Ulta Beauty shares fall as Gap, Old Navy look to expand into cosmetics

Published 04/09/2025, 16:40
© Reuters.

Investing.com -- Ulta Beauty shares slipped as much as 1% on Thursday as investors weighed fresh competition in the beauty market from Gap

Gap announced plans to expand into cosmetics through its Old Navy and Gap brands. 

By contrast, shares of Elf Beauty rose more than 4% in early trading.

Gap said roughly 150 Old Navy stores will begin selling a wider range of beauty and personal care products this autumn, including Old Navy-branded items. The Wall Street Journal said in a report that there will also be products from established names such as Mario Badescu, E.l.f. and Korean beauty companies TonyMoly and Mixik. 

The WSJ added that prices will mostly fall under $25, and about 45 locations will feature dedicated beauty shops staffed with advisers. Gap-branded stores will follow next year with a fragrance launch.

Chief Executive Richard Dickson, who joined the company in 2023 and has a background in the beauty sector, said in an interview that the strategy signals a willingness to expand beyond apparel.

Meanwhile, Gap said in its press release that it "sees a clear and meaningful opportunity to expand into this [cosmetics] category with plans for a phased launch, starting with an initial test-and-learn expression at Old Navy later this fall.” 

The move comes as more retailers seek to capitalise on the fast-growing beauty market, which Euromonitor projects will reach $129 billion in the U.S. this year, up nearly 4% from 2024. 

Kohl’s has Sephora shops in its stores, while Target previously partnered with Ulta before deciding to end the tie-up.

Ulta, long seen as a key player in U.S. specialty beauty retail, now faces the prospect of more mainstream clothing chains competing for younger shoppers and the higher margins beauty products can generate.

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