Target's Beauty Category Is Outgrowing the Company as Ulta Wraps Up

The five-year beauty shelf in the aisle is gone. Target's shop-in-shop partnership with Ulta Beauty — the prestige showcase it rolled out in 2021 to bring department-store brands into a big-box store — concluded this month, and in its place Target is now running its own in-house concept, Beauty Studio, rolled out across more than 600 stores the week of this writing. Why that change deserves attention is arithmetic. Beauty is Target's biggest discretionary, increment-driving category, roughly 14% of everything it sells. Hand it back to Target's own merchandisers and the worry has always been the same one: that a self-run beauty aisle loses the polish, the brands, and the service Ulta supplied, and that the handoff shows up as a stumble in the middle of a turnaround. Investors have called it the wildcard in the story. Here's the thing, though. In the quarter when the handoff was actually happening, the numbers show no stumble. Not yet, at least.

What the quarter's numbers show

The category tally is where the worry would show up first. In Q2 FY2026 — the quarter that ended August 1, the window when Ulta was winding down — Target booked $3.64 billion in beauty sales, up 7.2% from $3.40 billion a year earlier. Compare that with the company's overall net sales, which rose 5.3% to $26.54 billion. Beauty grew faster than the whole company, and at $3.64 billion of that $26.54 billion it held its ground at roughly 13.7% of total sales.

Target beauty vs company net sales, Q2 FY2025 vs Q2 FY2026 (USD billions)Beauty net sales across both quarters; total company net sales for Q2 FY2026

Beauty rose to $3.64B in Q2 FY2026, roughly 13.7% of $26.54B total net sales, keeping growth above the company-wide pace so the feared Ulta-exit disruption is not yet visible in the reported mix.

Period	Beauty net sales (B)	Total company net sales (B)
Q2 FY2025	3.4	N/A
Q2 FY2026	3.64	26.54

Target's own phrasing backs the read up. The retailer described beauty as growing in "high single digits," the same bracket it used for food. The continuity matters: as Ulta left and Target's own concept took over, beauty's share of the mix did not crater. A year earlier, in Q2 2025, the category was "down slightly" under the pressure of a customer boycott tied to Target's diversity policies; today it is a driver of the turnaround. As far as the reported numbers go, the feared disruption is not yet visible in the mix. Chief merchandising officer Cara Sylvester calls beauty one of the retailer's most powerful traffic- and margin-driving categories, framing Beauty Studio as a structural investment rather than a straight square-footage handoff to a replacement tenant.

The test that's actually ahead

Here the read has to stay honest. That "not yet visible" finding covers only the window through Q2 FY2026 — the quarter before Beauty Studio had to carry anything on its own.

The disruption would only start to show in the mix now, in the quarters where Target's own Beauty Studio — not Ulta — has to hold that 7% growth. Ulta brought prestige brand equity and a trained service model; Target now has to reproduce both itself, stocking 1,600-plus products from 90 brands, more than two-thirds of them new to the chain, and stationing dedicated beauty advisers in the aisles. That is an execution test, and it is genuinely open — not a success already banked. The number to watch is the one I started with. If beauty's growth holds above the company's comparable rate in the next couple of quarters, the wildcard was, at least through the transition, a phantom. If beauty decelerates to at or below the company comp rate for two straight quarters, or its share of sales starts to contract, then the disruption is real — and it will show up in exactly the place the worry said it would. That framing is the honest part of the read. This quarter does not prove the transition works; it only refutes the fear in the only place the fear was measurable — the reported mix — during the window when Ulta was still on the floor. The verdict moves to the quarters ahead, where Target curates the category itself, with no Ulta brand equity behind it. That is the test, and it is genuinely open.