Sephora at Kohl's (2020-2024): the LVMH/JCPenney-pivot beauty deal that produced $1.4B+ in 2023 Kohl's revenue
In December 2020, Sephora (LVMH-owned prestige-beauty retailer) and Kohl's (mid-tier US department store) announced a strategic partnership to bring Sephora's prestige-beauty shop-in-shop format to Kohl's stores. The deal followed Sephora's prior partnership with JCPenney that had been winding down. Sephora at Kohl's launched with 200 stores in August 2021, expanded to 600 stores by 2022, and by 2023 had reached 850 stores in 48 states. The 2,500-square-foot shop-in-shop is positioned at the front of each Kohl's store, integrated with Kohl's loyalty and operations. Sephora at Kohl's sales reached $1.4 billion in 2023 (up 90 percent year-over-year) with a stated goal of $2 billion annually by 2025. The 2024 expansion added 140 small-format Sephora shops to remaining Kohl's locations. The case is the defining current example of how a struggling mid-tier department store can use a category-defining beauty partnership as a structural growth driver.
- Story: Sephora-Kohl's partnership announced December 2020 deploying Sephora shop-in-shops within Kohl's department stores. ~850+ Kohl's locations by 2024. Mutual benefit: Sephora distribution to mid-market areas; Kohl's traffic-driving anchor.
- Why it matters: Sephora-Kohl's is a defining recent retail partnership case — demonstrating shop-in-shop format provides anchor benefit with geographic complementarity.
- Takeaway: Shop-in-shop format provides anchor benefit without full integration.
- Takeaway: Both partners benefit when geographic complementarity exists.
- Takeaway: Major retail partnerships can deploy at hundreds of locations within 3-4 years.
Sephora-Kohl's — the four-step story
Sephora-Kohl's partnership by the numbers
Quick facts
Where Sephora and Kohl's were in 2020
Sephora had operated a US shop-in-shop partnership with JCPenney since 2006, with hundreds of JCPenney-located Sephora locations as part of the broader Sephora US distribution. The JCPenney partnership had been important to Sephora's US footprint but JCPenney's broader financial difficulties (JCPenney filed Chapter 11 bankruptcy in May 2020) made the partnership's long-term durability uncertain. Sephora was looking for a stronger US shop-in-shop partner.
Kohl's, meanwhile, was a mid-tier US department store with approximately 1,100 stores nationwide and substantial cost-structure and comparable-store-sales pressure. Kohl's had been searching for ways to differentiate against competitors (TJX/Marshalls, Target, off-price retailers) and to attract higher-spend customer traffic. A prestige-beauty shop-in-shop partnership offered both: a destination category that drove traffic, plus a customer-mix improvement toward higher-spend Sephora shoppers.
The December 2020 deal and 2021-2023 buildout
In December 2020 Sephora and Kohl's announced the strategic partnership. The terms: 2,500-square-foot Sephora shop-in-shops would be built at the front of Kohl's stores, with Sephora-branded merchandising, Sephora-trained employees (operated by Kohl's staff but Sephora-trained), and Sephora-curated assortment. Kohl's loyalty integration meant Sephora at Kohl's purchases earned Kohl's Cash and other loyalty currency. The deal was structured for long-term partnership with explicit expansion targets.
The buildout was rapid. 200 Sephora at Kohl's stores opened in fall 2021. An additional 400 stores opened in summer 2022. By 2023 the count had reached 850 stores across 48 states. Sales tracked the buildout: Sephora at Kohl's revenue reached approximately $1.4 billion in 2023, up 90 percent year-over-year as the store base scaled. The format proved popular with customers; Kohl's broader comparable-store-sales benefited from the prestige-beauty traffic.
The 2024 deepening and JCPenney-Sephora wind-down
In August 2022 Kohl's and Sephora announced the partnership would expand to include a Sephora presence at all Kohl's 1,100+ locations. Stores too small for the 2,500-square-foot full format would receive a smaller Sephora shop. Through 2024 Kohl's allocated approximately $500 million in capital expenditures to add roughly 140 small-format Sephora shops to the remaining stores. The expansion meant Sephora would be present in nearly every Kohl's location nationwide.
In parallel, the Sephora-JCPenney partnership wound down. JCPenney emerged from bankruptcy in December 2020 under new ownership (Simon Property Group and Brookfield Asset Management) and continued the Sephora relationship in modified form for some years before the partnership formally ended. JCPenney has subsequently built a different beauty offering with smaller-scale prestige-beauty partners. The wind-down was a structural event for Sephora's US shop-in-shop strategy: the new partner (Kohl's) replaced the old partner (JCPenney) at greater scale and with deeper integration.
