Categories: WSJ

Companies Put the Best Face on Covid-19’s Financial Impact

After its business was hit by the pandemic, retailer Ulta Beauty Inc. ULTA -0.82% appears to have used some accounting cosmetics to add a gloss to its financial results.

Operating income at the once-fast-growing chain, which temporarily closed stores during the health crisis, plummeted to $13 million for the nine months through October, a fraction of the $613 million earned in the same period in 2019. Two coronavirus-related items affected the math: a $40 million impairment charge for the value of some stores that reduced the operating income, and $51 million of federal tax credits that increased it.

Ulta also reported a much healthier $98 million “adjusted operating income.” This tally, designed to strip out one-time items, added back the $40 million impairment cost, which boosted the adjusted number, but didn’t take off the $51 million of federal aid. If that aid had been removed, the adjusted-operating-income number would have been half of what the company reported.

…Roughly one-quarter of S&P 500 companies last year reported an adjusted figure for earnings before interest, tax, depreciation and amortization, or Ebitda. But only about one in 10 of those companies disclosed adjusted Ebitda because of Covid-19 during the three quarters through December 2020, according to data provider MyLogIQ.

admin

Recent Posts

How ESG Metrics Are Taking Over Annual Incentive Plans

Compensation committees at S&P 500 companies are increasingly tying annual bonuses to measures beyond financial…

2 weeks ago

Visual Investigation: Pay Gaps Widen as Workforce Scrutiny Grows

The pay gap between CEOs and their employees has widened over the past half decade,…

1 month ago

In a Bumper Year for CEO Pay, One Chief’s $161 Million Award Swells to $1.3 Billion

Chip maker Broadcom gave Hock Tan, its chief executive, a $161 million stock award, instantly…

2 months ago

Are Companies Really Reincorporating in Nevada?

Elon's Musk's $56 billion pay package's upheaval, a hedge fund sanctioned for failing to preserve…

2 months ago

Are Check Marks ‘Cheap Talk’ in Board Skills Matrices?

Disclosures about directors' skills and expertise are increasingly coming under the microscope as investors ramp…

3 months ago

Boards Looking for ‘Soft Skills’ in New Crop of CEOs

On Jan. 1, several of the nation's biggest companies — including Morgan Stanley, Kraft Heinz,…

4 months ago