Target Corp. has put online beauty in its bull’s-eye with an agreement to acquire DermStore Beauty Group.
The Minneapolis-based big-box retailer is paying an undisclosed amount for the parent of DermStore.com, HairEnvy.com and Blush.com, which will continue to operate as a separate entity and be housed in its current El Segundo, Calif., offices. Earlier this year, Dan Obegi, chief executive officer of DermStore, told WWD that DermStore was on pace to generate at least $100 million in 2013 revenues and has become the second-largest beauty e-commerce destination in the U.S.
On Tuesday, Obegi said, “DermStore’s success was built on understanding the beauty market and catering to a shopper who’s seeking a wide array of prestige products, exceptional service and product expertise. Our customers have come to trust us to consistently deliver a quality experience and we are confident that this acquisition will benefit Target’s guests and expand Target’s online market share.”
Obegi will be president of DermStore.com, a wholly-owned subsidiary of Target, and report to Casey Carl, president of multichannel and senior vice president, enterprise strategy, at Target. Carl said, “There is no doubt that the online beauty industry is growing rapidly, and this unique opportunity enables Target to gain insight into the superior, online customer experience DermStore provides. Not only will DermStore’s 750-plus brands offer Target expanded breadth across the beauty and skin-care industries, but also access to exceptional content and helpful resources we know consumers want.”
Target’s purchase of DermStore is reminiscent of Walgreen Co.’s 2011 acquisition of Drugstore.com, Beauty.com and SkinStore.com in a deal valued at about $409 million. That acquisition allowed the drugstore chain to tap into the online expertise of the e-tailers it bought and gave it access to beauty brands they carried that weren’t available at Walgreens, while providing Drugstore.com and its related Web sites cash and the ability to grow by leveraging Walgreens’ extensive consumer base.
DermStore’s sales are a fraction of Target’s $2 billion-plus beauty business, but DermStore has demonstrated a digital prowess — it has built an in-house studio to make online videos and is perfecting those videos as sales tools, for example — that could enhance the Target customers’ Web experience. When Obegi talked with WWD previously, he foreshadowed the worth that DermStore could have for a brick-and-mortar retailer by saying, “For us to be competitive, we will have to have national retail. That could be from us acquiring a national retailer or a national retailer acquiring us or a partnership where we can do e-commerce for somebody and in exchange we will share inventory and customers. It’s not very long until all national successful retailers are going to have to be omnichannel.”
DermStore was started in 1999 by dermatologist Craig Kraffert, who sold the company to El Segundo-based Intelligent Beauty in 2008. Today, it features more than 26,000 stockkeeping units and about 70 percent of its sales are from skin care, with sales from cosmetics and hair-care products roughly splitting the remainder. Among the best-selling brands are Le Métier de Beauté, Eve Lom, Sanitas and Eminence in skin care; Klorane, Miss Jessie’s, Philip B and Julien Farel in hair care, and It Cosmetics, Face Stockholm, Ellis Faas and Jane Iredale in cosmetics.
The transaction is expected to close within 60 days. Target said DermStore would not make a material impact on its 2013 results. Wells Fargo Securities LLC is DermStore’s financial adviser, and Latham & Watkins LLP is its legal counsel.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews