Ulta Beauty’s stock got a black eye from Wall Street after the company said its well-liked chief executive is stepping down.
Shares of the make-up giant fell more than 10 percent on Friday after the company said Thursday that CEO Mary Dillon will be succeeded by the company’s president, David Kimbell. Dillon will move to the executive chairman role for one year.
“This changing of the guard occurred sooner than the Street’s expectation,” wrote Wells Fargo analyst, Ike Boruchow, in a research note, adding that Dillon is “one of the most respected CEOs in our space.”
Under Dillon’s eight-year run at the helm, the Bolingbrook, Ill.-based company has thrived with the exception of last year, as demand for cosmetics waned during the pandemic. During her tenure, sales grew by 236 percent to $7.4 billion in 2019 and the number of stores doubled to 1,264.
Revenues plunged to $6.2 billion last year as fewer women bought color cosmetics while they stayed home due to COVID-19 lockdowns. But the company pulled off a surprisingly strong holiday quarter, with comparable sales down just 4.8 percent compared with the more than 12 percent decline analysts had expected.
“We begin fiscal 2021 with a strong foundation in place and good operational momentum,” Dillon said in a statement. “We are strategically investing in our business to drive further market share gains, and … we are beginning to execute a thoughtful succession plan that ensures we continue to benefit from strong, experienced leadership for the next chapter of growth.”
Kimbell joined Ulta in 2014 as chief marketing officer and was named president in 2019.