Media Reports Sink Kogan, Mortgage Choice

By Glenn Dyer | More Articles by Glenn Dyer

Shares in online retailer Kogan and Mortgage Choice took a hammering yesterday on the ASX from worried investors.

Mortgage Choice shares slid 25% at one stage yesterday after the home loan broker became the latest firm to face accusations of mistreating franchisees.

Fairfax Media and the ABC reported that Mortgage Choice franchisees could launch legal action against the company over its remuneration structure.

Mortgage Choice has said it is consulting franchisees over a new remuneration model, but did given details except to to say it will be implemented in August.

Shares in Mortgage Choice shed about a quarter of their value in the first 20 minutes of trade on Tuesday, but slowly recovered to end a tough day down 21.7% at $1.48.

That’s the lowest close since August 2012.

Mortgage Choice joins other ASX-listed franchising operations in Retail Food Group (See separate story), Caltex and Domino’s to have seen sharp share price falls after accusations they have been hitting franchisees. 7Eleven and Oporto operator Craveable Brands have been similarly criticised as has Foodco’s Jamaica Blue coffee chain.

Mortgage Choice CEO Susan Mitchell said the new structure was crucial to the health of the company. “These changes are designed to support the long-term sustainable growth of Mortgage Choice, increase franchisee remuneration and attract new high-quality franchisees to our network," Ms Mitchell said.

Meanwhile Kogan shares ended the day down 12.4% at $8.58 after an apparent attempt by the two insiders to sell 10% os the shares came to nothing. Reports on Monday night that brokers were trying to sell 10% of Kogan’s shares(worth around $100 million) made it into the media on Tuesday and a statement from the company didn’t help.

Founder and chief executive Ruslan Kogan and chief financial officer David Shafer were reported to be looking to sell the stake. ​The company said yesterday that Kogan and Shafer did not receive any bid and no sale of stakes have occurred, which was defacto confirmation that the sale would have happened if the right price had been achieved.

“Mr Kogan and Mr Shafer are not currently in discussions to sell any shares,” Kogan.com said, but that was not enough and brokers say there is no an overhang of Kogan shares which will push the price lower.

Mr Kogan holds around 36% of Kogan.com shares and Mr Shafer about 13.7%.

The sale news came hours after Kogan shares rose 7.5% on Monday after the company announced plans to sell its own brand of washing machines, fridges, cooktops and other household and kitchen appliances, challenging bigger rivals Harvey Norman and JB Hi-Fi. Sneaky.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →