Ulta Beauty Inc. ULTA 1.27% has named President David Kimbell as its next chief executive officer, succeeding current leader Mary Dillon, as the company continues to weather challenges from slower store foot traffic brought on by the pandemic.
Ms. Dillon will move into an executive chairwoman role and serve on the board for one year. She will continue to weigh on the company’s strategy and assist with the transition, the company said. The changes will go into effect in June.
Ms. Dillon has served as CEO of Ulta since June 2013. Under her leadership, annual sales grew to $7.4 billion in 2019 from $2.22 billion in the year before she took the helm. Sales totaled $6.15 billion in the year ended Jan. 30, a period marked by shutdowns caused by the Covid-19 pandemic and fewer in-store shoppers.
The company said its stores doubled during her tenure. And last year, the cosmetics company struck a deal to open shops inside more than 100 existing Target Corp. TGT 0.41% stores and was added to the big-box retailer’s website.
Ulta’s stock has increased nearly 3½ times during Ms. Dillon’s leadership, closing Thursday at $347.50. Shares tumbled 5.4% after hours to $329 after the leadership change was announced and the company set revenue guidance lighter than what analysts were expecting.
Mr. Kimbell joined the company in 2014 as its chief marketing officer and was given additional responsibilities, including as chief merchandising officer. He was named the company’s president in 2019. He will also be nominated to the company’s board at Ulta’s annual shareholders meeting in June, the company said.
After the Covid-19 pandemic took hold in the U.S. a year ago, Ulta temporarily closed all of its stores, but fully reopened them by the end of last July. The company said it incurred $188 million in Covid-19 related costs in 2020.
Comparable sales, or sales from stores that have been open at least 14 months and e-commerce sales, declined 18% in 2020, compared with a 5% increase in 2019.
Ulta generates most of its revenue from stores, where customers can try on makeup, buy skin-care products or book appointments for haircuts and other beauty services.
The beauty industry is also grappling with reduced demand for cosmetics as people spend less time in offices and at social gatherings, but the sector’s results have improved over time.
In September, the company suspended its Canadian expansion plans to focus on growth in its U.S. operations.
In the latest quarter, net sales slipped to $2.2 billion from $2.31 billion a year earlier. Analysts polled by FactSet were targeting $2.08 billion. Its comparable sales for the January quarter declined 4.8%.
The beauty retailer said earnings were $171.5 million, or $3.03 a share, down from $222.7 million, or $3.89 a share, in the same period a year earlier. Adjusted earnings were $3.41 a share, ahead of analysts’ expectations of $2.34 a share.
The company expects to garner net sales of around $7.2 billion to $7.3 billion for the fiscal 2021 year. Analysts had projected $7.32 billion in revenue.
As part of the leadership changes, the company’s current chairman Robert DiRomualdo will retire from the board. He has served three years as chairman and a combined 17 years on the board. Lorna Nagler, who has been with the board since 2009, will become a lead independent director.
The company also promoted Kecia Steelman, its chief store operations officer, to chief operating officer.
Write to Kimberly Chin at [email protected]
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