The embattled founder of Tile Shop Holdings Inc. is stepping down at the end of the year.
CEO Robert Rucker announced he would step down from the Plymouth-based company on Tuesday, the same day the company reported disappointing quarterly results.
The company has been tarnished by an internal investigation of improper consulting fees that led to the firing of Rucker's brother-in-law last year. Its stock price dropped from a 52-week high of $24.62 per share to less than $9 per share in recent weeks.
Rucker, 62, who founded the firm in 1985, will remain a paid adviser through July, and continue as a member of the board of directors.
Chief Operating Officer Chris Homeister, who joined Tile Shop one year ago, will succeed Rucker. Homeister, 45, was senior vice president of Best Buy's entertainment business group, which he left in 2012 to work as a consultant.
"We're a growing retailer with 105 stores in 30 states," Homeister said Wednesday. "We just need to deliver on expectations. We're telling investors that we're investing in infrastructure and talent and supply chain and new sources of supply in North America and South America."
Tile Shop is having a rough year. It posted net earnings that disappointed Wall Street at 3 cents per share in the third quarter vs. 6 cents in the same quarter of 2013, on a 10.6 percent revenue increase to $62.8 million.
On a conference call Tuesday with analysts, Rucker cited several factors for the weaker performance, including year-over-year declines in existing home sales and slower growth of home values that could be affecting remodeling.
Five of eight analysts who updated their outlooks on Tile Shop this week expect improved performance and a stock price move of $10-to-$12 per share over the next year, according to Bloomberg. Tile Shop closed down 3 percent Wednesday to $8.50 per share on twice the normal trading volume.
"Management is taking action to address underperformance, but near-term visibility remains low," Peter Benedict of Robert W. Baird in Milwaukee said in a note to investors Wednesday.
Rucker's brother-in-law, the owner of a Chinese export-promotion firm, netted $1.1 million in illicit consulting fees from Chinese manufacturers who sell to Tile Shop, according to the results of an investigation conducted by Minneapolis law firm Dorsey & Whitney. He also hid the acquisition of a Chinese vendor that sold millions of dollars worth of product to Tile Shop.
Rucker, who also is one of Tile Shop's largest shareholders, said he was unaware and disappointed by the activity.
Rucker's cash-and-stock compensation dropped from $2.4 million in 2012 to $500,000 last year, in the wake of the scandal and waning performance.
Tile Shop debuted as a publicly traded company at $12.10 per share in 2012.
Staff writer Patrick Kennedy contributed to this report.
Neal St. Anthony • 612-673-7144
