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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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Zacks Investment Research


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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.

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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.

Wrapping Up

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.

Solid Retail Bets

Some better-ranked stocks are Urban Outfitters URBN, American Eagle Outfitters AEO and DICK’S Sporting Goods DKS.

Urban Outfitters, a leading lifestyle product and services company, currently sports a Zacks Rank #1 (Strong Buy). Its expected EPS growth rate for three to five years is 18%.

You can see the complete list of today’s Zacks #1 Rank  stocks here.

The Zacks Consensus Estimate for Urban Outfitters’ current financial-year sales and earnings per share (EPS) suggests a growth of 4.3% and 41.7%, respectively, from the year-ago reported figures.

American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank of 2 (Buy). AEO delivered an earnings surprise of 23.3% in the last reported quarter.

The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year sales and EPS suggests a decline of 1.5% and 15.5%, respectively, from the year-ago reported figures.

DICK’S Sporting, a major omni-channel sporting goods retailer offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment, carries a Zacks Rank #2 at present. Its expected EPS growth rate for three to five years is 5.4%.

The Zacks Consensus Estimate for DICK’S Sporting’s current fiscal-year revenues and EPS suggests growth of 2.2% and almost 10%, respectively, from the year-ago reported figures. DKS has a trailing four-quarter earnings surprise of 10%, on average.

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Kohl's Corporation (KSS) : Free Stock Analysis Report

American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report

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DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report

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