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Now, here’s Rachel…

Sephora, LVMH’s retail beauty juggernaut with 3,000 stores in some 35 countries, has been the place to debut your beauty brand for decades. And given the spate of recent high-profile brands about to launch—from Hailey Bieber’s Rhode to haircare from “The Rachel” creator Chris McMillan—that remains an irrevocable truth. Sure, makeup and skincare sales are generally softening, but Sephora has generally been immune to the challenges facing parentco LVMH’s Perfumes & Cosmetics division. In fact, LVMH executives recently praised Sephora’s profit and revenue performance from the first half of the year, specifically citing Europe, Latin America, and the Middle East as regions seeing “robust growth.”

But nothing lasts forever. Recently, Ulta Beauty—ostensibly Sephora’s biggest competitor in the retail beauty space, at least in the U.S.—has taken a handful of steps that could threaten that dominance. Last year, the company revealed that it would open doors in Mexico, and in February, Ulta’s new C.E.O., Kecia Steelman, announced that the retailer would enter the Middle East. Earlier this month, the company announced the acquisition of Space NK, a retailer that operates more than 80 doors in the U.K. and Ireland, marking the first time that Ulta will have a European footprint. Ulta already has a robust network of 1,450 or so domestic stores—more than double Sephora’s U.S. door count—but the addition of 83 Space NK storefronts will dwarf Sephora’s tiny, but growing, network of 10 U.K. stores overnight.

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Historically, brands enter Ulta only after their multiyear exclusivity with Sephora has expired. But that dynamic might change as Ulta beefs up its global operation. “[Sephora executives] used to think Ulta was lowbrow, and that it wasn’t a prestige experience,” said a person with knowledge of the situation. “It wasn’t thought of as that big of a threat as it’s become in the last five years.” Before he left in 2024, Sephora C.E.O. Jean-André Rougeot started pushing to open “drive-up, strip-mall-type doors for convenience,” and to partner with Kohl’s to head off the threat. Now, with Ulta preparing to go global, the sentiment at the highest rungs of the organization has only become more serious.

Ulta’s global merchandising strategy is said to be led by Jessica Phillips, who previously spent six years reporting to Sephora’s global chief merchandising officer, Priya Venkatesh, before switching sides. According to an insider, it was “a big deal” when Phillips decamped. (“No one leaves Sephora to go to Ulta.”) Moreover, as multiple sources noted, Phillips is considered a strong merchant—a veteran who knows how to recruit great brands. “It was drama, and because California has no noncompetes, Jessica walked out and right into Ulta,” the insider added. “Now she’s going head-to-head with Priya.”

Phillips may be slightly less experienced than Venkatesh, but she understands how Sephora works. And now, with the Space NK acquisition, Ulta can begin offering a cohesive global platform to brands from the beginning of their partnership—an edge that Ulta previously lacked. “Building a global presence from the ground up makes it easier to have consistency and integrate that from the beginning, something Sephora hasn’t been able to do,” said the person with knowledge of the situation.

Of course, that’s not entirely true: Sephora has been able to entice vendors into exclusive global distribution partnerships by promising priority status—which, in semi-layman’s terms, means outsize support in every market. But Sephora has really only been able to prove that out with Fenty, the first time the retailer ever pulled off a global launch. (“It’s a work in progress,” I’m told.) Another recent win for Sephora was Makeup by Mario, a Sephora exclusive that launched in several European countries simultaneously. In May, its founder and C.E.O., Mario Dedivanovic, embarked on the retailer’s first “international masterclass tour,” which took him to Sephora U.K. and the retailer’s new store in Hamburg.

The battle, as always, is about which retailer lands the right brands, and how long those exclusivity arrangements last. LVMH executives have said that their exclusive brands, which make up “nearly half the brand portfolio,” are also responsible for Sephora’s highest increases for the first half of 2025. But Ulta can play the same game by guaranteeing other brands priority launches in multiple markets around the world.

