As Kohl’s continues to swim against the current of a highly competitive, ever-shifting retail environment, Sephora has remained its most consistent revenue driver and access point to younger customers. But that momentum has not yet carried over to the rest of Kohl’s business.

Kohl’s net sales fell 4% in fiscal 2025, the latest in a multiyear slide for the Menomonee Falls-based retailer. Aside from a 23% rebound in 2021 following the COVID-19 pandemic, Kohl’s has not posted a year-over-year net sales increase since 2018.

The downward sales trend has played out across all categories but one: accessories, which was up 2% in fiscal 2025.

The accessories category is anchored by Sephora at Kohl’s, a partnership that launched in 2021 and has grown into a roughly $2 billion business over the past four years, according to company leadership. Sephora beauty shops are now located in nearly every one of Kohl’s 1,150 stores in 49 states as well as online.

Kohl’s does not report Sephora as a separate revenue line, but the partnership’s effect on the accessories category is visible in company sales data.

In 2025, the accessories category had $3.1 billion in net sales, accounting for 21.1% of company net sales, surpassing men’s, home, children and footwear. Accessories sales have risen 85% since 2019 — prior to the Sephora partnership — when the category was among the company’s lowest-performing, then accounting for 8.9% of company net sales.

It should be noted that the accessories category as a whole has been the focus of some of Kohl’s more recent turnaround initiatives, including the return of jewelry at stores — after scaling back with the addition of Sephora — and the roll-out of impulse queue lines near checkout areas at all stores. Excluding Sephora, accessories sales in the fourth quarter of 2025 grew in the low single digits and impulse drove more than 40% comparable sales growth.

While beauty and accessories sales have only grown in recent years, all other categories for Kohl’s have contracted. For instance, women’s apparel, a mainstay for a company with a majority female customer base, has seen net sales fall 32% since 2019. The category accounted for 24.4% of total net sales in 2025, compared to 25.8% in 2023 and 28% in 2019. That’s despite years-long efforts to revive its women’s business by measures such as expanding dress assortment, investing in private-label brands and reintroducing petite sizing.

Kohl’s expected Sephora to act as a traffic driver for its women’s business, bringing new and younger shoppers into stores more often and increasing “cross-shopping in apparel,” shoes and other core categories. But without Sephora, Kohl’s would be approaching less than $13 billion in revenue, compared to almost $19 billion in 2019.

“Generally, I think it was a good move by Kohl’s to bring in Sephora,” said David Swartz, senior equity analyst, consumer research at Morningstar. “… but the unfortunate thing is that, clearly, Sephora has not prevented Kohl’s overall sales from declining, and it is not generating significant sales in other parts of the store.”

The company has seen some of the anticipated “halo effect” in the juniors category, which was up 8% in the fourth quarter of 2025. Kohl’s last year moved its juniors department to the front of the store to sit adjacent to Sephora. Jewelry also stands to benefit from proximity, situated just behind Sephora.

“Clearly, putting juniors in the front was working. That cross-shopability with Sephora had persisted and been consistent for us, which is a good thing,” said Kohl’s CEO Michael Bender during the company’s most recent quarterly earnings call.

He described the customer that comes in to shop at Sephora as younger, diverse and digitally savvy.

“And we want to make sure that the product that they see outside of the Sephora portion of the store is consistent with what they are looking for, and that move with juniors has been a big part of that,” said Bender.

Kohl’s has made several changes to its store layout and inventory mix in recent years in an effort to drive sales, and Swartz remains skeptical that this latest attempt will make a meaningful impact.

“They’re looking for some miraculous, perfect store layout and merchandise connection that’s going to entice people to shop more in the stores, and clearly, that’s not happened,” he said. “The biggest problem is just getting bodies into the stores. And, like I said, I think that it’s clear that the Sephora build-out is bringing people into the stores but they’re just not shopping.”

Part of the problem could be the range of inventory at Sephora at Kohl’s and a discrepancy between the target Kohl’s customer and target Sephora customer. Sephora at Kohl’s carries of limited selection of products, the majority being high-end brands and celebrity-backed labels such as Selena Gomez’s Rare Beauty, Rihanna’s Fenty Beauty and Lady Gaga’s Haus Labs. Generally speaking, those kinds of brands are likely outside of the price range of most of Kohl’s lower-to-middle income core customers, said Swartz.

By contrast, Sephora’s competitor, Ulta Beauty, carries low-, middle- and high-end products in all of its stores.

“The reason they do that is because they know that the beauty shoppers don’t just buy luxury beauty products all the time. There are women who will buy very expensive skin creams, but also buy an $8 lipstick in the same trip,” said Swartz.

Similar to Sephora, Ulta has operated shops inside Target stores since 2021. The brands recently announced their mutual decision to end the partnership, with all 600-plus “Ulta Beauty at Target” stores closing in August, on account of shifting strategies.

“(The Ulta-Target partnership) was primarily designed to be essentially a driver of new loyalty members to Ulta, but Ulta seems to attract them anyway. So they don’t need (Target),” said Swartz. “Kohl’s has plenty of loyalty members, they don’t see the shop enough. They need to find a way to get those beauty shoppers who shop consistently to shop in the Sephora at Kohl’s stores.”

A Kohl’s storefront featuring its Sephora shop-in-shops. Credit: Kohl’s Corp.