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Ulta CEO leaves for Michaels

BOLINGBROOK, Ill. (AP) -- Ulta Beauty Salon, Cosmetics & Fragrances Inc. said Thursday that Chuck Rubin will step down as president and CEO of the beauty products retailer to become CEO of arts and crafts retailer Michaels Stores Inc. Ulta shares plunged nearly 12 percent in afternoon trading.

The company appointed Dennis Eck, non-executive chairman of Ulta's board of directors since 2003, as interim CEO. Rubin will step down Feb. 21 and will assist Ulta during the transition period. The company has formed a search committee to find a permanent CEO.

Ulta said that Rubin's departure is not related to any disputes with management, its board or the company's performance.

The company also reaffirmed its earnings forecast for its fiscal fourth quarter, for profit of 96 and 98 cents per share. It also said that it expects revenue of $757 million for the period, a 30 percent increase from the prior year. Analysts polled by FactSet expected the company to earn 98 cents per share on revenue of $751.8 million.

Ulta also sees revenue from stores open at least a year increasing by 8 percent. That is a key indicator of a retailer's financial performance, because it strips away the impact of recently opened or closed stores.

Credit Suisse analyst Gary Balter downgraded his rating on Ulta to "Neutral" from "Outperform" on Rubin's departure. He said the move creates some near-term uncertainty for the company, but he continues to like the retailer's concept. He also said Rubin has been an integral part of Ulta's outsized success over the past two years. While he has high regard for Eck, he is in an interim position and that leaves some uncertainty at the top of the company. Balter said it was difficult to recommend the stock until he knew who was steering the ship. The analyst lowered his price target to $110 from $120.

Ulta, based in Bolingbrook, Ill., operates 550 stores across the country and sells its products online.

Shares of the company fell $10.49, or 10.5 percent, to $89 in afternoon trading. The stock has traded between $78.87 and $103.52 in the past 52 weeks.