Naturally, Ulta is starting to negotiate with brands in the markets it plans to expand to, like the Middle East—where Sephora has been the beauty retailer of record mostly because it’s never had a viable competitor—and Mexico, where it’s taken Sephora close to 15 years to even begin to gain traction for its 30-plus stores. Ulta will likely start trying to onboard brands in the U.K. as well. None of this is great news for Sephora, which has very strong businesses in the U.S., Canada, the Middle East, Southeast Asia, and France, but has less of a foothold in Australia, India, the U.K., and China—the last of which, I’m told, has been “the biggest flop” of all.

Sephora faces structural challenges related to its parentco, too. Despite attempts to allow for more shared resources and communication, LVMH is a huge, sprawling multinational organization with more than 74 different businesses. Sharing resources and intel is always a challenge. I’ve heard from multiple sources that Sephora U.S. typically has had no idea what was happening in other global markets, which was the impetus for Venkatesh’s newish global team. In fact, one of the biggest grievances among U.S. vendors expanding into global markets is learning that teams within Sephora—contracts, negotiations, support, and even the level of merchant talent—are completely different. “It’s a bit of a shock to the system, and you don’t know how to navigate it,” a person close to Sephora told me.

Perhaps Ulta can learn from this pain point to offer partners operating plans on a global level. Or maybe the company can even adopt a business model similar to Mecca, the leading beauty retailer in Australia, which manages everything from marketing and P.R. to logistics, so that vendors don’t need boots on the ground. Similarly, India-based Nykaa entered the Middle East via a joint venture, Nysaa, that offers a tiered structure of margin where brands can decide how much of the logistics they want Nykaa/Nysaa to handle. “The masterstroke would be to do an alliance with [the retailer] Douglas, which is number one in Europe, but does need brand differentiation,” a veteran beauty executive suggested.

Now that would be a power move. But it’s hard enough to scale, and even harder to integrate services along the way—especially when competing against a best-in-class competitor. After all, while Sephora and Ulta are competing in their own cold war, both are essentially testing out a two-fold proposition: How big is the global retail market? And, relatedly, is it big enough for the both of them?

There is another Barneys New York project in the works. This one is fancier, with writer Beth Schacter (Billions, The Morning Show) and big-time director Joe Wright (Pride & Prejudice, Atonement, a Keira Knightley Chanel commercial) attached. It’s based on They All Came to Barneys, Gene Pressman’s forthcoming memoir about growing up in the business. As a refresher, the Gossip Girl people are already working on a show in partnership with Authentic Brands Group, which owns the I.P. to the Barneys New York name. [Deadline]

Wall Power art correspondent Julie Davich did a great job of explaining how the secondary market for handbags (and, in particular, Birkins) ballooned. [Puck]

You have to love it when a writer’s personality comes out in a standard trend piece. Enjoy Liana Satenstein on the red-soled return of Louboutins. [NY Times]

Sam Lobban is leaving Nordstrom—where he currently runs the designer and apparel businesses—to be the C.E.O. of Zegna-owned Thom Browne, which has never been more widely distributed but is struggling in China, like everyone else. Congrats to Sam. Over at Nordstrom, here’s hoping Rickie De Sole and Jian DeLeon get promotions. [WWD]

Lauren will do an end-of-earnings-season reflection in tomorrow’s issue, but the primer on the Prada Group’s numbers is that Miu Miu boosted the overall group with a 40 percent year-over-year increase in sales during Q2. Prada is doing okay, too, given everything. (In the second quarter, sales at the marquee brand’s directly owned stores were down 3.6 percent, missing analyst expectations. Seems like wholesale gave them the most trouble this first half.) Also: D.T.C. sales were up in every region overall, even in Japan and China. Profit margin was steady. Not bad. [Prada Group]

ShopMy has launched a bunch of new tools to get consumers to actually shop via the platform, not just through their affiliate links. [BoF]

Until tomorrow,
Lauren

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