Thorn Group (TGA) slipped to a fresh 1½-month low this morning on news that its chief executive John Hughes is retiring.
The stock shed 1 cent, or 0.4%, to $2.27 – taking its loss to nearly 9% since the release of its full year result and sombre outlook last week.
Shareholders could feel a little nervous that Hughes is choosing to leave at this important juncture for the Radio Rentals chain store operator as the group is investing heavily to expand into other consumer financing areas, such as automobiles and personal loans.
These initiatives will weigh on the group’s financial performance in 2013-14 as management had indicated that the expansion will only pay off over the “medium- to long-term”.
Hughes will leave in May 2014 due to “family health reasons” and the Thorn’s board is considering internal and external candidates to replace him.
Thorn Group had been one of the better performing retail exposed stocks over the past few years and Hughes has overseen a near six-fold increase in the market capitalisation of Thorn.
However, his tenure is marked with some controversy with consumer advocates criticising the group for targeting low income households with its “rent-try-buy” programme on white- and brown-goods.
Thorn is part of the Uncapped 100.