Kohl’s said Thursday it plans to open Sephora shops in all of its 1,165 stores, positioning its beauty division for growth.
By the end of the year, Sephoras will have 600 Kohl’s locations. We plan to open another 250 stores in 2023. The Sephora space is a 2,500-square-foot shop-in-shop with products that you’d find in a full-line Sephora store. Kohl’s sees the partnership bringing annual sales to his $2 billion by 2025.
Kohl’s announced its partnership with Sephora in December 2020. At the time, French multinational beauty retailer Sephora wanted to re-establish a foothold in the suburbs it had gained through its previous deal with JC Penney. For Kohl’s, this partnership was a way to introduce the brand to a wider audience, especially new and younger consumers.
Kohl’s was under pressure to improve its financial situation and was forced to sell by activist investors. This year, it made a takeover offer and entered into negotiations with Franchise Group, the owner of The Vitamin Shop.Coles Negotiations were terminated in July, “in light of the current funding and retail environment, which has deteriorated significantly since the inception of the process.” The chain’s stock has fallen more than 30% this year.
Beauty is a major category of shopper during the pandemic, and retailers are looking for ways to enhance their personal care offerings. Target announced in February that it would add 250 more Ulta Beauty shops within its premises.
Jean-André Rougeot, CEO of Sephora Americas, and Michelle Gass, CEO of Kohl, said in interviews that their hopes are coming true and Kohl’s is gaining market share in the beauty business. said.
The first 200 Kohl’s stores to open Sephora shop-in-shop have seen sales growth in the high single-digit range compared to Kohl’s stores without Sephora, Gus said. About half of his Sephora transactions at Kohl’s stores included Kohl merchandise.
According to Rougeot, one million Kohl’s shoppers signed up for Sephora’s VIP loyalty program within the first year of the partnership. He said some customers who had stopped shopping at Sephora had resumed via Kohl’s, which he attributed to the convenience of the department store’s location.
Kohl’s has invested heavily in this partnership. Gus said more than half of Cole’s capital spending this year has gone to building Sephora stores and remodeling stores featuring Sephora. Sephora’s name is on the outside of the building, next to Kohl, and shop-in-shop is usually in front of the store. Kohl’s, which has partnered with Amazon, now promotes his Sephora at these return counters so that customers can return his Amazon products at Kohl’s stores.
The partnership has also increased online sales of Cole’s Sephora products. “I think it’s snowballing a little bit,” Rougeot said.
Kohl’s quarterly results, which Kohl reported on Thursday, saw sales fall 8.5%, sharply lowering its full-year revenue and profit outlook. Like other retailers, it is facing excess inventory as inflation remains high and shoppers are showing signs of restraining discretionary spending. On Thursday, it said it was working to cut unnecessary goods and cut costs as demand declined.
Kohl’s said it still sees strong demand for its beauty and skin care products, although there were signs that consumers were pulling back on some items.
“From a call perspective, we’re seeing these very strong results despite the headwinds our clients are facing with inflation and macro pressures,” Gass said. “We certainly feel that in some of our businesses, but certainly Sephora and Beauty have proven to be very resilient.”