Tile Shop Holdings CEO Chris Homeister has resigned under pressure.
Company founder and former CEO Robert Rucker has stepped in as interim CEO while the company searches for a new leader.
“[Homeister] and the board have mutually decided this is the right time to refocus the company on its core strategy that was key to its historic growth and profitability, and it makes sense at this time to set up the leadership team with a new CEO to take the company forward,” Rucker said in a statement.
Chief Financial Officer Kirk Geadelmann and other executives will remain, he said.
Homeister was recognized this year as an EY Entrepreneur Of The Year 2017 Upper Midwest award recipient. A Best Buy executive from 2005 to 2012, he joined the Tile Shop as its chief operating officer in October 2013 and was named president and CEO on Jan. 1, 2015.
The Tile Shop has 135 stores in 31 states and in 2016 reported record revenue of $324.2 million and earned $18.5 million. In a video announcing his award, Homeister said the company had plans to expand to all 50 states and operate 400 stores.
Rucker thanked Homeister for his time. “During his tenure, the company’s net sales and store count have meaningfully grown.”
Homeister helped stabilize the company and return it to growth after a 2013 scandal in which then-CEO Rucker fired his brother-in-law for receiving about $1.1 million in illicit consulting fees from Chinese manufacturers.
From the first quarter of 2015 through the first half of 2016, the company saw double-digit quarterly sales growth, but has not been able to maintain that momentum.
Shares dropped more than 30 percent on Oct. 3 after the company released preliminary third-quarter results that were weaker than expected and withdrew its prior expectations for full-year results. The firm’s shares have had a negative total return of more than 56 percent this year.
Anthony Chukumba, an analyst who follows the company for Loop Capital Markets, was surprised by Homeister’s resignation but maintained his “hold” rating on the company. Earlier in the month after the Tile Shop’s third-quarter conference call he said turnaround prospects were “increasingly murky.”
“We think it is far more important to see who his permanent replacement is — and what his or her strategy will be to turn Tile Shop around — than to debate whether Mr. Homeister was sacked prematurely,” Chukumba said in a note to investors.