Kohl’s Corp. shares surged on news it will install Sephora shops inside hundreds of its locations.

The department store, which has previously said it would expand its beauty section, will open the first 200 locations next fall, according to a statement. There will be at least 850 in-store Sephora shops by 2023.

In addition to adding the 2,500-square-foot shops, Kohl’s will convert its online beauty selection to exclusively sell an assortment of Sephora’s offerings, it said. The companies didn’t share terms of the agreement. J.C. Penney Co. had previously had a deal with Sephora.

Kohl’s jumped as much as 12 per cent before regular trading in New York.

“Shop in shop” concepts are a way for retailers to offer customers new experiences and a wider selection of brands. Walgreens Boots Alliance Inc. offers Birchbox products in some of its locations, while Target Corp. last month inked a deal with Ulta Beauty Inc. to add miniature “shop-in-shop” versions of the makeup store to its aisles beginning next year.

The Wall Street Journal reported the news earlier.