Shortly after it left Wall Street analyst consensus expectations in the rearview mirror with a sizzling third-quarter earnings beat, Kohl's (KSS 3.14%) has gotten on investors' good side again with an announced partnership putting Sephora store-in-store outlets in 850 Kohl's locations over the next three years. According to the Associated Press, the first 200 Sephora shops will open inside Kohl's in the fall of 2021.
The Sephora outlets will replace Kohl's cosmetics areas. Sephora will be assigned floor space "prominently located at the front of the store," according to a Kohl's press release. The partnership is currently slated to last a decade. At the same time, Kohl's will also start selling Sephora products through its e-commerce site.
According to CNBC, Kohl's says it hopes the fresh alliance will increase its beauty category sales by 200% over the next several years. Kohl's CEO Michelle Gass claims the deal is one of the "bold moves we are making at Kohl's to accelerate our growth."
Previously, Sephora maintained an exclusive partnership with J.C. Penney. However, with J.C. Penney's bankruptcy filing, Sephora is apparently seeking greener pastures for future development.
The press release notes the e-commerce relationship with Kohl's is exclusive, but doesn't mention whether or not Sephora is terminating its existing brick-and-mortar relationship with J.C. Penney, set to expire in 2023. J.C. Penney appears to be putting bankruptcy behind it, thanks to being bought out by two major mall owners, but is still struggling with profitability problems which have existed at least since 2011, as reported by CNN.
Kohl's share prices have risen by double digits in morning trading today on the Sephora news.