Tile Shop Holdings Inc. founder Robert Rucker, who left the firm in 2014 and retook control in 2017, has left again.
His departure comes after the Plymouth-based company took steps to delist itself from the Nasdaq Stock Market, a move that wiped out two-thirds of the firm's market value on the day it was announced in October. A group of outside investors led by Peter Kamin, a Florida investor with a record of turning companies around, moved to quickly buy a controlling stake.
In lawsuits that were subsequently brought by other shareholders, Rucker is accused of working with the outside group to take over the firm at a discount. However, a new filing to securities regulators shows a clear rift between Rucker and the outside group, though the circumstances are less so.
The filing said Rucker, 67, stepped down as interim chief executive in January but kept an office at the firm. Directors earlier this month "determined that Mr. Rucker's role in operations was no longer necessary" and that he didn't need to keep his office.
In the past week, Rucker wrote two letters to the investors who now control Tile Shop, according to the filing. In a letter dated Feb. 12, Rucker said the executive they selected to lead the firm, Philip Livingston, is unqualified and shows no interest in the "actual detail — the business model, theory, soul of the industry."
"Mr. Livingston is an accountant, not a merchant," Rucker wrote. "In my opinion, Mr. Livingston not only doesn't have the sense to run The Tile Shop, he could not run a gas station."
Rucker resigned in that letter.
In a second letter dated Monday, Rucker explained that since 2017 he focused on updating the firm's technology and accounting and that its current board decided to "go a different route" despite what he viewed as the success he was achieving.
"Notwithstanding my disagreement with and concerns regarding the Board's current approach for the Company, I hope the best for the Board, its members, the Company, its employees and its shareholders," Rucker wrote in the latest letter.
A call and e-mail to a Tile Shop executive for comment Thursday morning were not immediately returned.
A call to Rucker's office wasn't answered. He could not immediately be reached by other means.
Rucker started the company, long known as the Tile Shop, in 1984 with business partner Rod Sill. In the early 1990s, they began to expand their concept — stores of 15,000 to 30,000 square feet that offered a variety of tile, mostly imported, to both consumers and professional installers — across the Midwest.
The company later went public on the Nasdaq and had grown to a chain of 105 stores in 30 states by 2014 when trouble struck for Rucker. He had brought a brother-in-law into the company who later took large fees from Chinese companies that supplied products to the retailer.
Directors forced the brother-in-law to resign and Rucker to step down from his CEO role.
He stayed on the board, however, and then took the CEO role again on an interim basis in late 2017.
He picked a longtime sales executive to become the permanent CEO about a year later.
Last year, Rucker's grip on the company appeared to tighten with the decision to delist.
A lawsuit brought by Wynnefield Capital and individual investor Kevin Barnes accused Rucker of working with Kamin to devalue the firm at the expense of other shareholders. A Delaware state court judge subsequently ordered Kamin and other defendants to stop buying shares in Tile Shop and prevented the company from taking the final steps in the delisting process.
Another hearing was scheduled on the matter for Friday, but Tile Shop's regulatory filing said the firm decided not to contest the order. A trial is set in April in the Delaware court.
In a statement, plaintiff Barnes said Tile Shop is a "very valuable company" and he looks forward to the trial "and restoring value for the benefit of all stockholders."
Evan Ramstad • 612-673-4241
