Target is unloading its e-commerce subsidiary Dermstore.com to a fast-growing British retail company for $350 million.
U.K. e-commerce firm The Hut Group (THG) says the Dermstore acquisition will help it grab a share of the U.S. beauty market.
For Target, the divestiture may have something to do with its recent agreement with Ulta Beauty to open 100 Ulta outlets inside Target locations, as well as online shops on Target .com.
"For seven years, Dermstore achieved growth milestones as a premium e-commerce beauty retailer operating as a wholly owned subsidiary of Target," Target said in a statement Tuesday. "The pending sale of Dermstore to THG Holdings aligns it with an organization that shares long-term strategic goals and priorities for growth. Target is focused on continuing to grow and gain market share with its curated beauty assortment to serve our guest needs."
It's a curious time for Target to sell off a digital-first beauty subsidiary at a time when more consumers are shopping for beauty online than ever before.
Target acquired Dermstore.com in 2013.
The Hut Group issued a statement Tuesday saying it plans to expand its existing online retail brands, such as the makeup site Lookfantastic and protein shake brand MyProtein, as well as selling its online retail technology to other companies that want to sell directly to customers.
"A key driver behind the decision to list THG on the London Stock Exchange just over three months ago was to enable the group to make major global investments, such as Dermstore.com," said Matthew Moulding, CEO of THG. "Accessing capital through a London listing has enabled us to accelerate our growth plans and build out a global leadership position within the exciting beauty industry."
THG also announced it has acquired U.K.-based nutrition product suppliers Claremont Ingredients Ltd. and David Berryman Ltd.