The chief executive of HSS, the UK’s largest tool-hire company, quit yesterday after a torrid six months marked by a string of profit warnings and 70 per cent collapse in the share price.
Chris Davies, 61, will step down from the FTSE 250 business at the end of the year, to be replaced by 48-year-old chief operating officer John Gill. The HSS chairman Alan Peterson said Mr Gill would focus on overhauling costs and boosting operating margins – opening the door to a potential reduction in the group’s investment plans.
“I’m confident he will make the step-up to the chief executive role quickly and effectively,” Mr Peterson said.
Shares in HSS have tumbled from a listing price of 210p when it floated in February, to 61p – up 1.5p – yesterday. That marks the listing out as one of the worst in the past few years.
One HSS investor called the float, which was managed by JP Morgan Cazenove, an “unmitigated disaster”.
On a market capitalisation basis, the company is now worth £90m, compared with £325m six months ago.
HSS, known for its distinctive yellow and blue vans, hires out industrial-sized tools for use in the construction industry, as well as smaller tools for people doing DIY on their houses.
The company was forced to issue a profit warning last month, hot on the heels of another warning in late June, which sparked a 36 per cent fall in the share price.
The first warning came just weeks after the group had said it was trading well, sparking concerns among shareholders about how strong a grip management had on the business.
“It is a mantra of the City that you don’t have a profit warning in the first 12 months after IPOing ,” said Julian Cater, an analyst at Numis.
“HSS has had two warnings in its first six months, and investors just headed for the exit. The group needs to go through a period of rehabilitation as far as the City is concerned.”
The collapse in the company’s share price has dealt a heavy blow to its former backer Exponent Private Equity, which still owns 50 per cent of the shares.
Mr Davies, a former chief executive of the wellington boot maker Hunter, owns 1.6 per cent of the group, making him one of its top 10 investors.Reuse content