Ulta Halts Expansion Of Target Stores But Why?
Ulta Beauty is pausing expansion of its Target stores this year according to a variety of reports. As you well know Ulta struck a deal with Target in 2020 to create Ulta stores within the department store. At the moment there are over 600 Target stores that have and Ulta inside them and the plan was for 800 to be opened but at this time Ulta has decided to halt their expansion into Target stores. The idea was to provide a way to expose more customers to the Ulta experience and also, to make it convenient for current Ulta customers to grab their favorite items easily during a Target visit. According to reports more than 4 million Ulta shoppers have linked loyalty accounts to their Target store account.
There was no clear information why Ulta has made this decision but CEO Kecia Steelman stated, “In joint partnership with Target, we’ve made the decision to really lean into the 600-plus stores that are open this next year and really look at ‘How do we continue to drive efficiencies and leverage the learnings that we’ve had to really unlock value for both of us collectively together?” In March, Steelman also discussed sales decline amid “intense” competition and her plan to jump start sales going forward. It’s not officially addressed if declining sales is a factor in the halting of the store openings nor is the fact that Target is in the middle of some drama due to diversity issues. Target faced some major losses and boycotts after making the drastic chose to scale back its DEI program. That can’t be a good look for Ulta. Again, this wasn’t addresses in the statement about to pause in store openings but one wonders if any of it attributes to their decision.
Curiously, Sephora faces an interesting issue as well as Kohl’s is closing stores as well. According to reports none of the Kohl’s with Sephora inside will be closing but Kohl’s locations are closing none the less. 27 locations will be shutting their doors due to underperformance. I always felt the Sephora Kohl’s deal was an odd one but I felt the same about JCPenny. Sephora is very protective of their image and I just never felt either of those two stores was a proper fit for the image Sephora was so desperately protecting.
I’ll update you in further info as Ulta releases it about their choice to halt their Target store openings.