CVS to open high-end beauty stores

CHICAGO Fri Aug 22, 2008 12:27pm EDT

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CHICAGO Aug 22 (Reuters) - CVS Caremark Corp (CVS.N) will begin testing a high-end beauty store concept this year, looking to tap into growing demand for skin care and cosmetics seen at outlets like LVMH's (LVMH.PA) Sephora chain.

The drug store chain operator plans to open a store called "Beauty 360" by the end of the year next to existing CVS stores on the U.S. East Coast and another on the West Coast shortly thereafter, CVS spokeswoman Eileen Howard Dunn said on Friday.

She declined to say where the stores would be located. But Women's Wear Daily, which first reported the news, said the first would be opened in Washington, D.C., and the second in Sacramento, California.

The "prestige beauty" stores would carry 32 lines of skin care and cosmetics plus a number of fragrances, Dunn said. She declined to name the brands.

CVS's expansion efforts in recent years have been in the health-care realm, notably with the acquisition last year of Caremark, a pharmacy benefits manager.

Dunn said the company has also focused on building up beauty product offerings in its stores with research showing demand on the higher end.

"Beauty has always been a core part of our front-of-store offering, so this is the next evolution," she said.

CVS will have more than 6,800 stores if it completes its planned purchase of Longs Drug Stores Corp LDG.N. That geographic reach is one weapon it can bring into prestige beauty battle with Sephora, Dunn said.

She also stressed that the company does not plan to build a Beauty 360 shop next to every CVS store.

Aside from the first two stores, the company plans to test a few more, Dunn said.

CVS shares were up 13 cents at $37.49 on Friday on the New York Stock Exchange. (Reporting by Brad Dorfman; Editing by Daniel Trotta

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