Kohl's Sephora Slump Deepens, Target Launches Beauty Studio & Costco Cakes Come to Instacart

Hello, everyone. This is OmniTalk Retail. I'm Chris Walton, and you are listening to the Retail Daily Minute, your quickest, fastest breakdown of all the day's top retail news. Today's podcast is brought to you once again with the help and support of R&S Logistics. Are you looking for a fulfillment and distribution partner? That's just right. Well, RNS Logistics is small enough to provide custom solutions and that personal touch, while also still boasting 2 million square feet across 10 locations in the Southeast. With technology that can scale your growing e-commerce operations, visit rswarehousingsolutions.com and get your quote today. Okay, this morning we've got news on Target's big new in-store beauty launch and Costco's custom cakes making their way onto Instacart delivery. But we begin today with Kohl's, where the Sephora engine that's been powering its turnaround just stalled out for a second straight quarter. Kohl's Q2 net sales fell less than 1% to $3.3 billion, with comps also down less than 1%, which was actually Kohl's best comp performance since the third quarter of 2021, even though it has now seen what amounts to 18 straight quarters of declines. The bigger story here is Sephora. Sephora at Kohl's sales fell 4% after also dropping in the first quarter. That matters because Sephora has been contributing roughly 10% of Kohl's top line, and until recently, it was a genuine growth driver. CEO Michael Bender told analysts skincare had, quote, a challenging quarter, end quote, and pointed to a lack of fresh product as the culprit, though fragrance, hair care, and makeup held up fine. Kohl's is telling a turnaround story, but the Sephora partnership was supposed to be the traffic driver that made the rest of the story work, and right now, it appears to be doing the opposite.

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All right, we are back and our next story is about Target, which is opening a new beauty section called Target Beauty Studio on September 10th across more than 600 stores and online. We're talking 1600 products from 90 brands and Target says more than two thirds of those brands are new to the retailer entirely. Now, a lot of this reporting from modern retail, it's worth flagging, is built off interviews with the brand founders themselves. So take the enthusiasm with a grain of salt. But the pattern is real. Multiple small and mid-sized beauty brands, names like Romelia Hair and Clear Stem, say Target is their first ever brick-and-mortar retailer, and Target reportedly required them to build out training materials for its new beauty advisor staff. So the strategic question is whether a curated, editorially-driven beauty section with rotating editor's picks can actually compete with Sephora and Ulta's much deeper, much more established assortments. Target's own SVP of merchandising called it a way to drive, quote, guest experience, which fine, but the real test is whether Target shoppers actually change their beauty shopping habits or whether this ends up being a nice press