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And now, here’s Rachel…

Sephora has been surprisingly quiet in the wake of the recent controversy surrounding Huda Kattan, the founder and co-C.E.O. of Huda Beauty, who posted a revolting TikTok video last month to her 11 million-plus followers alleging that Israel was behind World War I, World War II, and September 11. Sure, the brand’s exclusive North American retail partner issued a statement on August 7, noting that they were “actively reviewing” the issue internally and “working with the brand,” but only obliquely gestured at the incident. (The video was swiftly removed by TikTok, and Kattan posted a six-and-a-half-minute semi-apology video on August 8.)

Late last week, however, I learned that Sephora had begun the process of removing Huda Beauty from its upcoming artist-focused campaign, which is one of the biggest of the year. The “Experts” campaign, which is slated to roll out in early September, will probably feature lines like Gucci Westman’s Westman Atelier, Patrick Starrr’s One/Size, Mario Dedivanovic’s Makeup by Mario, and potentially Mary Phillips and Hung Vanngo, whose brands, M.ph and Hung Vanngo, will launch at Sephora on August 22 and September 8, respectively. The absence of Kattan, who sits atop one of the bestselling artist-led brands at the store, will speak volumes.

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Originally, Kattan was going to be a “big anchor” of the promotion, and likely featured in front windows, at the front of the store, on tables and towers, etcetera. “This is one of the biggest makeup pushes of the year,” a person with knowledge of the situation explained. “As a brand, all you want to do is be in those ‘stories’––you’re developing new products to fit those stories, and everything is done around that. It’s a huge omnichannel campaign, and if Sephora says, ‘You’re cut,’ that’s move number one to show the brand they’re serious.”

Indeed, this is a massive reorganization so close to a campaign launch, given the need to rework the creative, change the inventory, and update the internal comms. “It’s moving mountains,” said a person close to Sephora. “This is major. When they do these campaigns, there’s always a mix of new and big players to balance the storytelling, but also the revenue. Huda’s business, as you know, has been so on fire,” they added, pointing out that Huda Beauty, which launched at Sephora in the United States in 2015, is currently one of the retailer’s top 10 makeup brands. (Spokespeople for both Sephora and Huda Beauty did not respond to requests for comment.)

Huda Beauty is only the latest brand to be mired in recent controversy, after E.L.F. Cosmetics and American Eagle. But whatever’s going on with Kattan is far more serious than tapping a brand ambassador who proves to be problematic. Kattan’s video and posts were so disturbing, and her apology so insufficient, that Sephora had a moral imperative—and given the current political environment, a fiduciary obligation—to respond. (In Kattan’s apology video, she said her post was “misinterpreted and completely misused,” and denied any allegations of antisemitism.)

But Sephora’s business will be impacted, and sales will probably suffer, whether the retailer continues its partnership with Kattan or decides to cut ties with the brand. (Cue the social media boycott on both sides.) Surprisingly, Sephora hasn’t faced this level of backlash and criticism regarding one of its important partners before, and how it handles Huda Beauty will reveal a lot about its priorities and reliance on top brands with bright futures.

An insider I spoke with said that, at this point, their assumption is that “the ball is in Huda Beauty’s court,” meaning how Kattan responds to the controversy will inform Sephora’s next steps. “They’re probably giving the brand some sort of ultimatum right now. I don’t think Sephora can just pretend that nothing happened, based on how Huda’s treated the issue this whole time––she’s been consistent, and she clearly believes these things,” the person with knowledge of the situation said. “This is big money on the table, unless she steps down.”

Of course, that’s unlikely—Kattan just bought back the minority stake of her brand that TSG Consumer Partners had acquired eight years earlier. After what’s often been described to me as a challenging partnership, Kattan has at last retained full ownership of Huda Beauty, which was valued at $1.2 billion at the time of TSG’s investment.

It’s an unfortunate situation for all parties involved, but none more than Huda Beauty. After years of struggling through a post-Instagram makeup slowdown, Covid, and more, the brand has managed to not just turn the business around, but also achieve growth this year that far outpaced the rest of the category. Makeup at Sephora, specifically, had a slow start to the year; category-wide increases are estimated to be in the low single digits for 2025. Meanwhile, according to a source with knowledge of their sales, Huda Beauty has seen “high double-digit growth.”

Sephora, however, is still responsible for the vast majority of the brand’s sales. While Nykaa, Harrods, and others sell Huda Beauty globally, Huda doesn’t have the buffer of Ulta Beauty in the U.S., since Sephora has been its exclusive retailer domestically since 2015. Many of Huda’s customers (at least the ones who aren’t bothered by, or are unaware of, her statements) may just revert to buying Huda Beauty from the brand’s own site. “Her following is so strong. If the majority of them go with her, she’ll get the margin in the long run,” a longtime beauty executive said.

Sephora, on the other hand, will be just fine, even if it has to sacrifice a few hundred million in sales by cutting ties with Huda Beauty. The upcoming introduction of Rhode alone will surely recoup that revenue, and then some, within a year. But the fact remains that you can’t pull a brand of this size out of your stores overnight. Logistically, it would take six months minimum to wind down, according to the beauty executive, who noted that space and location for brand moves are planned up to a year in advance. Plus, the retailer would need to have a plan for what brand(s) move into the space—which, in Kattan’s case, amounts to a lot. My question is, what lucky startup brand would get to fill it?

Until tomorrow,
Lauren

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