Ulta Beauty gains on plans to open stores at over 100 Target locations

(Reuters) - Ulta Beauty Inc shares jumped 10% on Tuesday after the cosmetics store chain signed a long-term deal with Target Corp to open its own stores at the big box retailer's locations.

Ulta will have the stores next to Target's own beauty section, as well as on its e-commerce website, starting next year, with plans to expand to more than hundred locations over time.

"We see this as great traffic driver beginning in 2021 and a partnership that could potentially pave the way for future deals with other retailers/vendors," Gordon Haskett analyst Chuck Grom said.

Sales of beauty products increased more than 20% in the second quarter, doubling their growth in the previous quarter, Target said in August, as people resume spending on non-essential items following the easing of COVID-19 restrictions.

Ulta has more than 1,200 outlets, while Target operates nearly 1,900 stores.

Target's shares were up 1.3% at $156.99 in pre-market trading.

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Shounak Dasgupta)