Ulta Beauty and Target said Thursday that they have decided to end a deal that opened makeup and beauty shops in hundreds of Target\u2019s stores.<\/p>\n
Shares of Target fell about 2% in early trading, while Ulta\u2019s stock slid about 1%.<\/p>\n
In a news release, the companies said the partnership \u2014 which also added some of Ulta\u2019s merchandise to Target\u2019s website \u2014 will end in August 2026. Target had added more than 600 Ulta Beauty shops to its stores since 2021, according to a company spokesperson. That\u2019s nearly a third of Target\u2019s 1,981 U.S. stores.<\/p>\n
Ulta Beauty at Target shops carried a smaller and rotating assortment of the merchandise at the beauty retailer\u2019s own stores. They were staffed by Target\u2019s employees.<\/p>\n
The loss of the popular beauty retailer\u2019s products could be another blow to Target as it tries to woo back both shoppers and investors. Target\u2019s annual sales have been roughly flat for four years and it expects sales to decline this fiscal year. Shares of the company are worth less than half of what the were back in 2021, when they hit an all-time closing high of $266.39. It also has faced backlash over both its Pride collection and its rollback of key diversity, equity and inclusion initiatives.<\/p>\n
Store traffic for Target has declined year over year nearly every week from the week of Jan. 27, days after the company\u2019s DEI announcement, through the week of Aug. 4, according to Placer.ai, an analytics firm that uses anonymized data from mobile devices to estimate overall visits to locations. Target traffic had been up weekly year over year in the four weeks before Jan. 27.<\/p>\n
The only exceptions to that trend were the two weeks on either side of Easter, when traffic rose less than 1% year over year, the firm\u2019s data showed.<\/p>\n
On earnings calls and in investor presentations, leaders of the Minneapolis-based company had touted Ulta\u2019s shops and its trendy beauty brands as a way to drive store traffic.<\/p>\n
At a investor presentation in New York City in March, CEO Brian Cornell highlighted beauty as a growth category for Target and cited it as reason for confidence in Target\u2019s long-term business. He said the company had gained market share in beauty and its sales in the category rose by nearly 7% in the fiscal year that ended in early February.<\/p>\n
Target\u2019s CEO Brian Cornell, 66, is expected to depart the company soon. The longtime Target leader renewed his contract for approximately three years in September 2022 after the board scrapped its retirement age of 65.<\/p>\n
David Bellinger, an analyst for Mizuho Securities who covers retailers, said in an equity research note on Thursday that Target\u2019s \u201cmessy in-store operations\u201d as well as issues with retail theft and insufficient staffing at stores likely contributed to the companies ending their partnership.<\/p>\n
\u201cOverall, we see losing the Ulta shop-in-shop relationship as a negative development and something else Target\u2019s next CEO will have to grapple with,\u201d he wrote.<\/p>\n
In a statement on Thursday, Target Chief Commercial Officer Rick Gomez said the discounter is \u201cproud of our shared success with Ulta Beauty and the experience we\u2019ve delivered together.\u201d<\/p>\n
\u201cWe look forward to what\u2019s ahead and remain committed to offering the beauty experience consumers have come to expect from Target \u2014 one centered on an exciting mix of beauty brands with continuous newness, all at an unbeatable value,\u201d he said.<\/p>\n
In a statement, Ulta\u2019s Chief Retail Officer Amiee Bayer-Thomas described the Target deal as \u201cone of many unique ways we have brought the power of beauty to guests nationwide.\u201d<\/p>\n
\u201cAs we continue to execute our Ulta Beauty Unleashed plans, we\u2019re confident our wide-ranging assortment, expert services and inspiring in-store experiences will reinforce our leadership in beauty and define the next chapter of our brand,\u201d she said.<\/p>\n<\/p>\n
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