Kohl's Soars on In-Store Partnership With Sephora

Kohl’s says Sephora’s first 200 locations will open in the fall of 2021, and the number will grow to at least 850 by 2023.
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Kohl’s  (KSS) - Get Report shares soared Tuesday after the department store chain announced that beauty retailer Sephora will set up shop within Kohl’s stores.

Kohl's traded at $36.43, up 13.14%. The stock has climbed since mid-October, but has slid 28% year to date, thanks to the coronavirus pandemic that shut stores and kept shoppers at home. Sephora is owned by Paris-based luxury goods seller LVMH Moët Hennessy Louis Vuitton.

Kohl’s said that Sephora’s first 200 locations will open in the fall of 2021, and the number will grow to at least 850 by 2023. "Sephora at Kohl's" will have 2,500 square feet of space and a “prominent” location at the front of the store, Kohl’s said in a statement. Sephora at Kohl’s shops will replace Kohl's current in-store beauty offerings.

Sephora is the largest specialty beauty retailer in the world, Kohl’s said. It cited its own “deep focus of serving the everyday needs for the whole family” and said it’s “reimagining and accelerating the company's ambition to be the most trusted retailer of choice for the active and casual lifestyle.”

Sephora has 500 of its 2,600 stores in the Americas and Kohl's has more than 1,150 locations in 49 states, serving 65 million customers, with very limited overlap between the two store networks, Kohl’s said . The partnership “will draw new and younger customers to Kohl’s,” the retailer said.

Morningstar analyst David Swartz puts fair value for Kohl’s at $38.50. “The pandemic remains a concern, but we believe Kohl’s e-commerce (32% of sales in the third quarter) and lack of mall exposure put it in better position than some rivals, such as J.C. Penney,” he wrote in a commentary last month.

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