Why In The World Would Ulta Pause Its Target Expansion?

Ulta has announced that it's pausing its stop, shop and shop, not stop and shop, which you could also do, but it's pausing its shop and shop expansion plans with Target, according to Retail Dive.

Ulta Beauty's new CEO Keisha Steelman, told an audience at JP Morgan's annual Retail Roundup conference last week that the beauty retailer would hold steady at its roughly 610 target shop and shops this year.

The news comes after the two retailers opened 101 Ulta Beauty at Target locations in 2024 and and that back in Q2 last year, Stillman said that Alta was still on track at that point to meet their 800 store commitment with Target.

Chris, I have to know, what do you think here about Alta's decision to pause this expansion at Target?

And what does this tell you about that relationship?

Ooh.

Oh man.

And yes, we're starting off a little spicy.

Starting off.

Yeah, why not April 16th podcast off spicy.

It's after tax day, so why not let's get a little hot under the collar to start out.

Well, my big take here is that something definitely feels amiss.

You know, I think that's without a doubt.

Yeah.

Because I look and here's why I look back at Target's earnings call, because I was kind of like, I thought they talked about beauty performing pretty well and they did.

Here was a direct quote from Target CEO Brian Cornell right out of the get go in that earnings call.

And I counted it, folks, in the sixth paragraph of his 24 paragraph opening prepared remarks.

That's how early it was.

He said, quote, we had an outstanding year in beauty.

We saw nearly 7% sales growth and share gains.

End quote.

I'm like, say what?

Like, and, and Ulta's pausing.

So how does, how does that jive?

And like, I just don't get it.

I'm dying to hear what you think too.

But, but it does make me wonder.

It makes me wonder a few things.

So first of all, how was that sales performance that he quoted weighted against the front end of last year versus the back end?

Because Target's back end has not been that great.

Number two, the numbers I've seen from our friends at Placer AI recently show Targets Traffic just fought.

Sorry, sorry.

Targets traffic.

Traffic.

What the hell is traffic at Targets Traffic falling off an absolute cliff in February.

Now, I haven't seen the March numbers yet, but you know, that's particularly, you know, it's correlated with their DEI stance.

And so God knows what Ulta is seeing from a traffic perspective.

And Ulta is probably looking at this as well as all the other macroeconomic economic factors that are playing into things and saying, like, I.

We just.

We just don't want to make investments right now in this.

And.

And, sorry, Target, like, you're just not showing us what we need to see from you to say, hey, we want to invest in 200 more stores roughly with you.

So.

So that can't be good for Target because that means some of the comp sales that they were counting on from this rollout is not going to happen.

And, you know, Target, as we talked about on the show, growth and comp has been hard to come by, so.

And it's sort of the best analogy that I can make.

I think you're going to love this.

Remember the movie Can't Buy Me Wait?

You remember Can't Hardly Wait?

Remember the Can Hardly Wait?

Yes.

Can't Hardly Wait.

I Can't Buy Me love.

Can't Hardly Wait.

You remember that movie Mike?

You remember Mike Dexter?

Mike Dexter was like, the cool guy.

And then Jennifer Love Hewitt dumps him.

He's like the bee's knees.

He's dating her, and then he's left for the entire movie just wandering around the party looking absolutely pathetic.

And I feel like Target is becoming the Mike Dexter of retail now, potentially, with saying, like, you know, we're not going to go with you.

They're going Dexter Spade, which is kind.

Of like a Kate Spade, is kind of like, yeah, okay, whatever.

You know, they've got the pea catchers on the aisle.

Like, what's going on?

Like, I don't want Target to be the Mike Dexter of retail.

But anyway, what do you think?

And so I told you I was going to start off hot.

I did.

I tried to bring the analogy.

You brought it all.

And how I'm going to tie this together is still a mystery to me.

So stick with us, folks.

I.

Look, I'm not too surprised.

I mean, just given what you said in traffic alone.

I mean, Ulta and Sephora are neck and neck trying to gain share in as many locations as they possibly can right now.

And I think for me, it's really looking at Keisha Steelman.

