NEW YORK, July 31, 2026, 05:15 EDT
Ulta Beauty NASDAQ:ULTA has teamed up with Pacsun in a youth-oriented marketing collaboration, rather than securing a new Target substitute. Pacsun’s exclusive range will roll out to over 100 stores. Meanwhile, Target NYSE:TGT is winding down roughly 600 Ulta shop-in-shops through August.
The difference is significant for investors. Pacsun reaches a younger demographic and attracts those interested in fashion trends. However, its store presence and routine customer visits do not rival Target’s.
The key issue is what happens to former Target sales. Bank of America NYSE:BAC analyst Lorraine Hutchinson calculates that the program delivered approximately $650 million in gross merchandise value, reflecting total customer purchases. Ulta’s main earnings came from royalties instead of booking overall sales.
U.S. regular trading remained closed before Friday’s market open. Ulta ended Thursday at $516.73, marking gains for a fourth consecutive session. Shares increased 8.70% since July 24. Over the identical period, Target advanced 5.65%.
| Stock | July 24 close | July 30 close | Change since July 24 | Thursday move |
|---|---|---|---|---|
| Ulta Beauty | $475.36 | $516.73 | up 8.70% | rose 1.70% |
| Target | $136.78 | $144.51 | gained 5.65% | dropped 0.95% |
The headline number of store locations exaggerates the actual space difference. Target’s mini-shops measured around 1,000 square feet apiece. In contrast, a standard Ulta store spans approximately 10,000 square feet. Some smaller store models are between 5,000 and 7,500 square feet.
Ulta has added 70 net new locations since May 3, 2025. An initial illustrative estimate uses the previously disclosed size ranges for stores. The company did not specify the exact formats for these new sites.
| Physical footprint | Locations | Assumed area per site | Illustrative gross area | Share of departing Target area |
|---|---|---|---|---|
| Exiting Target mini-stores | About 600 | 1,000 sq ft | 600,000 sq ft | 100% |
| Ulta expansion, compact layout | 70 | 5,000–7,500 sq ft | 350,000–525,000 sq ft | 58%–88% |
| Ulta expansion, standard layout | 70 | 10,000 sq ft | 700,000 sq ft | 117% |
| Pacsun nationwide launch | More than 100 | Not disclosed | Not disclosed | Not comparable |
The comparison is not direct. Ulta’s standard number factors in approximately 950 square feet allocated to salon areas. The nature of traffic also varies. Nevertheless, Ulta’s ongoing growth might offset a substantial portion of the missing gross floor space.
Pacsun introduced the collection at its SoHo location on July 28. Kits become available at selected Ulta stores, as well as Ulta.com and TikTok Shop, starting August 2. Pacsun plans broader distribution beginning August 6. Ulta’s partnership with Target is set to wrap up in August.
Each beauty kit is priced at $29. The Lip Statement set includes 10 products with an advertised value of $99, while Glow Authority offers 13 products worth $74.
| Collection | Items | Selling price | Stated value | Discount to stated value | Price per item |
|---|---|---|---|---|---|
| Lip Statement | 10 | $29 | $99 | 70.7% | $2.90 |
| Glow Authority | 13 | $29 | $74 | 60.8% | $2.23 |
The discounts indicate a focus on attracting new customers rather than substituting direct sales. Ulta’s marketing chief Kelly Mahoney said the company aims to be present “where culture is created and embraced.” No financial details or specific inventory amounts were provided in the announcement. PR Newswire
The earnings driver is located elsewhere. Hutchinson created three recapture scenarios for Target sales starting in Ulta’s fiscal third quarter. These are projections from analysts, not official company forecasts.
| Target spending regained | Ulta revenue increase | Projected annual revenue growth boost |
|---|---|---|
| 20% | $130 million | 1.05 percentage points |
| 40% | $260 million | 2.10 percentage points |
| 60% | $390 million | 3.15 percentage points |
According to her model, Ulta holds on to 29 cents of operating profit for every dollar in recaptured sales. She calculated that recouping roughly a third of the spending associated with Target would allow operating profit to remain unchanged. Recovery beyond that would boost profit.
Ulta continues its upward trend into the handoff. First-quarter revenue climbed 11.1% to reach $3.16 billion. Comparable sales, which track performance at existing stores and online, advanced 5.3%. Earnings per share rose 15.5% to $7.74.
Gross margin rose by one percentage point to 40.1%. Ulta increased its full-year earnings outlook to a range of $28.36 to $28.80 per share. Chief Executive Kecia Steelman pointed to “broad-based growth across all channels and major categories.” Ulta Beauty
Risks: Pacsun’s collection comes in limited quantities and will be offered as long as stocks last. According to BofA, Target is set to roll out its Beauty Studio concept at 600 locations in August. Ulta may still capture less than the projected one-third profit margin.
The initial widespread test of demand arrives next week. Investors are advised to monitor the speed of kit sales following launches on August 2 and August 6. The pace of these sales will provide more meaningful insights than the overall number of doors, according to analysts.
