Kohl's (KSS) Expands Partnership With Sephora to Fuel Growth
Kohl's Corporation KSS is committed to strengthening ties with its strategic partners. Moving on these lines, the company announced plans to add 250 more Sephora locations at its stores in 2023. The said expansion will bring the total Sephora in-store footprint to Kohl’s 850 locations, in line with the initial goal of the Sephora at Kohl’s partnership.
The expansion helps Kohl’s enhance customer experience and deliver prestige beauty to its customers. The company highlighted that beauty brands presently found in Sephora at Kohl’s are witnessing gains from higher reach and a new customer base.
Management looks to expand Sephora at Kohl’s to all its 1,100-plus locations. In this regard, the company will open 50 smaller format Sephora stores by the end of the year. The remaining shops are likely to be rolled out by 2025.
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We note that Sephora and Kohl’s partnership has been benefiting both parties. Management expects Sephora at Kohl’s to generate $2 billion in annual sales by 2025. The company highlighted that approximately 8 million Kohl’s customers bought beauty products at Sephora at Kohl’s and almost 50% of Sephora at Kohl’s baskets had additional category purchased during 2022.
In the fourth quarter of 2022, Kohl’s total beauty sales jumped 90%. The company saw high-single-digits percentage comparable beauty sales growth across 200 Sephora shops that started operations in 2021. Management witnessed better-than-anticipated beauty sales across 400 shops that started in 2022 along with persistent strong digital sales rise on Kohls.com.
The Zacks Rank #3 (Hold) company has been benefiting from its strategic framework introduced in October 2020. The strategic plan focuses on four key areas — driving top-line growth, expanding operating margin, implementing disciplined capital management and undertaking an agile accountable and inclusive culture. The company intends to become the most trusted retailer of choice for the active and casual lifestyle. In addition, Kohl’s is focused on growing its store portfolio and accelerating digital business growth.
All said, the expansion of Sephora at Kohl’s is in tandem with Kohl’s strategy to transform into a leading beauty destination.
KSS’s shares have decreased 11.2% in the past three months compared with the industry’s 4.2% decline.
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