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Investing.com - Ulta Beauty (NASDAQ:ULTA), the $23.7 billion beauty retailer trading near its 52-week high of $534.10, maintained its Market Perform rating from William Blair analyst Dylan Carden as the company announced plans not to renew its shop-in-shop agreement with Target Corporation (NYSE:TGT). According to InvestingPro data, Ulta has demonstrated strong financial health with 10+ exclusive ProTips available for subscribers.
The partnership, which began in 2021, will continue normal operations until the agreement ends in August 2026. Ulta had already paused expansions of its Target shop-in-shops in April, with 611 locations established by the end of the first quarter of 2025 against a previous target of 800.
New CEO Kecia Steelman, who was instrumental in creating the initial partnership during her previous roles as chief store operator and COO, stated that Ulta would focus on currently opened locations and seek ways to drive efficiencies.
The Target partnership was designed to increase Ulta’s reach and boost rewards membership in areas with less Ulta presence. Target has reported that nearly 3 million Target shoppers have linked their Target Circle rewards to Ulta’s rewards program.
William Blair estimates the partnership contributes approximately 4% of Ulta’s $11.4 billion annual revenue and 2% of operating income, with Target paying Ulta a royalty on products sold while taking ownership of inventory and staffing responsibilities. The agreement’s extension beyond 2025 means this announcement should not impact Ulta’s fiscal 2025 results or guidance, with second-quarter results scheduled for August 28. The company maintains strong profitability with a 42.7% gross margin and trades at a P/E ratio of 20.6.
In other recent news, Ulta Beauty announced it will not renew its shop-in-shop partnership with Target when their current agreement expires in August 2026. The collaboration, which started in 2021, will continue to operate in Target stores and on Target.com until the expiration date. Customers can still earn Ulta Beauty Rewards on eligible purchases at Target locations through the end of the partnership. In addition, Raymond James raised its price target for Ulta Beauty to $580, citing the company’s acquisition of Space NK as a catalyst for international expansion. DA Davidson also increased its price target to $585, highlighting strong comparable sales estimates for the second quarter of 2025. The firm noted a significant increase in its sales estimate to 3.5% compared to the consensus of 1.1%. Meanwhile, DA Davidson reiterated its Buy rating on Ulta Beauty following the Space NK acquisition. Space NK operates stores primarily in the UK and has a presence in the U.S. and Canada through boutique setups and e-commerce.
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