Kohl's Needs to Find an Identity Beyond Sephora — and Soon
The struggling department store’s partnership with the luxury beauty chain has paid dividends that will eventually run out.
An unlikely partnership.
Photographer: Scott Olson/Getty Images
To understand the challenges facing struggling department store company Kohl’s Corp. look no further than its latest quarterly earnings report. Investors cheered as a key measure of profits exceeded forecasts, suggesting the company’s two-year-old strategy of giving luxury beauty retailer Sephora space in its stores as a way of attracting shoppers is paying dividends. But comparable sales fell 5%, marking the sixth consecutive quarterly decline in this a key measure of growth for retailers and a sign that Sephora is more band-aid than long-term solution to what ails Kohl’s.
Kohl’s nabbing a “long-term strategic partnership” with Sephora in 2020 was much like the high school nerd winning a date with the popular girl in a high school rom-com. It came out of nowhere, made little sense and was seen as benefitting Kohl’s more than the unit of chic LVMH Moët Hennessy Louis Vuitton. After Sephora opened its first shop inside a Kohl’s in 2021, the drab department store saw its accessories business grow by mid-single digits in 2022 and its beauty sales surge 90% in the last quarter, new Kohl’s Chief Executive Office Thomas Kingsbury told investors on an earnings call Wednesday. Sephora itself saw a 20% increase in sales last quarter and appears well on its way to becoming a $2 billion beauty business at Kohl’s by 2025, just as Kingsbury estimated in June.