Kohl's is loving its Sephora partnership.
"2023 was truly a breakout year for our partnership with Sephora," said Tom Kingsbury, Kohl’s CEO, on an analyst call announcing the retailer's Q4 results. "We delivered more than $1.4 billion in sales, which was up more than 90% year on year and included greater than 25% comparable beauty sales growth in the shops opened in 2021 and 2022."
The executive added, "For Q4, Sephora sales increased more than 70% and comparable sales growth was nearly 25%, which was on top of a strong growth in the prior year."
It's no surprise, then, that Kohl's is spending some of its $500 million in 2024 capital expenditures to add about 140 small-format Sephora shops in stores.
"We ended the year with a Sephora presence in 910 of our stores," said Kingsbury, "with 860 large-format and 50 smaller-format shops. We are pleased with the consistent strong performance we have seen across both formats. In 2024, we will further expand our partnership, opening approximately 140 smaller-format shops. And in 2025, we will roll out a Sephora presence to the balance of the Kohl's chain."
In the same earnings call, Kingsbury noted, "Key drivers of comp growth in 2024 will be continued growth in Sephora at Kohl's, which will represent over 10% of our net sales for the year."
Sephora at Kohl's has added "seven or eight" new brands to drive growth, per Kingsbury, while longstanding brands like Sol de Janeiro have been strong sales drivers.
Also doing well are Rare Beauty and Sephora Collection.
Kingsbury concluded, "Taking a step back, it is quite impressive what we've been able to accomplish with Sephora. They are a great partner, and our teams have worked tirelessly over the past three years to position ourselves for this success. Based on our current trajectory, we now believe that we'll surpass our previously shared goal of $2 billion in sales by 2025. I want to now transition to our efforts to meaningfully increase our sales in underpenetrated categories. in Q4, we saw continued strong results from Sephora, as well as our initiatives in holiday gifting and home decor."
Previously (March 24, 2023):Kohl’s is set to open 250 new Sephora at Kohl’s in 2023, bringing the total store-in-store count to 850. Eventually, Kohl’s at Sephora will expand its presence to all Kohl’s 1,100-plus locations.
This expansion includes 50 new small-format Sephora at Kohl's this year, with additional stores opening by 2025 (full-sized stores span 2,500 square feet).
Furthermore, Sephora at Kohl's is expanding into seven new states in 2023, including Arkansas, Idaho, Louisiana, Mississippi, New Mexico, South Dakota and Utah, bringing its presence to 48 states.
Kohl’s projects that Sephora at Kohl’s will grow to achieve $2 billion in annual sales by 2025.
Placer.ai recently noted that, "Foot traffic data from California, New York, and North Carolina indicates that the share of Kohl’s shoppers who also shop at Sephora jumped in 2021 when the partnership first launched."
The beauty sector has been a boon for Kohl's across sectors. In 2022, almost 8 million Kohl’s customers purchased beauty products at Sephora at Kohl’s, while about 50% of Sephora at Kohl’s baskets had an additional category purchased.
In the fourth quarter of 2022, total beauty sales increased 90%. Kohl’s achieved high-single-digits percent comparable beauty sales growth in the 200 Sephora shops that opened in 2021, and better than expected beauty sales in the 400 shops opened in 2022, with continued strong digital sales growth on Kohls.com.
“We are making great strides in building a formidable beauty business with the addition of Sephora at Kohl’s,” said Karen Daoust, Kohl’s senior vice president, general manager, Sephora at Kohl’s. “The completion of our 850 stores in 2023 is just the beginning as we look to expand Sephora at Kohl’s to all stores, enhance the customer experience and deliver prestige beauty to our customers across the country.”
