• by Sarah Mahoney  @mahoney_sarah, December 4, 2020

After months of turbulence, Sephora is easing out of its long-term relationship with JC Penney and moving in with Kohl's. The move follows last month's announcement that rival Ulta is setting up housekeeping with Target, illustrating just how much retailers need brand partnerships to stay relevant with younger shoppers.

The beauty retailer, owned by LVMH, the luxury-brands giant, and Kohl's announced it would open 200 "Sephora at Kohl's" locations this fall, with at least 850 planned by 2023.

Observers cheered the move for Kohl's, struggling to become more appealing to younger shoppers.

The move signals another body blow to limping JC Penney. It is expected to emerge from bankruptcy early next year but faces grim prospects.

Calling the shops-within-a-store an immersive experience, the Menomonee Falls, Wisconsin-based Kohl's says it’s a marriage of its "expansive customer reach and omnichannel convenience with Sephora's prestige service, product selection and exceptional beauty experience."

Wall Street smiled on the news. Paul Trussell, who follows the company for Deutsche Bank, upgraded the stock to a "buy" following its "transformational" announcement.

The partnership with Sephora "combines with other unique traffic drivers including Amazon returns, expansion of athletic and outdoor, and a differentiated off-mall omnichannel experience to give us confidence in consistent positive comparable growth for years to come," he writes. "Our math suggests that the addition of Sephora could add about $1 billion in incremental sales once fully rolled out."

Sephora continues to perform well, bolstered by its digital strengths. And LVMH says it has continued to gain share, despite pandemic store closures. But the mostly urban chain faces ever-increasing threats from rival Ulta. Hooking up with Kohl's takes Sephora deeper into suburbia, where Ulta flourishes.

Sephora currently has 500 of its 2,600 stores in the U.S. And while Kohl's has more than 1,100 locations in 49 states, it says there is limited overlap between the two store networks. By comparison, Ulta has more than 1,200 and recently announced plans to open 100 locations within Target stores.

"Great brands are always looking for new ways to serve their customers and innovate," says Martin Brok, global president and CEO of Sephora, in the announcement. "With Kohl's, we will be able to bring Sephora closer to where our customers want us to be. This partnership also shows our confidence in the future of omnichannel retail and ideally positions both Kohl's and Sephora to seize tomorrow's opportunities, today."

The Sephora/JC Penney marriage had been floundering as the Texas-based Penney navigated bankruptcy.

In May, Penney announced that it had "reaffirmed" its long-standing partnership with Sephora, which dates back to 2006.