0:00

has announced that it's pausing its

0:02

stop shop and shop, not stop

0:04

and shop. which you could also

0:06

do, but it's pausing its shop

0:09

and shop expansion plans with Target.

0:11

According to Retail Dive, Alta Beauty's

0:13

new CEO, Keisha Steeleman told an

0:15

audience at JPMorgan's annual Retail Roundup

0:17

Conference last week that the beauty

0:19

retailer would hold steady at its

0:21

roughly 610 Target shop and shops

0:24

this year. The news comes after

0:26

the two retailers opened 101 Alta

0:28

Beauty at Target locations in 2024

0:30

and that back in Q2 last

0:32

year, Steeleman said that Alta

0:34

was still on track at that

0:37

point to meet their 800 store

0:39

commitment with Target. Chris, I

0:41

have to know, what do you

0:43

think here about Alta's decision to pause

0:45

this expansion at Target, and what

0:47

does this tell you about that relationship?

0:50

Oh, man, Ann. Yes, we're starting

0:53

off a little spicy. Yeah,

0:55

why not? April 16th's

0:57

podcast off spicy. It's after tax day, so why

0:59

not? Let's get a little hot under the collar

1:01

to start out. Well, my

1:03

big take here is that something definitely

1:05

feels a -miss, you know? I think

1:07

that's without a doubt. Yeah. And here's

1:10

why. I look back at Target's earnings

1:12

call because I was kind of

1:14

like, I thought they talked about beauty

1:16

performing pretty well. And yep, they

1:18

did. Here was a direct quote from

1:20

target CEO Brian Cornell right out

1:22

of the get go in that earnings

1:24

call. And I counted it folks

1:26

in the sixth paragraph of his 24

1:28

paragraph opening prepared remarks. That's how

1:30

early it was. He said quote, we

1:32

had an outstanding year in beauty.

1:34

We saw nearly 7 % sales growth

1:36

and share gains end quote. I'm

1:39

like, say what? And Ulta's pausing? So how

1:41

does that jive, Ed? I just don't get

1:43

it. I'm dying to hear what you think,

1:45

too. But it does make me wonder. It

1:47

makes me wonder a few things. So first

1:49

of all, how was that sales

1:51

performance that he quoted, weighted against the front end

1:53

of last year versus the back end? Because Target's

1:55

back end has not been that great. Number

1:58

two. the numbers I've seen

2:00

from our friends at

2:02

Placer AI recently show targets

2:04

traffic just fall sorry sorry

2:06

targets traffic traffic what the

2:08

hell is traffic at targets

2:11

traffic falling off an absolute cliff

2:13

in February now I haven't seen the March

2:15

numbers yet but you know that's particularly you

2:17

know correlated with their DEI stance. And

2:19

so God knows what Alta is seeing from

2:21

a traffic perspective. And Alta is probably

2:23

looking at this as well as all the

2:25

other macroeconomic factors that are playing into

2:27

things and saying like, I just, we just,

2:29

we just don't want to make investments right

2:31

now in race and, and, and sorry, Target, like

2:33

you're just not showing us what we need

2:35

to see from you to say, Hey, we want

2:37

to invest in 200 more stores, roughly with

2:39

you. So, so that can't be good for Target,

2:42

because that means some of the cop sales

2:44

that they were counting on from this rollout. is

2:46

not going to happen. And you know, Target, as

2:48

we talked about on the show, growth and

2:50

comp has been hard to come by. So and

2:52

it's some of the best analogy that I can make. I think

2:54

you're going to love this. You can't

2:56

buy me weight. You remember or can't

2:58

hardly wait. Remember the can't hardly wait.

3:01

Yes. And hardly wait. Not can't buy me

3:03

love. Can't hardly wait. You remember that movie?

3:05

Well, I remember Mike. You remember Mike Dexter.

3:07

Mike Dexter was like the cool guy. And

3:09

then Jennifer Love Hewitt dumps him. He's like

3:11

the bees knees. He's dating her. And

3:13

then he's left for the entire movie,

3:15

just wandering around the party, looking absolutely pathetic.

3:17

And I feel like Target is becoming

3:19

the Mike Dexter of retail now, potentially. Oh,

3:22

man. just saying, like, you know, we're

3:24

not going to go with you. Mike

3:26

Dexter? Which is kind of like a

3:28

kid's fate is kind of like, yeah, OK, whatever. You

3:30

know, they've got the pea catchers on the aisle. Like,

3:32

what's going on? Like, I don't want Target to be

3:34

the Mike Dexter of retail. But anyway, what do you

3:36

think? And so I told you I was going to

3:38

start off hot. I did. I tried to break the

3:40

analogy. Oh, my What do you

3:42

think? You brought it all. And how I'm

3:44

going to tie this together is still a

3:46

mystery to me. So stick with us, folks.

