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Feb 15, 2013
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Ulta Salon CEO resigns to join Michaels Stores, shares fall

Feb 15, 2013

Beauty products retailer Ulta said Chief Executive Chuck Rubin will step down to join Michaels Stores Inc, North America's largest arts and craft retailer, sending Ulta Salon's shares down as much as 13 percent.

Ulta Salon's Chief Financial Officer Bruce Hartman resigned in October.

Chuck Rubin (photo: Ulta)

Credit Suisse, which downgraded Ulta Salon to "neutral" from "outperform", said Rubin's departure after more than two years at the helm had created near-term uncertainty for the company.

"It is difficult for us to have an 'outperform' on a company missing a full-time CEO and full-time CFO. Until those positions are filled, we prefer to be on the sidelines," Credit Suisse analysts led by Gary Balter wrote in a note to clients.

However, analysts at Piper Jaffray & Co reiterated their "overweight" rating on Ulta Salon's stock, saying the company's strong growth will prove attractive to prospective CEOs.

Ulta Salon's Non-Executive Chairman Dennis Eck has been appointed interim CEO. Rubin's resignation takes effect on February 21.

The company said on Thursday revenue rose 30 percent to $757 million in the fourth quarter and backed its profit view of 96 cents to 98 cents per share.

Comparable-store sales rose 8 percent.

Ulta Salon's sales have risen 22 percent since Ruben became CEO in September 2010, while its stock jumped four-fold.

The Bolingbrook, Illinois-based company's shares were down 11 percent at $88.22 in heavy trading. The stock, which touched a low of $86.90, was one of the top percentage losers on the Nasdaq.


Rubin's entry could revive Michaels Stores's IPO plans, which were delayed after former chief executive John Menzer suffered a stroke in April 2012.

With Rubin assuming his role after an unspecified period of transition, Michaels Stores will discontinue the interim office of the CEO, comprising its finance chief and a managing director of one of its private equity owners.

The interim office of the CEO was set up after Menzer suffered a stroke.

The company was taken private in 2006 by a group of private equity firms, led by Bain Capital Partners and Blackstone Group.

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