Morses Club shares fell 60% in early trading after the credit provider revealed a profit warning and the immediate departure of its chief executive.
Pre-tax profits will be up to 30% below expectations and Paul Smith, who became chief executive in 2015, has been replaced by the company’s chief executive, Gary Marshall.
Morses Club shares fell 60% in early trading to 16.5p as shareholders reacted to the announcements.
Smith had sold £198,000 of shares in the AIM-listed company on Thursday at an average price of 42.65p, with the company being notified of the sale on Friday.
Morses revealed the stock sale, Smith’s departure and profit warning this morning. The company said it had “received no prior notification of the former CEO’s intention to negotiate”.
Morses’ share price closed at 41p on Friday, 55% below its peak of last summer. In the months leading up to the pandemic, its shares were trading above 120p.
The subprime lender has warned that the cost base of its home-collected credit division has been hit by a “rapid increase” in the volumes of claims submitted through claims management companies.
The company, which is headquartered in Nottingham and has a large base in Batley, said the scale of these complaints means it expects costs to rise.
It now expects its adjusted pre-tax profits for the current financial year, which ends this week, to be “between 20% and 30% below” the current consensus of £7.5million.
Smith’s departure is the company’s latest leadership change. Its lead independent director, Sir Nigel Knowles, will become chairman on March 1, a move announced in December.