3:49

I'm not too surprised. I mean,

3:51

just given what you said in

3:53

traffic I mean, Alta and

3:55

Sephora are neck and neck trying

3:58

to gain share in as many

4:00

locations as they possibly can

4:02

right now. And I think

4:04

For me, it's really looking at Keisha

4:06

Seelman. She just took the reins

4:08

as CEO a few months ago, and

4:10

she's a tried and true ops

4:12

leader. I mean, she also worked at

4:14

Target herself before coming into role

4:16

at Alta. And so I trust that

4:19

she's making a move here that's

4:21

looking out for what's best for Alta

4:23

and the operations that they're doing

4:25

inside those Target stores. And my guess

4:27

is it's just, it's a perfect

4:29

storm of things happening all at

4:31

once. I think it's an uncertain

4:33

economy. lower football and also,

4:36

you know. Maybe she just

4:38

wants to give a little more germination time

4:40

to some of these concepts too like they

4:42

just rolled out a bunch more in 2024

4:44

like this is this is a big right,

4:46

right? And so I

4:48

think that maybe it's just like let's

4:50

pause Let's not invest a bunch of money

4:52

right now and just keep keep it

4:54

on going and then dealing with the issues

4:56

that may be arising Positive and negative

4:58

out of this and let's just be really

5:00

strategic and thoughtful about it And I

5:02

think the last part that I'll add especially

5:05

in a beauty category, Chris. I'm

5:07

wondering how much the impact

5:10

of a brand that's not doing

5:12

well in popular culture right

5:14

now and among some audiences that

5:16

are big beauty supporters and

5:18

big beauty spenders. I'm wondering

5:20

where you go with this. Wow. I'm wondering

5:22

what's happening in terms of, you know,

5:24

I mean, I look at just the

5:27

posts that have been, or the comments

5:29

that have been made on our target

5:31

posts alone. And I can only imagine

5:33

what's happening to Target and right now

5:35

and what, what feedback they're getting from

5:37

people. And maybe it's just also saying

5:39

like, Hey, let's like, let some of

5:41

this settle before we start going big

5:44

and we wrap our brands together so

5:46

closely. So I, those are just a

5:48

few things that I think could be

5:50

swirling around in the background. Ultimately, I

5:52

think it's, it's It's traffic to the stores and

5:54

whether or not that this is really going to continue

5:56

to make an investment for Alta. But I think

5:58

that some of those other things are also playing a

6:01

factor. Wow. Wow.

6:03

OK. So a couple, a couple, a

6:05

couple of questions for you in. Yeah.

6:07

So you interviewed Keisha Steeleman at Shop

6:09

Talk Fall, right? You last year on

6:11

stage. Yes. Yep. Yep, right before she

6:13

took the CEO role. Yes. I can't remember.

6:15

Was she in charge or did she oversee

6:17

the target rollout? She did. She did, right?

6:19

Yep. Okay. So this is a big deal

6:21

because she's, it's not like she's the new CEO

6:23

saying, I want to reevaluate this, you know,

6:25

like I'm going to come in, you know,

6:27

carte blanche, stop everything till I get a

6:29

sense of what's going on. No, she's been

6:31

intimately connected with this rollout for a long

6:33

time. So that makes this news even bigger

6:35

to me when you read between the headlines, right?

6:38

I agree. Wow. Yeah. Yeah, especially like I

6:40

said given her background like I think

6:42

she's everyone that I've talked to that's

6:44

worked for her it said that she's

6:46

you know a no BS kind of

6:48

person like either it's working or it's

6:51

not and we course correct immediately if

6:53

it's not and so that's that's where

6:55

I think like you're you're really looking

6:57

at some some big calls here from

6:59

Keisha about where the direction of the

7:01

company is going and what's best for Alta

7:03

so. And the

7:05

other yeah no and the other question I wanted to

7:07

ask you to and was. Can

7:10

you ever remember a time in the history

7:12

of Target with its brand and its brand

7:14

cachet where someone has announced a rollout and

7:16

then said, we're going to pull back and

7:18

not go forward with this? I cannot. Not

7:21

that I can think about the top of my

7:23

but 20 year history of being intimately

7:25

involved with that brand. Yeah. I

7:27

mean, this is a huge undertaking as

7:29

well. I mean, we're talking about complete

7:31

remodels of stores and things to support

7:33

this. So I think, you know, this

7:35

is really a unique case, but I

7:37

think that I have to time. That's

7:40

all the time. I think the remodeling

7:42

level, not to the level of

7:44

the altar. And location for

7:46

all to not for all to know not for all to

7:48

and the cost for all to too. But yeah. But people are

7:50

coming in and remind those stores all the time and paying

7:52

for the remodels all the time. But to your point, yeah, right.

7:55

Yeah, all to just doesn't see the value in it. So

7:57

yeah, easy. Wow. Yeah. Well, either

7:59

way, not good news for Target right

8:01

now on top of everything else they're dealing

8:03

with. Not the

8:05

news that you want to be going

8:07

out at this time. So no. Yes.

8:09

Around. So net net this story is

8:11

more about target to you than it is about Ulta. Do

8:13

you think that's because of our Minneapolis bias? Or do

8:15

you think that's really the case? I think it's actually really

8:18

the case. I do. We try not to be biased

8:20

on this show as much as possible. Yeah,

8:23

I would say it's more about what's happening with

8:25

Target than I think you're right. I think

8:28

it's more about what's happening with Target and Ulta's

8:30

response to it. Yeah. Wow.

8:32

Fascinating. Fascinating discussion. God, going

8:34

to be fun to watch this year play out.