She just took the reins as CEO a few months ago, and she's a tried and true ops leader.

I mean, she also worked at Target herself before, you know, coming into role at at Ulta.

And so I trust that she's making a move here that's looking out for what's best for Ulta and the operations that they're doing inside those Target stor.

And my guess is it's just, you know, it's a perfect storm of, of things happening all at once.

I think it's an uncertain economy, lower football.

And also, you know, maybe she just wants to give a little more germination time to some of these concepts too.

Like they just rolled out a bunch more in 2024.

Like, this is, this is a big.

Right, right.

And so I think that maybe it's just like, let's pause, let's not invest a bunch of money right now and just keep, keep it on going and then dealing with the issues that may be arising positive and negative out of this.

And let's just be really strategic and thoughtful about it.

And I think the last part that I'll add, especially in a beauty category, Chris, I'm wondering how much the impact of a brand that's not doing well in popular culture right now and among some audiences that are big beauty supporters and big beauty spenders.

I'm wondering, where are you going with this?

Wow.

I'm wondering what, I'm wondering what's happening in terms of, you know, I mean, I, I look at just the posts that have been or the comments that have been made on our Target posts alone, and I can only imagine what's happening to Target and right now and what, what feedback they're getting from people.

And maybe it's just Ala saying, like, hey, let's like, let some of this settle before we start going big and we wrap our brands together so closely.

So I, those are just a few things that I think could be swirling around in the background.

Ultimately, I think it's, it's its traffic to the stores and whether or not this is really going to continue to make an investment for Ulta.

But I think that some of those other things are also playing a factor.

Wow.

Wow.

Okay, so a couple, a couple, a couple of questions for you in tort.

So you interviewed Keisha Steelman at Shop Talk Fall.

Right.

You last year on stage.

Yes.

Yep.

Yep.

Right before she took the CEO role.

Yes.

I can't remember, was she in charge or did she oversee the Target rollout?

She did.

She did.

Right?

Yeah.

So this is a big deal because she's, it's not like she's the new CEO saying, I want to reevaluate this.

You know, I'm going to come in, you know, carte blanche, stop everything till I get a sense of what's going on.

No, she's been intimately connected with this rollout for a long time.

So that makes this News even bigger to me when you read between the headlines.

Right, I agree.

Yeah.

Yeah.

Especially like I said, given her background, like, I think she's everyone that I've talked to that's worked for her.

It said that she's, you know, a no BS kind of person.

Like either it's working or it's not.

And we course correct immediately if it's not.

And so that's, that's where I think, like you're.

You're really looking at some, some big calls here from Keisha about where the direction of the company is going and what's best for Alta.

So.

And, and the other.

Yeah, no, and the other question I want to ask you to and was, can you ever remember a time in the history of Target with its brand and its brand cachet where someone has announced a rollout and then said we're going to pull back and not go forward with this?

I cannot.

Not that I can think about the.

Top of my entire 20 year history of being intimately involved with that brand.

Yeah, I mean, this is a huge undertaking as well.

I mean, we're talking about complete remodels of stores and things to support this.

So I think, you know, this is really a unique case, but I think.

That I have all the time.

That's all the time.

I think the remodel level.

Not to the level, particularly if Ulta and location.

Not for Ulta.

No, not for Ulta.

And the cost for Ulta too.

But.

Yeah, but people are coming in and remodeling those stores all the time and paying for the remodels all the time.

But to your point.

Yeah, right.

Yeah.

Ulta just doesn't see the value in it.

So crazy.

Wow.

Yeah.

Wow.

Either way, not good news for Target right now on top of everything else they're dealing with.

Not the news that you want to be going out at this time.

So hopefully something so net net.

This story is more about Target 2 than it is about Ulta.

Do you think that's because of our Minneapolis bias or do you think that's really the case?

I think it's actually really the case.

I do.

We try not to be biased on this show as much as possible.

Yeah, I.

I would say it's more about what's happening with Target than.

I think you're right.

I think it's more about what's happening with Target and Alta's response to it.

Yeah.

Wow.

Fascinating.

Fascinating discussion.

God, it's going to be fun to watch this year play out.