Macy's Buys Sephora Competitor Bluemercury

The department store paid $210 million in cash.
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Chantal Fernandez
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The department store paid $210 million in cash.
Inside a Bluemercury boutique. Photo: Bluemercury

Inside a Bluemercury boutique. Photo: Bluemercury

On Tuesday, Macy's Inc. announced that it has purchased Bluemercury, a Washington, D.C.-based beauty boutique chain, for $210 million. The Sephora competitor will continue as a standalone business and, in addition to opening more locations, Macy's will add Bluemercury products and boutiques to its stores nationwide. The transaction marks Macy's first acquisition of a speciality retailer.

In addition to its online business, Bluemercury has 60 stores in 18 states. It carries products from such brands as Laura Mercier, Bobbi Brown, Trish McEvoy, Nars, Oribe, SkinCeuticals, Kiehl's and Fresh. Most boutiques have an in-house spa, offering services such as waxing and facials. It also has its own proprietary skincare line called M-61 developed by Barry Beck and Marla Malcolm Beck, the husband and wife team that founded Bluemercury in 1999. The Becks will continue to operate the company but report to Lundgren. 

Bluemercury has been expanding rapidly, almost doubling the amount of stores in the last seven years, thanks to a 2006 majority stake purchase by New York private equity firm Invus Group LLC. According to TheDeal.com, the company reportedly starting interviewing investment banks for an IPO in April 2014. Goldman Sachs ended up advising the company on the deal with Macy's.

Perhaps the Becks were convinced of the sale by Macy's extensive infrastructure. “We are excited to continue our aggressive expansion of Bluemercury while simultaneously leveraging Macy’s leadership in omnichannel technology, supply chain and retail operations,” said Marla Beck in a statement. Lundgren also said that Macy's will be providing "enhanced omnichannel component for a seamless customer experience across stores, online and mobile."

Signing with Macy's is a bold step forward for the boutique chain, which was founded with a local, service-oriented identity. “When I started Bluemercury, in 1999, you could only buy cosmetics at drugstores or department stores, where all the products were behind glass counters," said Marla Beck to Vanity Fair in 2013. "I felt like it was so formal and impersonal. What I really wanted was the friendly neighborhood store where the staff was expertly trained in all brands and you could touch and play with product," she explained.

Barry Beck also mentioned the expert staff when WWD asked him about Sephora, the ubiquitous beauty store owned by LVMH. “We’ve been next to them for a very long time,” he said. “We do have some customer overlap, but our brand mix is very different and we believe that we’re a higher-service model than Sephora.”

With this purchase, it seems Macy's is betting on that high-service model. Stay tuned to see if it makes a difference for its customers across the country.