Ulta Beauty’s Stock Tanks Amidst Declining Sales, CEO’s Exit

Words by Luhar Singh

Ulta Beauty Announces CEO Transition
Ulta Beauty Announces CEO Transition

Ulta Beauty’s stock tumbled after the company reported lower than expected sales and the exit of its current chief executive Mary Dillon.

The company reported a Q4 net income of $171.5 million, or $3.03 a share, compared to $222.8 million, or $3.89 a share, in the same quarter a year ago. The company’s adjusted earnings were $3.41 a share, accounting for restructuring, impairment and the company’s decision to suspend its expansion to the Canadian market. Overall revenue fell to $2.2 billion, down from $2.3 billion in Q4 last year.

The decline in revenue came partly as a result of a slump in same-store sales, which fell by 4.8 percent, compared to a 4 percent increase in the same quarter.

The company’s stock reached an intraday high on Thursday but fell by as much as 10 percent in after-hours trading after seeing an improvement of 1.3 percent in regular session to close at $347.50, MarketWatch reported.

Ulta Beauty’s President David Kimbell will replace Dillon as the new chief executive officer. At the same time, Dillon will transition to executive chair of the board of directors. Kimbell will also be nominated to stand for election to its board of directors at the 2021 annual stockholders meeting.

“It has been the honor of my career to lead the Ulta Beauty family for the last eight years and a true joy to have been inspired by our dedicated associates and beauty-loving guests daily. Our strategies, culture and continuous innovation have strengthened our business model, ensuring we are well-positioned to continue leading the industry,” said Dillon.

“Throughout my time with the company, I have worked closely with our board on strategic succession plans, and I believe now is the right time to begin a CEO transition. Dave is a world-class business leader with incredible passion, deep beauty expertise, unwavering drive and a values-based leadership style. The board, executive team and I could not be more thrilled to congratulate and support Dave as he takes this new role. There is no one better suited to unlock even more beautiful possibilities.”

During his time with the company, Kimbell has played a pivotal role in developing and executing growth strategies to move the business forward. Kimbell originally joined Ulta Beauty as chief marketing officer in 2014 and was later named chief merchandising and marketing officer in 2015 and later president in 2019.

According to the company statement, Kimbell holds deep expertise and knowledge in corporate strategy, merchandising, insights and analytics, marketing and brand development, loyalty, innovation, and business transformation.

During the transition, Dillon will serve as executive chair for a one-year term and will continue to help guide strategy and support Kimbell.

Additionally, the company’s current chief store operations officer, Kecia Steelman, will take on the role of chief operating officer and oversee store and services operations, supply chain, Ulta Beauty at Target as well as other key initiatives.

The company also announced the retirement of its current chair, Robert DiRomualdo, who has served in the position for the last three years and a total of 17 years on the company’s board. Lorna Nagler, who has been a board member since 2009, will become lead independent director and will be working with Dillon in her executive chair role. These appointments are set to become effective on June 2, 2021.

Looking ahead, the company reportedly plans to open about 40 new stores this year and remodel or relocate about 21 store locations.

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