Target (TGT) has recently been in a rut when it comes to sales, as consumers across the country pull back their spending amid economic concerns.
In addition, its stores have recently suffered from consumer boycotts amid controversy over its decision to scale back diversity, equity, and inclusion policies earlier this year.
In Target’s first-quarter earnings report for 2025, it revealed that its comparable store sales dipped by 3.8% year-over-year. Also, according to recent data from Placer.ai, the number of customers visiting Target stores per location shrank by 4.8% year-over-year during the quarter.
Related: Ulta Beauty makes drastic decision on Target partnership
During an earnings call in May, Target CEO Brian Cornell said the company is navigating an “exceptionally challenging environment,” which negatively impacted foot traffic and store sales during the quarter, especially in discretionary categories.
“I want to be clear that we’re not satisfied with this performance, and we’re moving with urgency to navigate through this period of volatility,” said Cornell during the call. “Throughout our operations, we’re focused on consistency and reliability with an emphasis on retail fundamentals, and delivering a superior guest experience that features newness, differentiation, and value.”
Target announces unexpected move customers won’t like
As Target navigates a challenging environment, customers will soon see in stores a significant change they may not be too fond of.
The retail chain has mutually agreed with Ulta Beauty (ULTA) to pull the plug on their five-year-long partnership, which involved adding Ulta Beauty shop-in-shops in hundreds of Target stores.
In a new press release, both retailers announced that they will not renew their current agreement, which ends in August 2026.
“We’re proud of our shared success with Ulta Beauty and the experience we’ve delivered together,” said Target Chief Commercial Officer Rick Gomez in the press release.
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He emphasized that Target will “remain committed” to offering customers “beauty brands with continuous newness.”
Customers with linked Ulta Beauty Rewards and Target Circle accounts will continue to earn Ulta Beauty Rewards on eligible Ulta Beauty at Target purchases until August next year.
“For 35 years, Ulta Beauty has revolutionized how people experience beauty – bringing together an unmatched assortment from mass to luxury – and our partnership with Target was one of many unique ways we have brought the power of beauty to guests nationwide,” said Ulta Beauty Chief Retail Officer Amiee Bayer-Thomas in the press release.
Ulta Beauty CEO’s previous comments hinted at trouble in paradise
The announcement comes after Ulta Beauty CEO Kecia Steelman revealed in April that the beauty retailer is pausing its goal to expand to more Target stores.
“In joint partnership with Target, we’ve made the decision to really lean into the 600-plus stores that are open this next year and really look at ‘How do we continue to drive efficiencies and leverage the learnings that we’ve had to really unlock value for both of us collectively together?’” said Steelman at JPMorgan’s 11th Annual Retail Round Up Conference.
At the time, she said that the move would create even “greater value” for Target and Ulta Beauty and emphasized that the beauty retailer hadn’t announced further plans for additional stop-in-shops past this year.
Since Ulta Beauty at Target was announced in 2020, the partnership has seen heightened consumer demand.
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By 2021, Ulta Beauty debuted in over 100 Target stores nationwide and on Target’s website. The following year, both retailers expanded their partnership by implementing this concept in 250 more Target stores and announced their goal to build toward 800 shop-in-shops over the next few years.
During an earnings call in August last year, Steelman said the company’s partnership with Target is “driving growth,” and it is on track to reach its goal of expanding to over 800 Target stores.
“I think it’s also really key that nearly 4 million guests have linked their Ulta Beauty and their Target circle loyalty programs together,” said Steelman.
Last year, Ulta Beauty debuted at 101 new Target locations. Currently, Target operates about 610 Ulta shop-in-shops in its stores.
The ending of the Target and Ulta Beauty partnership comes as a surprise, since the beauty industry is currently seeing increased consumer momentum. According to a recent survey from investment bank Piper Sandler, Gen Z shoppers in the U.S. are spending $374 annually on beauty, which is 10% more than what they spent last year.
Amid increased demand, Ulta Beauty’s comparable sales increased by 2.9% year-over-year during the first quarter of this year. This was driven by a 2.3% increase in the average amount of money customers spent per purchase and a 0.6% increase in transactions.
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