FIN516 Advanced Managerial Finance

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Figure 1: Depicting the IPO initiation conducted b Ulta

(Source: ULTA BEAUTY, INC. ULTA IPO 2017)

1. Identifying the company and its industry:

Ulta Beauty is mainly identified as one the beauty chain stores in US, which who mainly deals in cosmetics and skincare products for both genders. The company was mainly established in 1996, and currently holds 974 stores all across 48 states of US. The operations of Ulta beauty mainly comprises of beauty products and saloon services, which are provided to the client. In addition, the company mainly falls under service sector and its industry mainly lies under specialty retail. The overall services of the company mainly stretch from cosmetics, fragrance, skincare, hair care, bath and body products, and salon styling tools.

The overall operations of the company mainly focus in delivering quality services to its clients. Furthermore, the company also focuses in delivering relevant services, which could helps in improving its performance. The company after the initial IPO offering was mainly able to utilise the capital to increase its overall operational capability. With the rising demand for services, the company mainly aims in increasing its store from 974 to 1000 in next fiscal year. The services and products mainly help Ulta beauty to increase its revenue generating capacity and attain higher growth.

2. Discussing the significance of financial and other factors about the company from S-1 Report:

The overall operations of the company mainly increased in 2016, where it is making higher revenue from investment. However, both revenue and cost of sales of the company mainly decline in percentage in 2016 from 2015. Nevertheless, the gross profit margin of the company mainly increased in 2016 indicating higher revenue from investment. In addition, the net profitability of company mainly declined in 2016, where the administrative expenses of the company increased exponentially. This rising expenses mainly declined the net profitability of the company which depicted its slow growth. Some of the researchers mentioned that use of adequate financial performance is mainly able to generate higher revenue from investment.

The overall cash accumulation of the company mainly declined with a reduction in working capital, total assets and total stockholder equity. This mainly indicates that lower profits and financial stability attained by the company in 2016 as compared to 2015. Thus, from the evaluation of S-1 report the overall financial condition of Ulta could be identified.

3. Depicting the successfulness of IPO in raising capital:

Figure 2: Depicting the IPO initiation conducted by Ulta

(Source: ULTA BEAUTY, INC. ULTA IPO 2017)

In 2007, Ulta Salon, Cosmetics & Fragrance, Inc mainly announced the overall public offering, which was entitled to transfer shares 8,539,648 of common shares for a price of $18 per share. Moreover, the company in 25 October 2007 mainly issued 7,666,667, whereas the stakeholders mainly provided 872,981 shares in the public offering. This initiation of the public offerings mainly helps in generating higher revenue from operations. The above figure mainly depicts the relevant IPO details that were conducted by Ulta in 2007, which helps in depicting the total amount received from the announcement. The overall amount that is mainly provided in the public offering is $153,713,664. This overall amount is mainly collected by conducting a total expense of $3,555,271, which is mainly needed before the public offering. The public offering conducted by the company mainly helped in raising the required level of capital, which supported its activities.

The public offering that was conducted by Ulta mainly helped in getting 123,549 amounts of share proceeds. In addition, Ulta company stock mainly provided adequate amount, which was used for providing relevant dividend in arrears of 93,012 to its shareholders. Moreover, the company also used 25,745 to reduce its overall debt, which helped in reducing its finance cost. Company also used the overall public offering to change the preference shares into common shares, where 41,542 preference shares were converted to common shares of Ulta Company. In addition, the IPO funding was mainly used to expand operations of the company and to increase its store all around USA. The reduction in debt obligations, dividend arrears and preference shares conversion mainly allowed the company to increase its overall operational capability and reduce its administrative expenses.

