brands like Laura Mercier, Florence & Pattern, and exciting holiday offerings from brands like Dyson, Tarte, Ariana Grande, Truly, and our very own Ulta Beauty Collection, we have great gifts for everyone. To help guests explore our best holiday gifts, we developed a unique digital experience to allow for easy discovery of holiday gifts online and in-store. When guests visit Ulta.com or scan the QR code on a banner at the front of our store, an app clip will launch, giving the guests an opportunity to easily explore top gifts by category. Our stores are always the center of holiday at Ulta Beauty. As we combine our great in-store experience with our innovative omnichannel capabilities, We'll meet every guest wherever and however they want to shop Ulta Beauty. To help guests get ready for in-real-life celebrations, we've expanded salon capacity to 100% in all Ulta Beauty salons and benefit brow bars, except we're limited by state or local mandates. And we've relaunched skin services in select stores. Finally, our Bopas, curbside, and same-day delivery options will provide guests with great shopping convenience this holiday season. Our teams are excited, engaged, and ready to support our guests from proactively managing inventory flow and anticipating supply chain challenges to stress testing our IT systems and digital platforms to successfully accelerating our holiday hiring. The holiday season is off to a strong start. and I am confident we are well positioned to deliver another successful holiday season at Ulta Beauty. In closing, we are excited about the strength we are seeing in our business. Our third quarter performance exceeded our initial expectations, and we are encouraged by the early holiday trends. The beauty category is recovering, and our teams are executing well. We are investing and innovating to ensure Ulta Beauty will lead the new beauty landscape and we are confident our well-defined strategy will enable us to capture more market share and drive profitable growth. And now I will turn the call over to Scott for a discussion of the financial results. Scott?