Why Ulta Beauty and Target Broke Up

Ulta Beauty’s partnership with Target will come to an end in Aug. 2026, the two companies announced on Thursday.

Despite initial synergies that saw the partnership roll out to 610 Target doors — both retailers are accessibly priced, attract a broad range of shoppers and are ubiquitous throughout the US — it failed to reach its goal of 800 locations, and new openings were paused in April of this year before the discontinuation was officially announced.

Neil Saunders, managing director of insights firm GlobalData’s US retail arm, said the partnership did make a difference when it started: It had helped Ulta Beauty expand its coverage and brought more prestige beauty to Target. “But what started off as pretty sharp execution has just descended into a bit of a mess,” Saunders added.

The shop-in-shops offered some of Ulta Beauty’s buzziest premium beauty brands like hair care line Ouai, skincare line The Ordinary and cosmetics maker Fenty Beauty. Target pays Ulta Beauty a royalty on products sold, and in return, took ownership of inventory and staffing; the selection is also available online.

In a statement, Ulta Beauty chief retail officer Amiee Bayer-Thomas said concluding the partnership would allow the beauty retailer to focus on maximising its own stores and services, while Rick Gomez, Target’s chief commercial officer, said the partnership had been successful and that it would continue to add new, accessibly priced brands.

The partnership achieved some goals. Investment bank William Blair estimates that by the end of 2024 financial year, revenue from Target shop-in-shops reached $465 million, a 16 percent increase on the previous year, representing around 4 percent of Ulta Beauty’s total revenue. It also reported that 3 million customers had linked their Target loyalty card to Ulta Beauty’s loyalty program.

However, the collaboration ultimately didn’t stick its landing. Target’s own selection of beauty brands continues to grow, many of the locations had a full Ulta Beauty a stone’s throw away and commentators online complained that anti-theft measures in physical stores made the shopping experience uncomfortable or impossible at times. On the social media forum Reddit, comments refer to the area being roped off, or even blocked off with shopping carts, and being poorly staffed. One poster described the experience as going into a “highly fluorescent cage to be watched like a hawk … by a bored sales person,” and that the experience was “weird and uncomfortable.”

“My local Ulta [Beauty] is a friendly space and I enjoy browsing there,” the comment concludes.

Why Ulta Beauty and Target’s Partnership Struggled

The concept was simple. Bring more premium beauty brands to Target under the Ulta Beauty umbrella, simultaneously expanding its portfolio of brands and basket size, while giving Ulta Beauty a bigger foothold and allowing it to further ratchet up market share.

Similar initiatives appear to have been more successful. Ulta Beauty’s rival Sephora has operated a similar shop-in-shop arrangement with department store Kohl’s since 2020, which has since expanded to over 1,000 stores, with Kohl’s projecting last year that it would generate more than $2 billion in sales by 2025. 100 new shop-in-shops are set to open this year.

Saunders described the Ulta Beauty and Target partnership as having gone off the boil due to poor execution. Initially, the shop-in-shop was well-staffed with an attractive assortment, but over time, the areas were prone to haphazard merchandising as products went out of stock and anti-theft measures were introduced, he said.

There was also an issue of overlap. While Sephora is usually found in malls and or has large freestanding stores in cosmopolitan cities, and Kohl’s stores sit in less metropolitan areas, Ulta Beauty’s bread and butter is strip malls or suburban shoppers. So is Target’s. Cassie Cowman, a co-founder and partner of beauty retail consultancy View from 32, said the initial rollout managed to avoid too many shop-in-shops being placed near Ulta Beauty stores, but over time, as the project scaled, it became more difficult to avoid lapping.

“How can you justify that you’re reaching a net new consumer, either from location, point of view or profile with so much overlap?” Cowman said.

Did Target Need to Premiumise?

Ulta Beauty brought pricey brands like Too Faced and Anastasia Beverly Hills to Target, but Target was already premiumising its offering — and investing in beauty. According to investment bank Jefferies, Target has doubled its beauty sales since 2019, and it offers buzzy brands like skincare line Naturium and Cosrx.

For the premium brands Ulta Beauty was bringing in, adding to their store count was a calculated risk, said Cowman. “You don’t want your brand to be in the position of more doors, and risk more brand dilution without incremental volume to your top and bottom line,” she said. “The whole point of prestige is that it is not available everywhere.”

In a more mass environment such as Target, brands may not have the same white-glove service for their visual merchandising or elevating elements like the custom displays that they can have in a specialty retailer.

The friction of navigating the store layout, or needing to use a separate checkout put some shoppers off, is not a premium beauty experience, said Saunders. “A lot of customers have just said, ‘Well, forget it. If we want prestige beauty, we’ll go to an Ulta Beauty on a dedicated trip,’” he said, adding that over time, the Target customer has become less likely to splurge on beauty due to economic concerns.

Ultimately, the breakup between the two stores is still an amicable — and mutually beneficial — one. Neither retailer needs the other: Target can focus on its own beauty assortment and adding masstige brands, while Ulta Beauty can hone in on its next growth engine of international expansion. It’s slated to open stores in the Middle East and Mexico, the latter in in partnership with local retailer Grupo Axo, later this year and in July, acquired the premium British chain Space NK, making its first European inroads.

The partnership’s cessation also signals a need to deliver differentiated retail experiences in tougher economic climes.

“[Ulta Beauty in Target] was more of a convenience,” said Cowman. “Convenience is great, but if there is already an Ulta Beauty five minutes away, what are you really offering?”

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