4. Depicting the marketing strategy after the IPO initiation:

After the overall Initiation of IPO, Ulta Company was mainly able to attain higher capital for increasing is over investment capacity. This increment the overall investment capacity also allowed the company to improve its current marketing strategy. Due to the increasing debt and financing cost, the company was not able to increase its marketing strategy, which could help in improving or attracting potential customers. This improvement mainly incurred after the company attained adequate capital from the IPO initiation. From the IPO initiation, the company started to adopt brand awareness marketing strategy. The capital obtained from public issue mainly helped in creating brand awareness among potential customers, which increased visitors to their stores. The company effectively use this multimedia to communicate with their customers and created adequate demand for its product. In addition, the company mainly focuses in using direct mail catalogs and freestanding newspaper inserts, as their primary marketing expenditure. The company also use different magazine and other marketing strategies to attract client into vicinity of the stores.

Moreover, company also focuses in e commerce advertising and print media strategies effectively increase their presence in the market. The company after initiation of the IPO mainly focused and its marketing structure and increased just course in US.  This helps in creating an effective demand and supply stature, which in turn help the company to increase its sales and in turn raise profit. The online marketing strategy also allowed in the company to increase the present in social media marketing, which helped in attracting high end potential customers. Company by using the online marketing strategies to meaning conduct email marketing, social media marketing and online advertisement, which help in effectively Communicating relevant  offers to the end consumer.

5. Depicting the trend price of the stock since IPO:

Figure 3: Depicting the share price movement of Ulta

(Source: ULTA BEAUTY, INC. ULTA IPO 2017)

After the initiation of the IPO Ulta beauty Inc was mainly able to reach adequate capital from the investors. In addition, the company’s overall share price mainly declined in 2009 due to the impact of economic crisis. However, after 2009 the overall share price of the company started to incline, which was due to high-end profits attained by Ulta beauty Inc. the share price until 2014 effectively increased from the lows of 4.40 to the height of 131.24 mainly depicted the rapid growth attained by the company during 5 years tenure. However, certain decline was mainly witness in the year 2014, which was due to the slow growth attained by the company. Nevertheless, in 2015 the company's share price started to rise from the lows of 85.43 to the current highs of 302.40. This Rapid increment in the share prices of Ulta beauty Inc mainly happened, due to the Rising profits attained by the company in each fiscal year. The rising number of stores and the number of dividend provided by the company mainly helped in increasing value of its shares among potential shareholders.

Evaluation of Ulta beauty Inc overall share price performance, the progress and growth of the company could be identified. The company's management has effectively utilised the IPO funds to increase their operations and attain higher profits. Some of the researchers mentioned that utilisation of adequate IPO funds mainly help companies to increase their revenue generation capacity. The company’s stock price is not adequately affected by the volatility present in the capital market. The decline in share price of the company was mainly, due to the slow economic growth in US, which did not allow the investors to rely on Ulta beauty Inc growth and performance. However, after the results of 2009 fiscal year the investors were keen on investing in Ulta beauty Inc to acquire higher profits from investment.

6. Depicting whether investment in the company could be conducted:

After the overall evaluation of Ulta beauty Inc, relevant growth prospects in the company could be identified. Ulta beauty Inc overall performance provides an average 20% increment in its overall net income from 2015 to 2016. This continuous increment in the overall valuation and growth of the company mainly indicates the rising profitability that is attained by the company. The company's overall total assets mainly increased in 2016 with the Increment in cash accumulated by the company. Seeing the overall progress investment in company’s shares could eventually help in increasing return from investment of the shareholders. The financial performance of the company has eventually increased from 2009, which has helped in increasing value of their shares.

In addition, seeing the company's increment in share price from 2009 until date, it could be advisable for effectively increasing exposure in Ulta beauty Inc. Moreover, the company is making new highs every day after the 2009 decline. This higher high indicates rising trend or uptrend, which will help investors increase value from investment. The combined increment in both share price of the company and its financial condition could eventually help in identifying the investment opportunity that is presented by Ulta beauty Inc. Therefore, from the levels of 266 with a stop loss of 240, investors could invest in the share of Ulta beauty Inc.

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"ULTA : Summary For Ulta Beauty, Inc. - Yahoo Finance". 2017. Finance.Yahoo.Com. Accessed May 29 2017. https://finance.yahoo.com/quote/ulta?ltr=1.

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