How RGM thinks about retail-brand shop-in-shop partnerships
When clients ask about shop-in-shop and category-partnership strategies in retail, the Sephora-Kohl's case is the defining current example of mutual strategic benefit. Three structural lessons. First, the partnership only works when both partners have something the other cannot easily build itself. Sephora needed US distribution scale; Kohl's needed a category-defining destination. Neither side could have replicated the other's capability easily, so the partnership produces compounding value rather than competitive cannibalisation. Second, the customer-experience integration has to feel substantive rather than co-marketed. The 2,500-square-foot front-of-store Sephora shop is large enough to feel like a destination, with full assortment and Sephora-trained service, rather than a small beauty endcap that customers can ignore. Third, the loyalty integration (Kohl's Cash earned on Sephora purchases) creates customer-flow between the partner businesses that drives incremental traffic in both directions.
The pattern is hard to copy without comparable category-defining partners. Mid-tier department stores in adjacent categories (electronics, apparel, home goods) have not produced equivalent partnerships because no single partner in those categories has Sephora's combination of category leadership and prestige positioning. Macy's tried Backstage (off-price section) and various beauty experiments at smaller scale; Target has Ulta inside its stores (a competitor structural-equivalent). The Sephora-Kohl's deal is the clearest current example of the value-creation potential when both partners are structurally complementary.
Frequently asked questions
When did Sephora and Kohl's announce the partnership?
December 2020. The first 200 Sephora at Kohl's stores opened in August/fall 2021. An additional 400 stores opened in summer 2022. By 2023 the count had reached 850 stores in 48 states. In 2024 Kohl's added approximately 140 small-format Sephora shops to remaining Kohl's locations.
How big is Sephora at Kohl's?
Approximately $1.4 billion in 2023 sales (up 90 percent year-over-year as the store base scaled). The 2025 stated target is $2 billion in annual sales. The partnership covers approximately 850 full-size shop-in-shops (2,500 sq ft each) plus ~140 small-format additions in 2024 for a near-complete Kohl's national footprint.
What format does Sephora at Kohl's use?
2,500-square-foot Sephora shop-in-shop positioned at the front of each Kohl's store, with Sephora-branded merchandising, Sephora-trained employees, and Sephora-curated assortment. Kohl's loyalty integration means Sephora at Kohl's purchases earn Kohl's Cash and other loyalty currency. Smaller Kohl's stores in the 2024 expansion get a smaller-format Sephora shop.
What happened with the Sephora-JCPenney partnership?
Sephora had operated a US shop-in-shop partnership with JCPenney since 2006. JCPenney filed Chapter 11 bankruptcy in May 2020 and emerged later that year under new ownership. The Sephora-JCPenney relationship continued in modified form for some years before formally ending; the wind-down was the structural opportunity for Sephora to invest more heavily in the new Kohl's partnership. JCPenney has subsequently built a different beauty offering.
How does Kohl's benefit?
Two primary ways. First, Sephora at Kohl's drives traffic from a customer demographic Kohl's had not strongly attracted on its own (higher-spend prestige-beauty consumers). Second, the integrated-loyalty mechanic (Kohl's Cash earned on Sephora purchases) brings those customers back into the broader Kohl's store to spend on apparel, home goods, and other Kohl's categories. The structural benefit is broader Kohl's comparable-store-sales improvement plus customer-mix improvement.
Is this a long-term partnership?
Yes. Both companies have framed it as a long-term strategic partnership. The specific contract terms have not been publicly disclosed in detail but the operational integration (Sephora-trained Kohl's staff, joint inventory and merchandising operations, loyalty integration) suggests multi-year commitment from both sides. The 2024 small-format expansion deepens the relationship further.
Sources & references
- Kohl's and Sephora Announce Long-Term Strategic Partnership (Sephora Newsroom, December 2020) — Sephora's own announcement of the December 2020 partnership.
- Kohl's and Sephora Announce Planned Expansion (Sephora Newsroom, August 2022) — August 2022 announcement of the all-store expansion plan.
- Sephora at Kohl's Surpasses $1.4 Billion in Sales (BeautyMatter) — Industry coverage of the 2023 sales milestone.
- Kohl's Expects Sephora Partnership to Exceed $2B by 2025 (GCI Magazine) — Industry coverage of the 2025 sales target.
- Sephora and Kohl's Sign Long-term Partnership (WWD) — WWD industry-press coverage of the partnership announcement.
- Kohl's revealed plans to expand Sephora at Kohl's with 250 more stores (Beauty Buddy) — Industry coverage of subsequent expansion plans.