Here’s something Kohl’s wasn’t expecting from its Sephora partnership.
Kohl’s is dealing with a downturn in its Sephora partnership after years of the in-store Sephora beauty shops serving as a growth engine for the struggling department store chain.
According to Fitch Ratings research, Sephora at Kohl’s accounts for roughly 10% of the retailer’s total sales. While the partnership had previously contributed to growth, it seems to now contribute to the chain’s declining comparable sales.
The results marked the 18th consecutive quarter of falling comparable sales for Kohl’s, though GlobalData research noted it was the chain’s best performance since the third quarter of 2021. Private-label merchandise posted 3% growth in comparable sales during the period.
Kohl’s CEO Michael Bender attributed the Sephora slide to a shortage of new products and weakness in parts of the beauty category. Fragrance, hair care and makeup performed well, but skin care struggled.
“Skin care had a challenging quarter,” Bender told analysts. “We expect the softer performance we’ve seen year to date to persist until we can reach full scale with new brands and cycle through the headwinds from expanded distribution from a few of the bigger brands.”
However, despite the recent struggles, the broader beauty market has remained resilient, Retail Dive reported.
Prestige beauty sales rose 7% in the first half of the year, exceeding $17 billion, while mass retail beauty also climbed 7%, exceeding $39 billion, according to Circana research. Fragrance, skin care and self-care products drove those gains.
According to Fitch Ratings Senior Director David Silverman, the long-term outlook for the partnership remains favorable. “Longer term, we expect beauty to remain a contributor to comps at Kohl’s due to inherent strength in the beauty category and the benefits of its Sephora partnership,” he said.
Later this year, for the holiday season, Sephora at Kohl’s plans to expand its assortment and in-store merchandising, including holiday outposts featuring gift sets in 130 stores and fragrance towers launching in November in 250 stores.
Generative AI was used to draft this story, based on data provided by Retail Dive. It was reviewed and edited by Advance Local.
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